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CVS Sees Income On The Rise In Q2

Wednesday August 14th, 2013 - 1:36PM


CVS Caremark Corp. announced that its Q2 income from continuing operations was $1.12 billion versus $967 million in the period a year earlier. CVS's second quarter ended June 30. Adjusted earnings per share from continuing operations for the three months ended June 30, according to the company, were 97 cents versus 81 cents in the year-earlier period.

Earnings per share narrowly beat a Zacks analyst estimate of 96 cents.

The company added that adjusted EPS excludes $124 million and $123 million of intangible asset amortization related to acquisition activity in the three months ended June 30, 2013, and 2012, respectively.

Revenues in the Retail Pharmacy Segment gained 1.9%, or $293 million, in the quarter versus last year’s period. Comparable store sales increased 0.4% when compared to the prior-year period, with pharmacy comps up 0.8% and front store comps, including those for general merchandise such as home goods, down 0.4%, the company noted.

Net revenues for the quarter increased 1.7%, or $534 million, year over year to $35.25 billion, it related.

Larry Merlo, CVS president and CEO said, "Our second quarter results reflect very strong operating performance, with operating profit increasing 15% enterprise-wide, with 32% growth in the [pharmacy benefit management] and 9% growth in the retail business. As expected, new generic drug introductions continued to be a significant growth driver across the enterprise, resulting in healthy margin expansion and earnings growth. We achieved adjusted EPS for the quarter at the high end of our guidance range despite a higher-than-anticipated share count. A primary reason for our higher-than-anticipated share count is that we suspended share repurchases during part of the second quarter while we were engaged in negotiations with the SEC concerning the agreement in principle we announced last week. However, we remain committed to returning significant value to our shareholders through both dividends and share repurchases. We have delivered $1.7 billion in free cash flow year-to-date, and we expect to complete our planned $4 billion in share repurchases during 2013."

On August 2, CVS announced it had reached an agreement in principle to resolve an investigation by the SEC of events that occurred in the third and fourth quarters of 2009, including certain public disclosures made by the company, transactions in the company's securities by certain current and former employees and certain aspects of the purchase accounting adjustment related to the October 2008 Longs Drug Stores acquisition. CVS stated that the settlement remains subject to completion of final documentation and approval by the SEC and federal court.