CVS Caremark's 4Q profit rises 6 percent
CVS Caremark's fourth-quarter earnings climbed 6 percent, as new customers and Medicare prescription drug plans helped its pharmacy benefits management business, and revenue from the chain's established drugstores grew.
The Woonsocket, R.I., company said Wednesday it earned $1.13 billion, or 90 cents per share, in the three months that ended Dec. 31. That compares with earnings of $1.06 billion, or 81 cents per share, in the same period in 2011.
Adjusted earnings totaled $1.14 per share, while revenue climbed nearly 11 percent to $31.39 billion.
Analysts expected, on average, earnings of $1.10 per share on $31.14 billion in revenue, according to FactSet.
CVS Caremark Corp. runs the second-largest chain of drugstores in the United States, after Walgreen Co., and also is one of the nation's largest pharmacy benefits managers.
Revenue grew more than 17 percent from its pharmacy benefits management side, as the number of pharmacy network claims processed in the quarter rose 6.5 percent to 205.5 million.
Pharmacy benefits managers, or PBMs, run prescription drug plans for employers, insurers and other customers. They process mail-order prescriptions and handle bills for prescriptions filled at retail pharmacies. They use large purchasing power to negotiate lower drug prices and make money by reducing costs for health plan sponsors and members.
CVS also runs 7,458 drugstores in the U.S. Revenue from drugstores open at least a year grew 4 percent despite taking a hit from a wave of generic drug introductions. Generic equivalents to drugs like the blockbuster cholesterol fighter Lipitor have hurt revenue for pharmacies over the past year because they cost less than brand-name products. But they help profitability because they provide a wider margin between the cost for the pharmacy to purchase the drugs and the reimbursement the pharmacy receives.
The company also said Wednesday it now expects 2013 adjusted earnings of $3.86 to $4 per share, a two-cent increase from its previous forecast. That's because of lower interest payments on refinanced debt, not the company's operations, said Credit Suisse analyst Edward Kelly, and the outlook is still in line with analysts' prediction of $3.92 per share, on average.
CVS shares added 78 cents, or 1.5 percent, to $52.50 before markets opened Wednesday. The stock has gained 19.5 percent in the past 12 months.