CVS Caremark's Q2 growth prompted by Walgreens-ESI stalemate
WOONSOCKET, R.I. — CVS Caremark’s solid second-quarter performance and outlook has prompted the company to raise yet narrow its guidance for the year. CVS Caremark now expects to deliver adjusted earnings per share of $3.32 to $3.38 for the full year 2012, up from its previous guidance of $3.23 to $3.33.
“The retail business continued to take advantage of the unprecedented opportunity presented to us by the stalemate between Walgreens and Express Scripts. This resulted in significant market share growth in the quarter and, as anticipated, we realized about a 3.5-cent benefit in Q2 from the impasse,” CEO Larry Merlo told analysts during Tuesday morning’s second-quarter conference call. “Now, with the recent news that Walgreens will re-enter the broadest Express Scripts network this Sept. 15, we estimate that we will generate an additional benefit of approximately 5 cents per share in the second half of the year.”
For the quarter ended June 30, pharmacy same-store sales rose 7.2%, compared with the year-ago period and included a significant benefit associated with Walgreens not being a part of the Express Scripts pharmacy provider network during the quarter. In addition, pharmacy same-store prescription volumes rose 7.7% when 90-day scripts are counted as one script. When converting 90-day scripts into three scripts, the same-store prescription volumes rose 9.8% during the quarter.
Revenues for the pharmacy services segment rose 28.2% to $18.4 billion, driven largely by new clients, drug cost inflation and new activity resulting from its acquisition of the Medicare prescription drug plan of Universal American in April 2011.
Meanwhile, retail revenues rose 6.9% to $15.8 billion. Same-store sales rose 5.6%, as front-end same-store sales increased 2.3% during the quarter.
MinuteClinic posted a 17% boost in second-quarter revenues and ended the quarter with 584 clinics.
Income from continuing operations attributable to CVS Caremark rose $153 million to $967 million. Adjusted EPS from continuing operations attributable to CVS Caremark were 81 cents per share compared with 65 cents per share in the year-ago period.