Drugstore chain CVS Caremark Corp. (CVS) Wednesday reported a 23 percent increase in profit for the first quarter, amid a strong flu season. Adjusted earnings topped Wall Street estimates. The company also raised the low end of its annual earnings forecast.
The company's CEO Larry Merlo said, "I'm very pleased with our strong first quarter results. As expected, the influx of new generic drugs was a key driver across the enterprise, resulting in solid gross margin expansion as well as significant growth in operating profit and earnings.''
Net income attributable to the company increased to $956 million or $0.77 per share from $776 million or $0.59 per share in the previous year. Excluding intangible asset amortization related to acquisition activity, earnings were $0.83, while it was $0.65 last year. On average, 19 analysts polled by Thomson Reuters expected earnings of $0.79 per share for the quarter. Analysts' estimates typically exclude special items.
Net revenues were $30.763 billion compared to $30.798 billion last year. Analysts expected revenues of $30.36 billion.
Revenues in the Pharmacy Services Segment edged up 0.1 percent, primarily driven by volume increases across all channels and drug cost inflation in the specialty pharmacy business, mostly offset by the impact of new generic introductions. Pharmacy network claims processed during the quarter increased 4.3 percent to 207.1 million due to higher claims activity associated with new clients, a strong flu season and the Medicare Part D program.
Revenues in the Retail Pharmacy Segment advanced 0.2 percent. Same store sales declined 1.2 percent, with pharmacy same store sales down 2.3 percent and front store same store sales up 1.4 percent. CVS cited new generic drug introductions, a strong flu season and the shift of the Easter holiday as reasons for the change in same store sales.
During the quarter, the company opened 37 new retail drugstores and closed nine retail drugstores. CVS also relocated 15 retail drugstores.
Looking ahead, CVS sees second-quarter adjusted earnings per share of $0.94 to $0.97 and GAAP earnings per share from continuing operations of $0.88 to $0.91. Wall Street looks for earnings of $0.94 per share. Further, CVS revised its earnings guidance range for 2013 to reflect the solid first quarter performance and the outlook for the remainder of the year.
The company now expects to deliver adjusted earnings per share of $3.89 to $4.00, compared to the previous projection of $3.86 to $4.00. Analysts expect earnings of $3.97 per share.
GAAP earnings per share from continuing operations are now estimated to be $3.64 to $3.75 per share. The previous forecast was for reported earnings per share from continuing operations of $3.61 to $3.75.
CVS closed at $58.18 on Tuesday.
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