CVS Caremark Corp posted a bigger-than-expected jump in quarterly profit on Tuesday, aided by new stores and increased demand as consumers bought Easter treats and products to combat the H1N1 flu.
The drugstore operator and pharmacy benefit manager also raised its 2009 profit forecast, with Chief Financial Officer Dave Rickard citing strong results so far and optimism for the rest of the year.
CVS Caremark, whose drugstore rivals include Walgreen Co and Rite Aid Corp , has benefited from its Maintenance Choice program. The program allows customers to pick up 90-day prescriptions in CVS stores at the same lower price they would pay if getting the drugs through the mail.
CVS earned $886.5 million, or 60 cents per share, in the second quarter, up from $771.2 million, or 53 cents per share, a year earlier. Adjusted earnings from continuing operations rose to 65 cents per share and topped analysts' average forecast of 64 cents, according to Reuters Estimates.
CVS, which snapped up smaller drugstore chain Longs Drug Stores in October, said net revenue jumped 17.6 percent to $24.9 billion.
Pharmacy services revenue jumped 22.1 percent to $13 billion. Revenues in the retail pharmacy segment, which includes nearly 7,000 drugstores, climbed 17.2 percent to $13.8 billion.
Those figures combined are higher than the total net revenue since both segments record revenue when a pharmacy services customer buys products covered under his plan in a CVS store.
Sales at stores open at least a year rose a strong 6.1 percent after rising 3.3 percent in the first quarter and 3.1 percent in last year's second quarter.
Pharmacy same-store sales jumped 7.5 percent, while same-store sales of general merchandise rose 3 percent. Sales were helped by the timing of Easter, which fell in the second quarter after falling in the first quarter of 2008, as well as higher cigarette prices.
They were also helped by sales of hand sanitizers and anti-viral medications to fight the H1N1 flu.
CVS expects to report 2009 adjusted earnings from continuing operations of $2.59 to $2.64 per share, up from a previous forecast of $2.55 to $2.63.
Analysts on average had been expecting $2.52 per share.
Walgreen said its July same-store sales rose 2 percent. Pharmacy same-store sales climbed 3.8 percent but same-store sales of general merchandise fell 1.3 percent as consumers bought fewer discretionary items and sales of some seasonal products, such as fans, were a bit slow [ID:nBw045308a].
Shares of CVS rose 5 cents to $34.05 in premarket trading.
(Reporting by Jessica Wohl; Editing by Derek Caney)