CVS Caremark Corp. said Tuesday that its third-quarter earnings climbed 16 percent. The drugstore operator and pharmacy benefits manager posted revenue increases in both businesses, benefiting from new customers won from rivals, and raised its full-year earnings outlook.
The Woonsocket, R.I., company said it earned $1.01 billion, or 79 cents per share, in the three months that ended Sept. 30. That compares with earnings of $868 million, or 65 cents per share, in last year's quarter. Adjusted earnings were 85 cents per share, 2 cents better than analysts expected. That excluded $121 million for the gradual writedown of acquisition-related assets.
Revenue jumped 13 percent to $30.2 billion, above the $30.09 billion analysts expected.
CVS said revenue from pharmacy services climbed 22 percent to $18.1 billion, mainly because of new client starts, growth of its Medicare Part D prescription program and higher medication prices. The segment processed about 255 million prescription claims in the quarter, up 11 percent.
Revenue from drugstores rose 5.5 percent to $15.5 billion, as revenue at stores open at least a year rose 4.3 percent from a year earlier. They filled about 210 million prescriptions in the quarter, up 12 percent, when counting 90-day prescriptions as three monthly prescriptions.
The retail and pharmacy services segments have some overlapping revenue, so their total exceeds company revenue by a few billion dollars.
CVS Caremark got a significant bump from millions of Walgreen Co. customers who migrated to CVS stores during a nearly nine-month split between Walgreen and Express Scripts Holding Co., which runs drug plans for employers, insurers and other customers as a pharmacy benefits manager, or PBM. Walgreen fills prescriptions for Express Scripts, but the two let their contract expire at the end of 2011. They resumed doing business Sept. 15.
The new customers added about 3.5 cents per share to third-quarter results and should add another 2.5 cents in the fourth quarter.
Besides the many new clients and higher drug prices, CEO Larry Merlo cited improved operating profits due to productivity measures, more flu-related prescriptions, an uptick in patient visits to doctors and more patients taking their maintenance medication as scheduled — because new generic versions of several widely used drugs has made them more affordable. Several blockbusters taken daily by millions have gotten U.S. generic rivals since last Nov. 30, including cholesterol fighter Lipitor, blood thinner Plavix, Singulair for asthma and allergies and blood pressure treatment Diovan.