RSS Feed
TwitterCVS Caremark Corp., one of US’ biggest drugstore operators, and the largest distributor of prescription drugs in the country today announced it fourth quarter results. Much to the surprise of Wall Street analysts, it posted an 11 percent hike in profit, as shares gained 2.7% in early morning trading. Net income rose to $1.05 billion, or 74 cents a share, from $949 million, or 65 cents, a year earlier. Sales gained 7 percent to $25.8 billion said the official statement. Wall Street analysts expected the pharmacy giant to earn 77 cents a share on revenue of $26.3 billion.
The company believes this to be a direct consequence of increase in the sales of 90 day supplies of medicines at retail stores. These were earlier only available by mail. Revenue from CVS drugstores rose 4.5 percent, to $14.46 billion. Sales at stores open at least a year grew 4.9 percent. Results from those stores are considered an important reading of retailer health. At those stores, CVS said pharmacy revenue rose 7.3 percent.
CVS Caremark posted impressive results for Q4
CVS also is changing the way it markets its pharmacy-benefits management business to customers after losing contracts for 2010. The PMS business handles drug benefits for health plan sponsors and members. Pharmacy benefit sales rose 14.5 percent to $13.5 billion. The number of claims processed at its pharmacy benefit services segment declined 5.6 percent (The company lost two large customers in January 2009). Some of those gains came from RxAmerica, formerly the PBM unit of Longs Drugs Stores. CVS acquired Longs and RxAmerica during the fourth quarter of 2008.Sales at stores open at least a year rose 4.9 percent in part from 90-day prescriptions. 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.
In November, the company had lost $4.8 billion in contracts for 2010, including about $2 billion over the previous three months. A management shake-up followed, with Per Lofberg of Generation Health becoming the president of the PBM in January.
CVS’ initial report did not include an update on how Caremark is doing at securing new contracts.
It is also interesting to note that along with a management shake-up, there was also a juggling of retail stores and outlets. During the period, the company opened 23 pharmacies, relocated eight, and closed six. CVS now has a grand total of 7025 drugstores to its name, which is effectively around 100 fewer stores than its next nearest rival, Walgreen Co (as of January end). A few days back, Walgreen had also posted a second consecutive monthly drop in same-store sales, as the January same-store sales fell 1.1 percent.
Since the company changed the end of the fiscal year from the Saturday closest to December 31, to December 31 itself, its fourth quarter of 2008 was effectively three days shorter than that of 2009.
Seems like the results give an all new meaning to the age-old adage ‘Health is Wealth’.
Posted in 
Tags:
[...] today posted a 2.6% rise in the global same store sales in January. Perhaps taking a cue from the CVS Q4 results that came out yesterday, Mc Donald’s too, as a pleasant surprise, beat analysts’ expectations. [...]