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WOONSOCKET, R.I. — Both net revenue and profit grew by double digits at CVS Caremark Corp. during the second quarter, beating analysts’ projections and leading the company to raise its earnings forecast for the full year.
Both net revenue and profit grew by double digits at CVS Caremark Corp. during the second quarter, beating analysts’ projections and leading the company to raise its earnings forecast for the full year.
CVS said Tuesday that for the quarter ended June 30, net income climbed 10.9% to $1.25 billion, while reported earnings per diluted share increased 16.5% to $1.06. Adjusted earnings rose at the same rate to $1.13 per diluted share, ahead of the consensus forecast of $1.10 per share among analysts surveyed by FactSet.
Net revenue expanded 10.7% to $34.6 billion, easily surpassing the $33.52 billion expected by analysts.
"I’m extremely pleased with our strong performance this quarter," said Larry Merlo, president and chief executive officer of CVS Caremark. "With adjusted earnings per share increasing 16.5%, we came in 2 cents above the high end of our expectations. This was fueled by solid results across the enterprise, as both the PBM and retail businesses exceeded revenue expectations while delivering strong gross margins. Operating profit in the PBM increased 30%, exceeding expectations, while operating profit in the retail business grew 6.5%, at the high end of our expectations."
Net sales for the CVS/pharmacy drug store segment expanded 4.5% to $16.87 billion, while operating profit, as Merlo indicated, gained 6.5% to $1.71 billion.
Same-store sales rose 3.3%, driven by a 5% increase in comparable pharmacy sales that offset a 0.4% decline at the front end, despite a benefit from the Easter calendar shift of 80 basis points.
According to management, the front-end decrease reflected softer customer traffic that was partially offset by an increase in basket size. Management also noted that front-end same-store sales would have been approximately 110 basis points higher if tobacco and associated sales were excluded.
Pharmacy same-store sales, meanwhile, were negatively impacted by approximately 160 basis points by introductions of new generic drugs and by about 130 basis points by the implementation of the CVS Specialty Connect program. Comparable-store prescription count gained 3.9% on a 30-day basis.
The Pharmacy Services, or PBM, segment produced a 30.1% leap in operating profit to $878 million on a 16.2% rise in revenue to $21.84 billion.
Based on the strong performance, management raised and narrowed its full-year adjusted earnings projection to a range of $4.43 to $4.51 per share.
