CVS Caremark 4Q profit jumps more than 12 pct

By Tom Murphy

Associated Press

Published: Tuesday, Feb. 11 2014 9:42 a.m. MST

In this June 20, 2011 photo, the logo for a CVS store is displayed in Philadelphia. CVS Caremark's fourth-quarter earnings climbed more than 12 percent, as improved sales from established locations helped the drugstore operator and pharmacy benefits manager offset fewer customer visits.

Matt Rourke, Associated Press

Enlarge photo»

CVS Caremark's fourth-quarter earnings climbed more than 12 percent, as improved sales from established locations helped the drugstore operator and pharmacy benefits manager offset fewer customer visits.

The Woonsocket, R.I., company said Tuesday that pharmacy revenue from established drugstores climbed 6.8 percent in the quarter that ended Dec. 31. That countered a drop of nearly 2 percent from the front end, or the rest of the store.

Revenue from stores open at least a year is considered a key indicator of a drugstore chain's financial health. It eliminates the impact of stores that have recently opened or closed.

CVS Caremark runs the nation's second-largest drugstore chain with more than 7,600 locations. It said revenue from that segment climbed more than 5 percent to $17.2 billion in the quarter.

The company draws most of its revenue from its Caremark unit, which is one of the nation's largest pharmacy benefits managers, or PBMs. That business runs prescription drug plans for employers, insurers and other customers, and its revenue rose 5.2 percent to $19.6 billion in the quarter.

Overall, CVS Caremark earned $1.27 billion, or $1.05 per share, in the fourth quarter. That compares with earnings of $1.13 billion, or 90 cents per share, in the final quarter of 2012. Revenue rose nearly 5 percent to $32.83 billion.

Adjusted earnings totaled $1.12 per share.

The performance topped the average analyst forecast for earnings of $1.11 per share on about $32.67 billion in revenue, according to FactSet.

CVS Caremark gained national attention last week after it announced that it would phase out sales of tobacco products at its more than 7,600 stores. The company said then that the move will cost about $2 billion in annual revenue and will affect its earnings by between 6 cents and 9 cents per share.

But it also said the move won't affect its 2014 earnings forecast for adjusted earnings of $4.36 to $4.50 per share, which the company reaffirmed Tuesday.

Analysts forecast, on average, earnings of $4.46 per share.

CVS Caremark shares rose 2.3 percent, or $1.51, to $68.44 in morning trading Tuesday. The company's shares are up more than 33 percent since a year ago. It set an all-time high of $71.99 ion Dec. 27.

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