Company Raises Mid-Point of 2010 EPS Guidance Range
- First Quarter Year-Over-Year Highlights:
- Adjusted EPS from continuing operations increased 8.8% to $0.60
- GAAP diluted EPS from continuing operations increased 9.3% to $0.55
- Net revenues increased to a first-quarter record $23.8 billion
- Generic dispensing rate increased nearly 300 basis points to an industry-leading 70.4% in our Pharmacy Services segment and 72.1% in our Retail Pharmacy segment
- Mail choice penetration rate increased over 100 basis points to 24.8%
- Full-year Adjusted EPS Guidance Range Revised to $2.77- $2.84; Full-year GAAP EPS Guidance Range Revised to $2.58 - $2.65
WOONSOCKET, R.I.,, May 4, 2010 /PRNewswire via COMTEX/ --CVS Caremark Corporation (NYSE: CVS), today announced revenues, operating profit, and net income for the three months ended March 31, 2010.
Net revenues for the three months ended March 31, 2010 increased $366 million to $23.8 billion, up from $23.4 billion during the three months ended March 31, 2009.
Revenues in the Pharmacy Services segment increased 2.6% to $11.8 billion in the three months ended March 31, 2010. This increase was primarily associated with the conversion of a number of RxAmerica(R) pharmacy network contracts, which resulted in those contracts being accounted for using the gross method. Adjusting the growth rate for the impact of new generics, net revenues would have grown 7.7% in the Pharmacy Services segment. Retail network claims processed during the three months ended March 31, 2010 decreased 10.3% to 132.0 million, compared to 147.1 million in the prior year period. The decrease in retail network claims was primarily due to the termination of a few large client contracts effective January 1, 2010 and the decrease of covered lives under our Medicare Part D program resulting from the 2010 Medicare Part D competitive bidding process. Mail choice claims processed during the three months ended March 31, 2010 decreased 4.8% to 15.5 million compared to 16.3 million in the prior year period. The decrease in the mail choice claim volume was related to the termination of a few large client contracts effective January 1, 2010, partially offset by new client starts effective January 1, 2010.
Revenues in the Retail Pharmacy segment increased 3.6% to $14.0 billion in the three months ended March 31, 2010. Same store sales increased 2.3% over the prior year period. Same store sales in both the pharmacy and front store were negatively impacted by a weak flu season and severe weather in certain markets. Pharmacy same store sales rose 3.7% and were negatively impacted by approximately 290 basis points due to recent generic introductions and positively impacted by approximately 260 basis points due to the continued growth of the Maintenance Choice(TM) program. Front store same store sales decreased 0.7% in the three months ended March 31, 2010. As expected, front store same store sales were negatively impacted by the inclusion of stores acquired as part of the Longs acquisition and benefited from an earlier Easter this year compared with last year.
The generic dispensing rate in our Pharmacy Services segment increased approximately 270 basis points to an industry-leading 70.4% and by approximately 290 basis points to 72.1% in our Retail Pharmacy segment for the three months ended March 31, 2010, compared to the prior year period.
Income from continuing operations attributable to CVS Caremark:
Income from continuing operations attributable to CVS Caremark for the three months ended March 31, 2010, increased $30 million to $773 million, compared with $743 million during the three months ended March 31, 2009. Adjusted earnings per share from continuing operations attributable to CVS Caremark, which excludes $105 million of intangible asset amortization related to acquisition activity, for the three months ended March 31, 2010 were $0.60, compared with $0.55 in the three months ended March 31, 2009. GAAP earnings per diluted share from continuing operations attributable to CVS Caremark for the three months ended March 31, 2010 were $0.55, compared with $0.51 in the three months ended March 31, 2009.
The Company's reported results for the three months ended March 31, 2010 benefited from lower litigation-related costs and fewer integration-related costs associated with the Longs acquisition.
Tom Ryan, Chairman, President and Chief Executive Officer said, "I'm very pleased with our results in the first quarter. Our operating profit across the enterprise was in line with our expectations, despite the weaker-than-anticipated flu season and severe weather in certain markets that dampened retail revenue growth. That solid performance was driven by continued market share gains and better expense leverage. At the same time, we continued to make excellent progress on our new clinical initiatives that should further differentiate CVS Caremark in the PBM marketplace. I'm also pleased to report that we generated approximately $660 million in free cash during the quarter, and remain committed to using our strong cash generation capabilities to return value to our shareholders. We accelerated our share repurchases during the quarter, which contributed to our achieving earnings per share that were slightly ahead of our expectations."
In light of the solid performance reported today and continued confidence about the remainder of the year, the Company also raised the mid-point of its earnings per share guidance range for the full year 2010. The Company increased the low-end of EPS guidance by $0.03 and now expects adjusted EPS from continuing operations to be in the range of $2.77 - $2.84 and GAAP EPS from continuing operations to be in the range of $2.58 - $2.65.
Real estate program:
During the three months ended March 31, 2010, the Company opened 48 new retail drugstores, and closed ten retail drugstores and two specialty pharmacy stores. In addition, the Company relocated 53 retail drugstores. As of March 31, 2010, the Company operated 7,063 retail drugstores, 47 specialty pharmacy stores, 18 specialty mail order pharmacies and six mail order pharmacies in 44 states, the District of Columbia and Puerto Rico.
Teleconference and webcast:
The Company will be holding a conference call today for the investment community at 8:30 am (EDT) to discuss its quarterly results. An audio webcast of the conference call will be broadcast simultaneously for all interested parties through the Investor Relations section of the CVS Caremark website at cvshealth.com. This webcast will be archived and available on the website for a one-month period following the conference call.
About the Company:
CVS Caremark is the largest pharmacy health care provider in the United States. Through our integrated offerings across the entire spectrum of pharmacy care, we are uniquely positioned to provide greater access to engage plan members in behaviors that improve their health, and to lower overall health care costs for health plans, plan sponsors and their members. CVS Caremark is a market leader in mail order pharmacy, retail pharmacy, specialty pharmacy, and retail clinics, and is a leading provider of Medicare Part D Prescription Drug Plans. As one of the country's largest pharmacy benefits managers (PBMs), we provide access to a network of more than 64,000 pharmacies, including over 7,000 CVS/pharmacy(R) stores that provide unparalleled service and capabilities. Our clinical expertise includes one of the industry's most comprehensive disease management programs. General information about CVS Caremark is available through the Company's website at cvshealth.com.
This press release contains certain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially. For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The Company strongly recommends that you become familiar with the specific risks and uncertainties outlined under the Risk Factors section in our Annual Report on Form 10-K for the year ended December 31, 2009.
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CVS CAREMARK CORPORATION
Condensed Consolidated Statements of Income (Unaudited)