CVS Caremark 1Q profit jumps 9 percent

[May 02, 2012]  CHANDLER, Ariz. (AP) -- CVS Caremark Corp.'s first-quarter earnings climbed 9 percent as the drugstore operator and pharmacy benefits manager gained customers from an acquisition and a competitor's contract dispute. The company also raised its 2012 profit forecast.

The Woonsocket, R.I., company said Wednesday it earned $776 million, or 59 cents per share, in the three months that ended March 31. That compares with $713 million, or 52 cents per share, in last year's quarter. Revenue rose 20 percent to $30.8 billion.

Adjusted earnings were 65 cents per share in a performance that topped Wall Street expectations. Analysts surveyed by FactSet expected, on average, earnings of 62 cents per share on $30.3 billion in revenue for the first quarter.

Company shares climbed 3 percent, or $1.39, to $46.10 Wednesday in pre-market trading.

CVS Caremark runs a pharmacy benefits management business and is the second-largest chain of drugstores in the United States, after Walgreen Co. CVS operated 7,352 retail drugstores at the end of March.

The company said it saw a "significant benefit" in the quarter because Walgreen ended a contract to fill prescriptions with another pharmacy benefits manager, Express Scripts Inc. That prompted Walgreen customers to migrate to CVS stores.

CVS said revenue at stores open at least a year climbed more than 8 percent, and pharmacy sales growth surpassed 9 percent, even though a weak flu season hurt business. Revenue at stores open at least a year is a key indicator of a retailer's health because it excludes the impact of recently opened or closed stores.

Revenue from the company's Caremark pharmacy benefits management, or PBM, segment climbed 32 percent to $18.3 billion, mainly because of business gained from the acquisition of Universal American Corp.'s Medicare prescription drug business.

PBMs run prescription drug plans for employers and other customers. They use large purchasing power to negotiate lower drug prices. They make money by reducing costs for health plan sponsors and members.

CVS Caremark now expects 2012 adjusted earnings to range between $3.23 and $3.33 per share. That's up from a previous forecast of $3.18 to $3.28 per share.

Analysts had expected, on average, $3.29 per share.

[Associated Press; By TOM MURPHY]

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