NEW YORK (AP) - CVS Caremark Corp., one of the nation's biggest drugstore operators, said Monday its profit rose 11 percent in the fourth quarter as results improved for its pharmacy benefits management business.
CVS shares rose $1.38, or 4.4 percent, to $32.45 in premarket trading.
The Woonsocket, R.I., company said it earned $1.05 billion, or 74 cents per share, in the last three months of 2009, up from $949 million, or 65 cents per share, a year ago. Excluding one-time costs, CVS earned 79 cents per share - a penny ahead of Wall Street estimates.
Revenue grew 7 percent to $25.82 billion from $24.14 billion.
According to a Thomson Reuters survey, analysts were expecting a lower profit of 78 cents per share and higher revenue of $26.22 billion. They typically exclude one-time items from earnings estimates.
At the Caremark pharmacy benefits management unit, which handles drug benefits for health plan sponsors and members, revenue grew 14.5 percent to $13.49 billion. Some of those gains came from RxAmerica, formerly the PBM unit of Longs Drugs Stores. CVS acquired Longs and RxAmerica during the fourth quarter of 2008.
CVS' initial report did not include an update on how Caremark is doing at securing new contracts. In November, the company said Caremark had lost $4.8 billion in contracts for 2010, including about $2 billion over the previous three months. A management shake-up followed, with Per Lofberg of Generation Health becoming the president of the PBM in January.
Caremark processed 151.4 million claims during the quarter, a drop of 6 percent from a year earlier. It filled 16.7 million claims by mail, up 4 percent.
Revenue from CVS drugstores rose 4.5 percent, to $14.46 billion. Sales at stores open at least a year grew 4.9 percent. Results from those stores are considered an important reading of retailer health. At those stores, CVS said pharmacy revenue rose 7.3 percent. But sales of discretionary "front-end" items edged up only 0.3 percent.
Some revenue is counted for both businesses when they are broken down individually.
During the fourth quarter, the company opened 23 retail pharmacies, relocated eight, and closed six. It also closed two specialty pharmacies, leaving it with 49. CVS now has a total of 7,025 drugstores. That is about 100 fewer stores than rival Walgreen Co. had at the end of January.
For the year, CVS said its profit grew 16 percent to $3.7 billion, or $2.55 per share, from $3.2 billion, or $2.18 per share. Revenue rose 13 percent to $98.73 billion from $87.47 billion.
For CVS, the fourth quarter of 2009 was three days shorter than the fourth quarter of 2008. That's because the company changed the end of its fiscal year to Dec. 31. Its fiscal year used to end on the Saturday closest to Dec. 31.
The company said it expects an adjusted profit of $2.74 to $2.84 per share for 2010, and said revenue will be flat to up as much as 2 percent - or as much as $100.7 billion. Analysts expect $2.78 per share and $100.5 billion.
That includes an adjusted profit of 57 cents to 59 cents per share in the first quarter. Analysts were expecting 62 cents per share.
Date: February 8, 2010
Source: Associated Press
