Wednesday, May 5, 2010

CVS profits climb 4.5 percent in 1st quarter

CVS Caremark Corp., the largest U.S. provider of prescription drugs, said first-quarter profit climbed 4.5 percent as customers purchased more 90-day supplies of medicines at stores.
Net income increased to $771 million, or 55 cents a share, from $738 million, or 50 cents, a year earlier, the Woonsocket, R.I.-based company said Tuesday in a statement.

CVS sold more 90-day prescriptions through its stores after expanding a mail-only program.

That helped boost pharmacy sales at locations open at least a year by 3.7 percent.

Corporate clients that were initially skeptical are becoming more receptive
to the 90-day in-store program and seeing it as a way to save money, said Chairman and Chief Executive Officer Thomas M. Ryan.

"We continue to get a lot of uptick on that," Ryan said on a call with analysts and investors. Clients that sign employees up for the program typically have "substantial savings," as workers buy more three-month prescriptions and generic drugs, he said.

CVS lost 60 cents, or 1.6 percent, to $36.48 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have climbed 13 percent this year.

Generic sales increase

CVS said it dispensed more generic drugs, which are more profitable than brand-name medicines.

Excluding some items, first-quarter profit was 60 cents a share. CVS was projected to earn 58 cents, the average of 15 analysts' estimates compiled by Bloomberg.

Sales rose 1.6 percent to $23.8 billion. Analysts predicted $24.1 billion. Operating expenses declined 1 percent to $3.34 billion in the quarter.

The number of drug prescriptions processed by the pharmacy-benefits unit fell 9.7 percent to 147.5 million, according to the statement.

The division, which negotiates drug prices with manufacturers for corporate and government customers, lost contracts because of price and service, Ryan said in November.

Antitrust regulators are investigating some business practices at the unit.

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