WOONSOCKET – CVS Caremark Corp. (NYSE: CVS) today posted a record profit of $774.8 million for the quarter ended June 28. That represented an increase of 5.20 percent from the year-ago $723.6 million. Earnings per fully diluted share rose to 53 cents from the 2007 second quarter’s 43 cents.
Second-quarter net revenue amounted to $21.14 billion, a 2.11-percent increase from the year-ago $20.70 billion. (READ MORE)
Results for the quarter just ended included a loss from discontinued operations of $48.7 million, or 3 cents per share, related to store leases it continues to guarantee for former subsidiary Linens ’n Things, which filed for Chapter 11 protection on May 2, CVS said. The company also recorded $600,000 in second-quarter expenses related to the March 2007 CVS Corp.-Caremark Rx Inc. merger, compared with the year-ago period’s $6.2 million expense.
“This was another quarter of strong financial performance across our businesses,” said Thomas M. Ryan, CVS Caremark’s chairman, president and CEO. “We delivered solid improvement in sales and gross margins and continued to exercise disciplined expense control. That enabled us to hit a record operating profit margin this quarter. At the same time, we’ve further advanced our new [pharmacy-benefit management] PBM / retail model and our clients have expressed growing enthusiasm for our unique new product offerings.”
The pharmacy services segment’s operating profit rose 5.52 percent to $614.0 million, or 5.76 percent of net revenue – from the year-ago period’s $582.0 million, or 5.51 percent – on revenue that rose 0.97 percent to $10.66 billion. Retail-network claims rose 2.7 percent to 136.3 million claims processed, “driven primarily by increased enrollment in the Medicare Part D business,” CVS said, but mail-service claims fell 18.9 percent to 15.0 million processed “due to the [Dec. 31] termination of the Federal Employees Health Benefit Plan mail contract.”
The retail segment’s operating profit rose 18.71 percent to $864.0 million, or 7.34 percent of net revenue – from the year-ago period’s $727.8 million, or 6.47 percent – on revenue that rose 4.63 percent to $11.77 billion as same-store sales “were negatively impacted by an earlier Easter, which shifted more holiday sales into March,” the company said.
Sales at CVS/pharmacy stores open at least one year rose 3.1 percent compared with the 2007 first quarter. Pharmacy same-store sales rose 3.7 percent year-over-year, despite recent generic drug introductions that pared results by about 280 basis points, CVS said. Front-end same-store sales rose 1.8 percent, losing about 110 basis points because of the early holiday that helped boost results in the first quarter. (READ MORE)
(The company noted that the year-ago period was the first to include same-store revenue from the Albertsons Inc. distribution center and roughly 700 stores acquired by CVS in June 2006.)
During the 13 weeks ended June 28, CVS Caremark opened 49 new retail pharmacies; relocated 39 and closed eight. That left the company with 6,308 regular pharmacies, 56 specialty pharmacy stores, 19 specialty mail-order pharmacies and seven regular mail-order pharmacies – in 44 states and the District of Columbia – at the quarter’s end.
This month, CVS Caremark has announced plans to merge its electronic prescription management system with those of Medco Health Systems, Express Scripts and the four-store SureScripts network (READ MORE) and it has added health-management tools to its consumer Web site, CVS.com. (READ MORE) And on July 17, the company announced plans to expand its headquarters in the Highland Corporate Park, building two 150,000-square-foot office buildings in the Cumberland portion of the campus, and adding more than 200 jobs over the next few years. (READ MORE)
Earlier this month, a 15-percent increase in CVS Caremark’s regular quarterly dividend – to 6.9 cents per common share from the first quarter’s 6 cents per common share – was declared by the company’s board of directors. The increase brings the annual rate to 27.6 cents per share from the previous 24 cents.
The new dividend is payable tomorrow, Aug. 1, to shareholders of record on July 21. “The board’s decision … marks the fifth consecutive year of dividend increases for our company,” Dave Rickard, executive vice president, chief financial officer and chief administrative officer, said in announcing the July 9 decision. The increase “reflects our continued strong financial performance and significant cash generation capabilities, as well as our ongoing goal of enhancing total returns for our shareholders.”
CVS Caremark Corp. (NYSE: CVS) – the nation’s largest provider of prescription medications – operates the CVS/pharmacy stores; the CVS.com online pharmacy; Caremark Pharmacy Services; and the MinuteClinic retail-based health care subsidiary. Additional information is available at investor.cvs.com.
