CVS Caremark profit falls on costs, charges
NEW YORK -- CVS Caremark Corp. said Tuesday that charges and higher costs outweighed a a boost in the drugstore operator's pharmacy sales, pushing first-quarter profit down slightly.
CVS said revenue from both prescriptions and discretionary items increased. That was a break with competitor Walgreen Co., which reported weaker sales of nonessential items in its most recent quarter as consumers cut back amid the recession.
It added that those sales remained strong in April.
The company said its Maintenance Choice program, which health plan members to pick up 90-day orders at drugstores while paying lower mail-order prices, has "really taken off." That led to greater sales at drugstores.
The drugstore operator and pharmacy benefits manager earned $738.4 million, or 50 cents per share, down from profit of $745 million, or 51 cents per share, a year prior. Revenue rose 10 percent to $23.39 billion from $21.33 billion.
Excluding buyout costs, the company says it earned 55 cents per share. Wall Street expected 54 cents per share on revenue of $23.64 billion.
The company raised its profit forecast for the year by 2 cents, to a range of $2.55 to $2.63 per share excluding one-time costs. CVS said it expects better same-store sales and pharmacy benefits management revenue.
Woonsocket, R.I.-based CVS said sales from pharmacy services and retail pharmacies rose despite one less reporting day during the quarter. Revenue was also helped by the acquisition of 529 Longs Drugs stores. CVS said those stores added about $1.2 billion in revenue, and the integration of the Longs stores into CVS' business has been going well.
CVS saw pharmacy benefit network revenue rose 6.8 percent, while mail order service revenue rose 8.4 percent. CVS acquired the pharmacy benefits management business RxAmerica when it bought Longs.
Pharmacy services revenue rose 7.2 percent to $11.5 billion during the quarter, while retail network claims processed rose 4.4 percent, primarily because of the addition of RxAmerica.
The retail segment gained 13.9 percent to reach $13.5 billion in revenue, with same-store sales rising 3.3 percent.
During the quarter, CVS opened 39 new retail stores while closing 50, five specialty pharmacies and one mail order facility. Also, it moved 53 retail stores. As of March 31, CVS operated 6,912 stores, 52 specialty pharmacy stores, 20 specialty mail order pharmacies and 6 mail order pharmacies in 43 states, the District of Columbia and Puerto Rico.
In morning trading, CVS shares rose 45 cents to $32.48.
The company has some corporate offices in Northbrook.