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WOONSOCKET, R.I. — CVS Caremark Corp.’s fourth quarter earnings beat analysts’ expectations as pharmacy sales were boosted by new drugs and new customers for specialty medications.
CVS Caremark Corp.’s fourth quarter earnings beat analysts’ expectations as pharmacy sales were boosted by new drugs and new customers for specialty medications.
Net income climbed 12.4% to $1.27 billion, or $1.05 a share, from the year-ago period. Stripping out amortization charges of $124 million in both quarters, adjusted income from continuing operations rose 11.5% to $1.34 billion, or $1.12 a share, beating the average estimate of $1.11 a share among analysts polled by Bloomberg.
Revenue for the quarter ended December 31 advanced 4.6% to $32.83 billion, with pharmacy services up 5.2% and retail pharmacy increasing 5.6%. Same-store sales in the CVS/pharmacy segment increased 4%.
For fiscal 2013, revenues expanded 3% to $126.76 billion, as pharmacy services gained 3.8% and retail pharmacy grew 3.1%. Full-year same-store sales advanced 1.7%.
Income from continuing operations for the year jumped 18.9% to $4.6 billion, or $3.75 per share. Including net losses from discontinued operations of $8 million in fiscal 2013 and $7 million a year ago, net income kept pace with an 18.9% surge to $4.59 billion, or $3.74 per share. Excluding amortization expense in both years, adjusted earnings from continuing operations jumped 17.6% to $4.9 billion, or $4.00 per share.
The fourth quarter results "came in at the high end of our expectations and helped produce a record year," said president and chief executive officer Larry Merlo. "As expected, the quarter was somewhat atypical, largely due to the timing of Medicare Part D profits within the PBM and the timing of break-open generics across the enterprise. Overall, the year 2013 produced strong growth in revenues, gross margin, operating margin and earnings across the enterprise."
The rise in fourth quarter pharmacy services came as drug inflation, new products and new clients in the specialty business offset lower Medicare claims. On the retail side same-store prescription volume climbed 3.8%.
CVS Caremark reaffirmed its guidance for 2014, projecting earnings between $4.36 and $4.50 — excluding special items and assuming completion of a $4 billion share repurchase. The company raised its first quarter 2014 earnings guidance to $1.03 to $1.06 per share.
Merlo did not refer to CVS’ plans to stop selling cigarettes and other tobacco products — a move that will cut $2 billion worth of sales — while saying the company’s focus on health and wellness has it well positioned.
"The U.S. health care landscape is undergoing its most transformative change in decades," he said. "Health care consumers are taking on greater responsibility for choosing their own plans and controlling costs. With our unique pharmacy health care model, we have the ability and agility to offer innovative solutions and capitalize on these changing market dynamics. As a result, we look forward to continued strong growth in 2014 and beyond."
