CVS Caremark profit tops view, sales fall short

CVS Caremark Corp posted a bigger-than-expected rise in quarterly profit on Monday as it began to attract more business to its pharmacy benefits management unit.

While total sales missed analysts' projections, sales at drugstores open at least a year far outpaced recent results at larger US drugstore chain Walgreen Co.

Shares of CVS rose 2.7 per cent to $31.91 in premarket trading.

Fourth-quarter profit rose to $1.05bn, or 74 cents per share, from $949 million, or 65 cents per share.

Adjusted earnings per share rose to 79 cents from 70 cents, topping analysts' average forecast of 78 cents, according to Thomson Reuters I/B/E/S.

Revenue climbed 7 per cent to $25.8bn, but fell short of analysts' expectations of $26.22bn.

Retail pharmacy sales rose 4.5 per cent to $14.5bn, while sales at drugstores open at least a year rose 4.9 percent.

Pharmacy services revenue jumped 14.5 per cent to $13.5bn. The PBM business, which grew when CVS acquired Caremark Rx Inc in March 2007, administers prescription drug benefits for employers and health plans and operates a large mail-order pharmacy.

Its growth came a quarter after CVS said the PBM had lost about $4.8bn in contracts heading into 2010, leading to the departure of the unit's president. In December, CVS won an extension on its contract with a Texas pension fund worth about $1bn. It also named Per Lofberg as the new president of the PBM in December.

CVS said it processed 5.6 per cent fewer pharmacy network claims in the latest fourth quarter, as it lost two big clients and had three fewer reporting days in the quarter. The addition of new clients helped offset those declines.

Back at the drugstores, pharmacy same-store sales rose 7.3 per cent, while same-store sales of general merchandise rose just 0.3 per cent.

Last week, Walgreen posted its second consecutive monthly drop in same-store sales, as January same-store sales fell 1.1 per cent.

CVS did not give an update regarding the US Federal Trade Commission's investigation into some of its business practices, which followed its 2007 acquisition of Caremark.