CVS Caremark Q4 profit grows 11 percent

CVS shares rose 82 cents, or 2.6 percent, to US$31.89 in premarket trading.

The Woonsocket, R.I., company said it earned US$1.05 billion, or 74 cents per share, in the last three months of 2009, up from US$949 million, or 65 cents per share, a year ago. Excluding one-time costs, CVS earned 79 cents per share — a penny ahead of Wall Street estimates.

Revenue grew 7 percent to US$25.82 billion from US$24.14 billion.

According to a Thomson Reuters survey, analysts were expecting a lower profit of 78 cents per share and higher revenue of US$26.22 billion. They typically exclude one-time items from earnings estimates.

At the Caremark pharmacy benefits management unit, which handles drug benefits for health plan sponsors and members, revenue grew 14.5 percent to US$13.49 billion. 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.

CVS' initial report did not include an update on how Caremark is doing at securing new contracts. In November, the company said Caremark had lost US$4.8 billion in contracts for 2010, including about US$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.

Caremark processed 151.4 million claims during the quarter, a drop of 6 percent from a year earlier. It filled 16.7 million claims by mail, up 4 percent.

Revenue from CVS drugstores rose 4.5 percent, to US$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. But sales of discretionary “front-end” items edged up only 0.3 percent.

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