CVS Caremark results better than expected

CHICAGO (Reuters)—CVS Caremark Corp. posted a slightly better-than-expected profit on Thursday, aided by strength at its drugstores, where it kept costs under control and sold more generic drugs.

CVS, which also runs a major pharmacy benefits management business, narrowed its full-year forecast toward the high end of its prior expectations and said it remains confident about the rest of the year.

Adjusted earnings per share from continuing operations were flat at 65 cents per share, topping analysts' forecast by a penny, according to Thomson Reuters I/B/E/S.

Second-quarter net income attributable to CVS Caremark was $816 million, or 60 cents per share, compared with $821 million, or 60 cents per share, a year earlier.

Revenue rose 10.9% to $26.63 billion. That fell just short of the $26.77 billion expected by analysts, according to Thomson Reuters I/B/E/S.

Revenue in the retail pharmacy business, which runs more than 7,200 drugstores, rose 3.6% to $14.8 billion. Sales at stores open at least a year rose 2%, with pharmacy same-store sales up 2.6% and same-store sales of general merchandise up 0.8%.

Selling more generic drugs crimps revenue, as the drugs are less expensive than their branded counterparts; however they are also more profitable for chains such as CVS to sell.

Revenue in the pharmacy services business jumped 23.2% to $14.6 billion, due in part to the addition of a previously announced major contract with Aetna Inc. The number of claims processed during the quarter soared 35.6% to 174 million.

CVS now expects to earn $2.75 per share to $2.81 per share from continuing operations, compared with its prior forecast of $2.72 to $2.82. Analysts' average forecast is $2.78 per share.