CVS Caremark Corp. last week solidified its national presence with its announced purchase of Longs Drugs Stores Corp., a 521-store chain that dominates Northern California and other Western retail markets.

Woonsocket-based CVS has been pushing outside the Northeast for a decade, accelerating its growth in the last four years.

The purchase of Longs (LDG:NYSE) is its 10th acquisition in a decade, a series of takeovers that has pushed it past its chief drugstore rival, Walgreen Co., positioned CVS Caremark deeply into health-care management services and vaulted the company onto the list of the nation’s 20 largest public corporations. The Rhode Island company now employs 190,000 people nationwide. It will add another 22,000 Longs workers when it completes the acquisition later this year. The company’s revenues last year hit $85 billion.

CVS (CVS:NYSE) is now the nation’s top provider of prescription medications, filling or managing 1.2 billion prescriptions a year.

“This transaction provides tremendous benefits to CVS Caremark by accelerating our expansion in very attractive drugstore markets and strengthening our geographic reach,” said CVS chief executive Tom Ryan in an announcement Tuesday. “With this acquisition, we will increase accessibility to our pharmacies for consumers and put us in an even better position to grow our [pharmacy] offerings . . .”

The purchase of Longs boosts CVS’ lead in the drugstore industry, giving it approximately 6,800 stores in 41 states and the District of Columbia.

CVS has so often successfully employed a strategy of buying its way into new markets that last week’s $2.9-billion deal was greeted with the equivalent of verbal shrugs by some investment managers.

“This makes all the sense in the world,” Matt Kaufler, of Clover Capital Management, told Bloomberg News. “My only question: what took them so long?”

Moody’s Investor Service and Standard & Poor’s Ratings Service last Wednesday both affirmed their ratings for CVS after the announcement of the Longs purchase.

Moody’s affirmed a Baa2 rating on the company’s senior unsecured notes and a Baa3 rating on junior subordinated debentures. Both are medium, investment-grade ratings. S&P affirmed its BBB+ credit rating, also a medium-level rating.

Moody’s analyst Margaret Taylor said in a note the rating outlook remains positive.

“The affirmation reflects the fact that Longs will provide CVS with a meaningful presence in California in which CVS is currently under-penetrated, and CVS’ history of successfully integrating acquisitions,” Taylor wrote.

The ratings service also noted that CVS has nationwide geographic diversification and “limited seasonality of cash flow.” Unlike many retailers, who generate the bulk of their sales in November and December, the medication-heavy sales at CVS are spread through the year.

CVS moved into the South and West to capture business in fast-growing population centers that the Rhode Island company sees as key to its long-term growth.

The populations of Arizona and Nevada, for instance, may more than double from 2000 to 2030, according to U.S. Census Bureau projections.

Last week’s deal will bring Longs’ stores in California, Hawaii, Nevada and Arizona into the CVS fold. CVS moved full-bore into California, and other Western states, in 2006, when it acquired 700 stores as part of the breakup of grocery giant Albertson’s Inc. That followed the 2004 purchase of 1,260 stores in Texas, Florida and the nation’s midsection from the now-defunct Eckerd chain.

“It’s very similar to the Osco/Sav-on purchase,” Ryan said last week of the Longs purchase. “Osco/Sav-on was the dominant brand in Southern California; Longs is the leading brand in Northern California.”

Longs, like the former Osco/Sav-on chains, owns stores far larger than the ones CVS typically operates.

The CVS store prototype is about 12,500 square feet, with 70 percent of sales coming from prescriptions and 30 percent from incidental goods such as greeting cards, beauty items and food.

Longs’ stores, like Osco-Sav-on stores, are larger than 20,000 square feet, filled with a product mix heavy on food items, greeting cards and beauty products, Ryan noted. Sales at Longs are about evenly split between prescriptions and the incidental goods found in the front end of its stores.

“The consumer [in the West] uses it more as a general store,” Ryan noted.

CVS will open MinuteClinic units inside “appropriate” Longs locations, he said.

Private companies have stepped deeper into the patient-care business by opening retail medical clinics inside stores and supermarkets.

CVS joined the crowd in 2006, when it bought MinuteClinic — a chain of in-store clinics based in Minnesota.

The company currently has 500 clinics nationwide. The for-profit clinics are staffed by nurse practitioners and physician assistants trained to give customers quick and inexpensive care for common illnesses. The company said earlier this year that it planned to open 200 to 300 new clinics this year, but that is being scaled back to 100 new clinics, and the company may also close some existing clinics.

CVS expects to convert the newly acquired stores to its own look and systems by the end of next year. The exception, Ryan said, is Hawaii, where the Longs name will remain.

Investment and retailing analysts have looked favorably on CVS’ strategy for a number of years.

At the time the Osco/Sav-on purchase was announced in January 2006, Edward M. Mazze, then dean of the College of Business Administration at the University of Rhode Island, told The Journal’s Neil Downing the deal was a good one for three main reasons:

•CVS is in the right business at the right time — health care.

