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Strong 2Q pharmacy business boosts CVS Caremark
August 4th, 2009
CVS Caremark CEO Tom Ryan
WOONSOCKET, R.I. – Lifted by surging pharmacy revenue, CVS Caremark Corp. saw a jump in sales and profit for the second quarter and raised its earnings projection for fiscal 2009.
For the quarter ended June 30, overall sales climbed 17.6% to $24.9 billion, compared with $21.1 billion a year ago. Pharmacy services revenue swelled 22.1% to $13 billion, while retail pharmacy sales rose 17.2% to $13.8 billion, the company said Tuesday.
Same-store sales for the drug store chain, meanwhile, gained 6.1% year over year. Same-store revenue increased 7.5% in the pharmacy and 3% in the front end.
The company noted that pharmacy same-store results were negatively impacted by 478 basis points because of recent generic drug introductions and that front-end same-store business was positively impacted by a later Easter, providing a lift of about 135 basis points, and by product cost increases in advance of a hike in the federal cigarette excise tax, giving a boost of roughly 85 basis points.
On the earnings side, CVS Caremark posted a second-quarter profit of $886.5 million, or 61 cents per share, up from $774.8 million, or 54 cents per share, a year earlier.
Earnings from continuing operations in the second quarter rose to $889.1 million from $823.5 million in the prior-year period. Adjusted earnings from continuing operations, which excludes $107.3 million of intangible asset amortization related to acquisition activity, came in at 65 cents per share, compared with 60 cents per share a year ago.
Analysts had forecast CVS Caremark's earnings at 64 cents per share, on average, for the second quarter, according to Thomson Financial.
CVS Caremark chairman and chief executive officer Tom Ryan commented that the company's second-quarter results "were at the high end of our expectations."
"This is shaping up to be a very good year, and we expect an even better 2010," Ryan said in a statement.
The strong performance led CVS Caremark to raise its earnings guidance for the year. According to chief financial officer Dave Rickard, the company now forecasts adjusted EPS from continuing operations of $2.59 to $2.64 for 2009, up from its earlier projection of $2.55 to $2.63.