CVS raises forecast due to rivals' rift

(Reuters) - CVS Caremark Corp expects its full-year profit to be slightly better than expected as it wins over former patrons of Walgreen Co who fill prescriptions with pharmacy benefits manager Express Scripts Inc .

CVS, which operates the CVS drugstore chain and the CVS Caremark pharmacy benefits management business, also posted a fourth-quarter profit in line with analysts' expectations, helped by better-than-expected revenue.

CVS is among the retailers benefitting as patients who still fill their prescriptions in the Express Scripts network go elsewhere after Walgreen stopped filling such prescriptions at the beginning of the year.

Pharmacy benefit managers, or PBMs, such as Express Scripts and CVS Caremark administer drug benefits for employers and health plans and they also run mail-order pharmacies. CVS can add the ability to pick up prescriptions at its namesake drugstores.

CVS expects to post 2012 adjusted earnings of $3.18 to $3.28 per share, raising the low and high end of its December forecast by 3 cents.

The higher forecast only reflects the expected benefit the company foresees in the current first quarter. In December, CVS Chief Financial Officer Dave Denton said the rift could add 8 cents to 11 cents per share to the company's 2012 profit.

For the first quarter, CVS expects adjusted earnings per share from continuing operations of 61 cents to 63 cents, up from a prior forecast of 58 cents to 60 cents. Analysts were looking for 61 cents.

PROFIT IN LINE WITH EXPECTATIONS

Fourth-quarter net income attributable to the company rose to $1.06 billion, or 81 cents per share, from $1.02 billion, or 75 cents per share, a year earlier.

Adjusting for acquisitions, earnings per share from continuing operations attributable to the company climbed to 89 cents from 79 cents a year earlier. Analysts, on average, expected a profit of 89 cents per share, according to Thomson Reuters I/B/E/S.

Revenue rose 15.2 percent to $28.32 billion, while analysts anticipated $28.12 billion.

Revenue in the pharmacy services business soared more than 32 percent to $15.87 billion, due largely to the addition of a big Aetna Inc contract and the acquisition of Universal American Corp's Medicare prescription drug business, two deals that were previously announced.

Revenue in the drugstore unit, which operates more than 7,300 U.S. stores, rose 4 percent to $15.5 billion. Sales at stores open a least a year, or same-store sales, rose 2.5 percent.

Shares of CVS closed at $43.08 on Tuesday. The company said its forecasts assume it buys $3 billion worth of its shares, the amount remaining in a share repurchase program authorized in 2011.

(Reporting by Jessica Wohl in Chicago; Editing by Derek Caney)

WhatsAppFacebookTwitterLinkedinBeloudBluesky