CVS Caremark profit up; raises and narrows 2012 view

Tue Nov 6, 2012 7:40am EST

(Reuters) - CVS Caremark Corp (CVS.N) posted a higher third-quarter profit and raised its expectations for the year on Tuesday, as sales grew at its drugstore chain and it brought in new pharmacy benefit clients.

CVS, which operates the No. 2 U.S. drugstore chain and a major pharmacy benefits management business, has been working on keeping customers who switched to its stores during an impasse between main drugstore rival Walgreen Co (WAG.N) and pharmacy benefits manager competitor Express Scripts Holding Co (ESRX.O).

CVS earned $1.01 billion, or 79 cents per share in the third quarter, up from $868 million, or 65 cents per share, a year earlier.

On an adjusted basis, which excludes intangible asset amortization related to acquisitions, CVS earned 85 cents per share. That topped analysts' expectations of 84 cents per share, according to Thomson Reuters I/B/E/S, and was ahead of the company's forecast of 81 cents to 83 cents per share.

Revenue rose 13.3 percent to $30.23 billion, ahead of analysts' average forecast of $30.09 billion.

Revenue in the pharmacy services business jumped 22.2 percent to $18.1 billion, led by the addition of new clients, higher drug costs and the growth of its Medicare Part D program.

Revenue at the CVS drugstore chain rose 5.5 percent to $15.5 billion. Sales at stores open a least a year rose 4.3 percent, topping the company's August forecast of a 2.5 percent to 3.5 percent increase in same-store sales.

During the quarter, CVS's same-store sales at the pharmacy counter rose 5.3 percent, helped by Walgreen not being part of the Express Scripts pharmacy network for the bulk of the quarter. Walgreen did not fill Express Scripts prescriptions from the beginning of the year until mid-September.

CVS has increased its marketing to hold onto new customers who started shopping its stores during the earlier part of 2012.

CVS now expects to post adjusted earnings per share of $3.38 to $3.41 this year, versus its prior forecast of $3.32 to $3.38. Analysts' 2012 forecast is $3.37 per share.

(Reporting by Jessica Wohl in Chicago; Editing by Gerald E. McCormick and Maureen Bavdek)