"The outstanding service that customers received, the ExtraCare card, the strong (store brand) offering, combined with the convenient locations" could drive the 60 percent retention forecast even higher, Citigroup analyst Deborah Weinswig wrote to investors.
Optimism about that let the company to raise its 2012 profit forecast. It now expects adjusted earnings of $3.38 to $3.41, up from its previous forecast of $3.32 to $3.38 per share, and net earnings per share of $3.15 to $3.18.
Merlo noted that more then 1,100 CVS stores were closed at the peak of Superstorm Sandy, but all but 20 have reopened. Those lost sales could reduce fourth-quarter earnings per share by a penny.
CVS Caremark runs the second-largest chain of drugstores in the U.S., after Walgreen's, with 7,423 pharmacies, including more than 40 new stores opened during the quarter. The company also operates about 600 MinuteClinic locations and six mail-order pharmacies, plus a dozen mail-order pharmacies and 31 retail pharmacies devoted to specialty drugs. Those are very expensive, usually injected drugs for complex chronic health conditions — a category that is driving overall spending on medications.
Revenue from the specialty pharmacy segment jumped 34 percent.
Merlo said CVS saw significant jumps in the number of PBM clients requiring their members to get maintenance drugs via mail order, which saves those payers money, and more people enrolled in CVS "pharmacy adviser" plans that help patients with diabetes and heart disease stick to their medication schedules and avoid expensive complications. Those programs are to be expanded to more diseases next year.
Shares rose 25 cents to close at $46.88 Tuesday.
Linda A. Johnson can be followed at http://twitter.com/LindaJ_onPharma