CVS Caremark Corp posted a bigger-than-expected rise in quarterly profit, helped by dispensing more profitable generic drugs, and the company raised the low end of its 2010 earnings forecast.
CVS, which runs its namesake drugstores and a pharmacy benefits management unit, said it remains confident about the rest of the year.
First-quarter profit rose to $771 million, or 55 cents per share, from $738 million, or 50 cents per share, a year earlier.
Adjusted earnings per share from continuing operations climbed to 60 cents from 55 cents. Analysts had expected 58 cents per share, according to Thomson Reuters I/B/E/S, and the company had forecast a profit of 57 to 59 cents per share.
CVS said its earnings per share topped its own expectations in part because it ramped up buybacks during the quarter.
Revenue climbed 1.6 percent to $23.76 billion, falling short of analysts' forecast of $24.12 billion.
CVS said it now expects 2010 adjusted earnings per share from continuing operations of $2.77 to $2.84. In February, its forecast was $2.74 to $2.84. Analysts' average forecast was $2.79 per share.
CVS's shares rose 2 cents to $37.10 in light premarket trading.
WEAK FLU SEASON HIT RETAIL SALES
Drugstore revenue rose 3.6 percent to $14 billion, while sales at drugstores open at least a year rose 2.3 percent. Pharmacy same-store sales rose 3.7 percent and same-store sales of general merchandise fell 0.7 percent.
As competitors Walgreen Co and Rite Aid Corp previously noted, same-store sales were hit by a milder-than-anticipated cold and flu season and severe winter weather in some areas. March sales got a boost from an earlier Easter.
In November, CVS shocked investors when it said that its PBM, which administers prescription drug benefits for employers and health plans and operates a large mail-order pharmacy, lost out on about $4.8 billion of business heading into 2010, leading to the exit of the unit's president.
Pharmacy services revenue rose 2.6 percent to $11.8 billion during the quarter. But the PBM processed 10.3 percent fewer retail network claims since it lost a few large client contracts as of January and now covers fewer Medicare Part D patients.
The use of generic drugs rose about 2.9 percentage points to 72.1 percent in the company's stores and about 2.7 percentage points to 70.4 percent in the pharmacy services unit.
CVS operated 7,063 drugstores as of March 31, making it the No. 2 U.S. drugstore chain behind Walgreen, which has nearly 7,500 locations.
(Reporting by Jessica Wohl, editing by Gerald E. McCormick and Maureen Bavdek)