Pharmacy sales boost CVS 3Q profit 7 percent

WOONSOCKET, R.I. -- Drugstore operator and pharmacy benefits manager CVS Caremark Corp. said Thursday its profit grew 7 percent in the third quarter as retail pharmacy revenue improved.

CVS said it earned $732.5 million, or 50 cents per share, up from $686.1 million, or 45 cents per share a year ago. It says revenue grew 2 percent, to $20.86 billion from $20.5 billion, with retail pharmacy revenue up 5 percent to $11.54 billion.

CVS reported a profit of 60 cents per share excluding one-time items, such as amortization costs. Analysts expected 60 cents per share and greater revenue of $21.06 billion, according to Thomson Reuters.

Better pharmacy sales and front-end revenue lifted CVS's retail pharmacy profit, and CVS said sales at older stores grew 3.7 percent. Front-store revenue grew 5.7 percent, pharmacy revenue grew 5.1 percent. Growth was significantly slower than a year ago, however.

Pharmacy services revenue fell about 1 percent to $10.56 billion. CVS lost a mail services contract with the Federal Employees Health Benefit Plan at the end of 2007, and as a result, mail service revenue fell 13 percent to $3.62 billion. That canceled out an increase in revenue from the retail network business.

CVS's generic drug dispensing rate increased to 68 percent from 63.7 percent a year ago.

The company also expects to close its $2.7 billion buyout of California-based Longs Drugs Stores Corp. Thursday.