CVS Caremark Corp.'s third-quarter earnings jumped 7.3 percent, off a boost in pharmacy services and retail pharmacy revenues.

The drugstore company, based in Woonsocket, R.I., upped its full-year outlook, with CEO and president Larry Merlo touting its better-than-expected third-quarter results.

Our retail drugstore business continues to grow and gain share while our PBM continues to demonstrate success in the selling season, with strong client retention and significant new business, Merlo said in a statement on Thursday. PBM refers to the company's pharmacy benefits management business.

I fully expect the company to deliver substantial free cash flow for the foreseeable future, which should enable us to continue to return significant value to our shareholders.

Shares of CVS Caremark jumped 3.7 percent as of 11:50 a.m. Thursday.

The company drew a net income of $868 million in the third quarter of 2011, or $0.65 per share. That's up from $809 million ($0.59 per share) in the same three-month period ending Sept. 30 last year. In addition, the company's revenues rose 12 percent from the same last-year period to $26.7 billion.

CVS saw a huge leap in its pharmacy services segment revenues, as they increased 25.8 percent to $14.8 billion in the third quarter. This was due to a couple of contracts: a long-term, 12-year contract with Aetna Inc. and new activity from the company's acquisition of the Medicare prescription drug business Universal American Corp.

Also, CVS Caremark's retail pharmacy segment revenues also jumped 3.8 percent. Same-store sales grew 2.3 percent.

During the third quarter, CVS Caremark also netted an increase of 38 new drugstores -- it closed one while opening 39. CVS had 7,304 operating stores in the U.S. after the third quarter, which grew from 7,152 a year ago.

CVS also sold its subsidiary, TheraCom, to AmerisourceBergen Corp. for $250 million, in the third quarter.

On a conference call Thursday, Merlo addressed the ongoing dispute between Walgreen Co. and Express Scripts Inc. Last week, Express Scripts Inc. said it was unlikely the two would be able to complete a deal to keep Walgreen Co. in Express' network next year.

But Merlo said he didn't think the dispute would result in any gains for CVS.

I don't think it's a big advantage, he said. I don't think it would be a significant factor. ... I do think it would be on the table in quite a bit of conversations next year.

CVS Caremark is the second-largest chain of drugstores in the United States, following only Walgreen Co.

Write to Brett LoGiurato at .