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CVS Caremark points to Rx business for strong 4Q
February 8th, 2010
WOONSOCKET, R.I. – Robust pharmacy business drove strong revenue and profit gains in the fiscal 2009 fourth quarter for CVS Caremark Corp.
The drug store chain and pharmacy benefit manager said Monday that overall revenue for the quarter ended Dec. 31 rose 7% to $25.8 billion from $24.1 billion a year earlier. Retail pharmacy sales climbed 4.5% to $14.5 billion, while PBM revenue jumped 14.5% to $13.5 billion.
Same-store sales in the fiscal 2009 fourth quarter increased 4.9%, reflecting a 7.3% gain in the pharmacy and a 0.3% uptick in the front end. CVS Caremark noted that pharmacy same-store results were negatively impacted by about 290 basis points because of recent generic drug introductions but got a lift of approximately 270 basis points from its Maintenance Choice program, which lets customers choose to pick up of prescriptions at a CVS store or have them delivered via mail order.
The company also said the retail pharmacy revenue growth rate is lower than that of same-store sales due to three fewer reporting days in the 2009 fourth quarter versus a year ago.
On the earnings side, CVS Caremark saw double-digit gains in the quarter. Net income came in at nearly $1.05 billion, or 74 cents per diluted share, up about 10.1% from $953 million, or 65 cents per diluted share, a year earlier.
Income from continuing operations for the 2009 fourth quarter rose 10.2% to $1.1 billion from $1 billion in the prior-year period. Adjusted earnings per share from continuing operations, which excludes $108 million of intangible asset amortization related to acquisition activity, came in at 79 cents (including 1 cent per diluted share from an income tax benefit) in the 2009 quarter, compared with 70 cents a year ago.
Financial analysts had forecast CVS Caremark's earnings at 78 cents per share, on average, for the 2009 fourth quarter, with a high estimate of 81 cents and a low estimate of 72 cents.
For the 2009 fiscal year, overall revenue surged 12.9% to $98.7 billion, compared to $87.5 billion in 2008. Retail pharmacy sales increased 13% to $55.4 billion, and PBM revenue gained 16.7% to $51.1 billion for the year ended Dec. 31.
Fiscal 2009 net earnings totaled almost $3.7 billion, or $2.55 per diluted share, up about 15.1% from more than $3.2 billion, or $2.18 per diluted share, a year earlier. During the fiscal 2009, the company recorded about $167 million, or 12 cents per diluted share, of previously unrecognized tax benefits.
Income from continuing operations for fiscal 2009 swelled 10.9% to $3.7 billion, compared with $3.3 billion in 2008. Adjusted earnings per share from continuing operations, which excludes $430 million of intangible asset amortization related to acquisition activity, for 2009 were $2.74 (including the income tax benefit) versus $2.44 in 2008.
"We made good progress in 2009 in solidifying our position as the largest pharmacy health care provider in the nation with the broadest capabilities," CVS Caremark chairman and chief executive officer Tom Ryan said in a statement.
"We continued to make investments and forge strategic alliances that will enable us to capitalize on the evolving health care landscape and further differentiate our offerings in the marketplace. At the same time, we delivered financial performance ahead of our initial plan for the year, including the solid quarter we announced today," Ryan noted. "I'm very pleased to report continued industry-leading performance in our retail pharmacy business and solid performance in our PBM, which resulted in double-digit EPS growth and significant free cash flow generation."
During the 2009 fourth quarter, CVS Caremark opened 23 new retail stores and relocated eight stores. The company also shut six retail pharmacy stores and two specialty pharmacies. As of Dec. 31, it operated 7,025 retail pharmacy stores and 49 specialty pharmacy stores.