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UPS and CVS set to expand drone delivery to fight COVID-19

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UPS will expand its drone delivery program with CVS Health Corporation to deliver prescription vaccines and help in the fight against COVID-19. Yahoo Finance’s Adam Shapiro breaks down the latest developments.

Video Transcript

ADAM SHAPIRO: I want to talk about United Parcel Service, because they announced this morning they're going to dramatically expand their drone delivery program. That's the subsidiary Flight Forward, and what they're going to do is begin drone delivery of CVS pharmacy product to the villages. The villages of Florida is a huge. It's the largest retirement community in the United States with roughly 135,000 residents.

Now at first, this program is going to have the drone leave a CVS pharmacy to a central location within the villages, where a UPS ground vehicle will then finish the delivery run. But eventually, UPS plans to Flight Forward program to be able to deliver pharmaceutical product right to the door via drone of roughly 135,000 people within the villages. I spoke with Scott Price, who is one of the executives at UPS, this morning about the program.

He said, this gives them a chance to scale up Flight Forward before the FAA actually introduces the final regulations on drone delivery nationwide, which is expected next year. They have permission to do this right now from the FAA in Florida. And Jared Blikre, UPS is going to be reporting earnings tomorrow morning before the bell. Flight Forward and drone delivery, they generate revenue, but it has nothing big on their earnings sheet just yet.

JARED BLIKRE: That is correct, Adam. Really thinking forward to the future there. They're expecting adjusted EPS or at least the street is of about $1.23 per share. That would represent a drop of about 11.5% year over year, which really isn't that bad. What you also have to consider is that, of course, the quarter was somewhat normal for about the first four to six weeks, but revenues expected to come in at $17.2 billion.

That would be a slight year on year growth of about 30 basis points, and Bloomberg Intelligence is noting that the impact of the coronavirus will likely be felt most at UPS's is international segment in the first quarter. And this accounts for about 20% of its revenue with most of that coming from Europe and less exposure in Asia. But as we were talking about in the break, UPS is part of that Air Bridge program, bringing in supplies from China. So very important work being done there, Adam.

ADAM SHAPIRO: And they also don't face the threat, at least just yet, from Amazon, which was launching its own delivery program. They put that on hold because of COVID-19. Amazon earnings are going to be out this week as well.