UFCW 324 Communications / News
CVS/Caremark First-Quarter Profit Jumps 24 Percent
May 8, 2007 · Reuters
CVS/Caremark Corp. the drugstore and pharmacy benefits company, posted a 24 percent rise in first-quarter profit on Tuesday, aided by new stores and strong sales of prescription medications.
The results also include 10 days of operations at Caremark, the pharmacy benefits manager that CVS acquired on March 22.
First-quarter profit was $408.9 million, or 43 cents per share, compared with $329.6 million, or 39 cents per share, a year earlier.
Excluding items related to the acquisition, CVS earned 46 cents per share, in line with Wall Street expectations.
CVS, based in Woonsocket, Rhode Island, said revenue jumped 32.1 percent to $13.18 billion. As previously reported, sales at stores open more than one year rose 7.5 percent.
The increased use of generic drugs and a focus on general merchandise drove higher margins, President and Chief Executive Tom Ryan said in a statement.
While generic medicines are cheaper, they are more profitable for pharmacies since the prices of branded drugs are tightly controlled by the major drug companies that make them.
Ryan called Caremark's full first-quarter results "extremely solid." Caremark's generic dispensing rate -- the percentage of processed prescriptions filled with generics -- increased 4.5 percentage points to a record 58.2 percent. Mail and retail revenue both increased.
CVS has been opening new stores, adding in-store clinics to some locations and beefing up its operations with two large acquisitions in the past year. It bought the Osco and Sav-on chains from Albertsons last year and bought Caremark in March.
As of March 31, CVS had 6,208 stores and 52 specialty pharmacies.