CVS Caremark profit falls 20% on lower sales in pharmacy-benefits division

CVS CAREMARK CORP. said third-quarter profit fell 20 percent after lower sales in its pharmacy-benefits management division. /
CVS CAREMARK CORP. said third-quarter profit fell 20 percent after lower sales in its pharmacy-benefits management division. /

(Updated, 11 a.m.)

WOONSOCKET – CVS Caremark Corp., the largest provider of prescription drugs in the U.S., said third-quarter profit fell 20 percent thanks to lower sales in its pharmacy-benefits management division.

Net income declined to $820 million, or 59 cents a share, from $1.02 billion, or 71 cents, the company said Wednesday in a statement. Sales fell 3.1 percent to $23.9 billion.

CVS Caremark, led by Chairman and CEO Tom Ryan, cut its annual profit forecast in July as some consumers deferred medical treatment and legal expenses rose. The company lost pharmacy-benefits management, or PBM, contracts valued at $4.8 billion for 2010.

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PBMs make money by negotiating prices with retail pharmacies and drugmakers and processing a large number of claims. They pass most of those savings on to corporate, government and insurance customers.

Sales at the PBM fell 8.5 percent to $11.9 billion. They will decline as much as 9.5 percent this quarter, the company said Wednesday on a conference call.

Analysts on average had projected profit of 64 cents a share, excluding some items, according to a Bloomberg survey. They predicted sales of $23.9 billion.

Profit for the year will be as much as $2.70 per share, down from a previous estimate of $2.73, the company said.

Since the $27 billion acquisition of Caremark Rx Inc. in 2007, more than 24 states and the U.S. Federal Trade Commission have begun investigating the company over business practices.

CVS Caremark rose 63 cents to $30.53 yesterday in New York Stock Exchange composite trading. Before Wednesday the shares had declined 5.2 percent this year.

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