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CVS Health (CVS) Introduces Changes in ExtraBucks Program

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CVS Health Corporation’s (CVS - Free Report) retail segment, CVS Pharmacy, recently announced a new update related to its ExtraCare Rewards loyalty program. The loyalty program is now offering members 2% return in ExtraBucks rewards, credited instantly after almost every transaction starting July. The program's core 2% back benefit was previously paid out on a quarterly basis through 20 years.

The loyalty program now also features a new birthday benefit option, which offers ExtraCare members a $3 in celebratory ExtraBucks Rewards, who have chosen to share their birthday information. This celebratory reward can be used to purchase any gift from CVS Pharmacy's wide array of products during their birthday month.

The ExtraBucks rewards will be displayed on the CVS App, CVS.com, digital and paper receipts. Customers can also track their rewards from ExtraCare, including the ExtraCareBeautyClub and ExtraCare Pharmacy & Health Rewards programs, and CarePass with the Rewards Tracker.

This new loyalty plan is expected to boost the company’s online customer footfall across all platforms. 

Additional Details on the Loyalty Program

The new changes in the loyalty program have been introduced following in-depth assessment undertaken by CVS Health. The results revealed that customers seek flexibility in the way they access and use their rewards.

Following the evolution of the ExtraCare program, members now have the choice to use their rewards on their next visit or add their rewards to spend later, within 90 days of issue. These changes can be accessed on the upgraded CVS App, enabling members to view, track and send earnings and personalized deals directly to their ExtraCare card.

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Beginning late June, ExtraCare members will also be given free gifts every week in the CVS app as a celebratory offer throughout July.

Industry Prospects

Per a report published in Globe Newswire, the global loyalty management market is set to witness a CAGR of 16.2% during the forecast period 2020-2027. Factors like a customer-centric approach adopted by businesses, several customer rewarding schemes, intense competition between organizations, rising costs of customer acquisition and use of artificial intelligence and machine learning to enhance loyalty programs are fueling market growth.

Given the substantial market prospects, the innovations in CVS Pharmacy’s loyalty program seem well-timed.

Notable Developments

In June 2021, CVS Health’s company Aetna received approval to expand its existing Aetna Better Health Premier Plan MMAI to serve the entire state of Illinois. The Medicare-Medicaid Alignment Initiative (MMAI) is a combined initiative by the Illinois Department of Healthcare and Family Services and Centers for Medicare and Medicaid Services, intended to deliver care individual health care needs to eligible enrollees for both Medicare and Medicaid services.

In May 2021, CVS Pharmacy introduced more than 150 new products to its exclusive Store Brands portfolio, which include brands like Live Better by CVS Health brand, Gold Emblem Fair Trade Certified coffee and Goodline Grooming Co. These latest additions have been guided by consumer shopping behavior and feedback with a focus on value, transparency and sustainability. CVS Pharmacy intends to drive customer engagement and fulfill unmet customer needs through these offerings across health, grocery and beauty.

In the same month, the company launched Clinical Trial Services business, the latest development of the CVS Pharmacy arm. The new business is intended to evaluate the safety and efficacy of the latest investigational drugs and medical devices by combining technology and clinical trial expertise across CVS Health enterprise.

Share Price Performance

The stock has underperformed its industry over the past year. It has gained 31.4% versus the industry’s 34.2% growth.

Zacks Rank and Key Picks

Currently, CVS Health carries a Zacks Rank #3 (Hold).

A few better-ranked stocks from the broader medical space include PetIQ, Inc. (PETQ - Free Report) , Computer Programs and Systems, Inc. (CPSI - Free Report) and Intuitive Surgical, Inc. (ISRG - Free Report) , each sporting a Zacks Rank # 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PetIQhas a long-term earnings growth rate of 25%.

Computer Programs and Systems has a long-term earnings growth rate of 14%.

Intuitive Surgical has a long-term earnings growth rate of 9.40%.

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