CVS Caremark Corp.'s (CVS) second-quarter profit rose 15% amid
revenue gains at its pharmacy-benefits business, prompting the
drugstore chain to raise its 2009 earnings outlook.
It now expects $2.59 to $2.64 a share. In May, an uptick in its
PBM business prompted CVS to raise its target slightly to $2.55 to
$2.63. The upbeat results provided more evidence that the drugstore
chain's $27 billion purchase of pharmacy-benefits manager Caremark
in 2007 may be paying off, until recently a big investor
concern.
CVS' retail sales are being helped by its Maintenance Choice
program, which allows PBM customers to pick up 90-day prescriptions
at a CVS instead of receiving them through the mail, for the same
price. Many PBMs require patients to receive long-term
prescriptions through the mail, a method that is more profitable
than filling the prescription in-store.
The company's same-store sales jumped 6.1% in the quarter, much
stronger than the rest of the industry, with growth of 7.5% at the
pharmacy.
Maintenance Choice also helped the pharmacy-services segment,
whose revenue jumped 22% as processed claims rose 8.8%.
CVS's second-quarter profit increased to $886.5 million, or 60
cents a share, from $774.8 million, or 53 cents a share, a year
earlier. Excluding acquisition-related costs, earnings rose to 65
cents a share from 60 cents.
Revenue rose 18% to $24.9 billion, in part on the acquisition of
Longs.
Analysts polled by Thomson Reuters were expecting earnings,
excluding items, of 64 cents a share on revenue of $24.41
billion.
Gross margin fell to 20.3% from 20.7%.
Shares closed Monday at $34 and were inactive premarket. The
stock is up 18% this year.
-By Mike Barris, Dow Jones Newswires; 212-416-2330;
mike.barris@dowjones.com;