•The transaction will mean that CVS “truly has become a highly visible company in virtually every . . . market in the U.S.”

•The company gets to take further advantage of a business model it has successfully honed in New England — attracting not only customers interested in pharmacy purchases, but also customers who are interested in convenient purchases of a range of health and beauty products and other items.

“In other words, they’ve got their act together,” said Mazze, an authority on the retailing business who has written a number of books on the subject.

“When it’s all said and done, there will be only a handful of major retailers in the pharmacy business. . . . There will be more competition, but it will be among the giants,” including Walgreen’s and CVS, he observed.

“Sort of like the automotive industry, there will only be a handful of companies left,” he said, and CVS — our CVS — will be among them.

The transaction put CVS in a better position to pick up more customers, grow its market share, increase its revenue and ultimately boost its profitability, Mazze said.

CVS didn’t wait very long after the Osco/Sav-on deal to make another purchase — a “transformational” one that the investment community is still digesting.

The March 2007 acquisition of Tennessee-based Caremark Rx Inc., the nation’s second-largest pharmacy-benefits manager at the time, for $27-billion lifted CVS into the heavyweight class of American corporations. The merger even prompted the company to change its name — to the current CVS Caremark Corp.

PharmaCare, CVS’ own pharmacy-benefits manager was the fourth-largest in the country and it still couldn’t offer the price breaks or services needed to capture contracts with some of the country’s largest employers, Ryan said back then.

“It was a big drop-off after [numbers] one, two and three,”" he said. “It’s hard to break into the big contracts. We had scale on the pharmacy side of the business. What we needed was scale on the PBM side of the business.”

Caremark seemed in a position to prosper from some of the trends. As in other retailing sectors, the largest PBMs typically get the best prices from manufacturers.

But, Ryan said, unless the Nashville, Tenn.-based company could find thousands of new customers, the squeeze on drug pricing threatened them as well.

“The PBMs in the country were beginning to see it,” Ryan said. “There was a realization with the PBMs that that was the next step.” If growth was key, then one way to persuade major employers to sign up with your PBM was to make it convenient for people to get their medications.

Joining would help them survive and profit by offering people more than one way to buy their medications, more places to get simple medical care and combining disease-management programs with in-store produce offers, Ryan said.

“Like anything these changes evolve over time,” he said. “You have the largest integrated pharmacy-service provider in the world headquartered here,” in Woonsocket, Ryan said at the time. With its size and scope, CVS can take advantage of other trends.

The CVS pharmacy-benefits arm administers the drug coverage of millions of patients — giving it the power to grind down the price it pays drug companies and other pharmacies for the medications people buy.

About 45 percent of CVS sales now come from the pharmacy-benefits side of the business.

The Longs purchase also brings to CVS the California company’s pharmacy benefits subsidiary.

The Longs’ purchase adds to that power. Longs’ PBM — Rx America — focuses on contracts with government agencies and Medicare programs.

“It gives us much better coverage for our PBM,” Ryan said.

Conversely, the addition of 521 stores makes it more likely U.S. employers will include the Woonsocket company’s stores on their lists of accepted pharmacies.

As CVS continues its spread across the country, Americans are more likely to request CVS be a prescription drug source, if only for the convenience factor.

Customers do not like to travel more than two miles to their local drugstore, according to retail analysts, and retailers in general draw the bulk of their customers from within five miles.

CVS is the number one or number two drugstore operator in dozens of the nation’s top markets.

While CVS offers online sales of both prescriptions and other items through its Web site, Internet sales aren’t a focus, Ryan said.

“Online is a very small percentage of our business,” he said.

Prescriptions ordered online are filled at the company’s mail-order facilities, not by its stores.

The increasing use of generic drugs also plays into CVS’ hands.

For instance, Goldman Sachs analyst Randall Stanicky told the Associated Press last year that CVS and pharmacy-benefits manager rivals MedcoHealth Solutions Inc. and Express Scripts Inc. would benefit from the introduction of generic forms of the heartburn medication Protonix.

With three companies now producing the same heartburn medication, the PBMs can pit these manufacturers against one another to get lower prices on the medication, Stanicky said.

Selling generic drugs typically is more profitable than brand-name drugs for PBMs because they can negotiate better prices when several companies sell the same medication.

The continuing shift from brand name to generic drugs is worth $63 billion in sales to drug distributors and PBMs, estimated analyst Charles Boorady, of Citigroup’s brokerage arm.

Meanwhile, the brokerages are watching CVS Caremark to see whether the $27-billion merger with the Tennessee PBM becomes a template for future industry consolidations.

“If this vertical integration is successful, it could set the benchmark for additional mergers within the industry,” Boorady said.

CVS has had little trouble pulling previous purchases into its operations and Ryan doesn’t expect the newest purchase to run afoul of state or federal regulators.

“We think it’s pretty straightforward,” he said of the deal. “There is essentially no overlap with the Longs stores.”