(Updates with closing stock price in fifth paragraph.)
Feb. 11 (Bloomberg) -- CVS Caremark Corp., the largest provider of prescription drugs in the U.S., posted fourth- quarter profit that topped analysts’ estimates as pharmacy sales rose on new medicines and new customers.
Net income climbed 13 percent to $1.27 billion, or $1.05 a share, from $1.13 billion, or 90 cents, a year earlier, the Woonsocket, Rhode Island-based company said today in a statement. Excluding one-time items, earnings were $1.12 a share, topping by 1 cent the average of 25 estimates compiled by Bloomberg.
The new drugs and an expanded roster of clients for specialty pharmaceuticals, along with higher prices, boosted revenue from pharmacy services to $19.6 billion, the company said. The decision to stop selling tobacco products at the company’s 7,600 pharmacies as of Oct. 1, at an expected cost of about $2 billion in annual revenue, was greeted with an “overwhelmingly positive” response last week, Chief Executive Officer Larry Merlo said today.
“We’re doing this from a position of strength,” Merlo said on a conference call. “All see the health benefit and the role that pharmacy can play in advancing smoking cessation and improving control of disease. We strongly believe this decision will strengthen our position as a health care leader.”
CVS rose 2.7 percent to $68.77 at 4:01 p.m. in New York. The shares have climbed 34 percent in the past 12 months.
The company also expects to benefit from the Patient Protection and Affordable Care Act, also known as Obamacare, as enrollment in health insurance programs overcomes a “slow and bumpy outset,” Merlo said. The company is encouraged by recent progress with expanded insurance coverage, is in a good position to support new customers and expects a “modest net positive” benefit from the changes this year, he said.
“The beat this quarter appears clean and solid, with upside coming from the Pharmacy Services segment and solid volumes,” said David Larsen, an analyst with Leerink Partners in Boston, in a note to investors today.
Overall revenue climbed 4.6 percent to $32.8 billion in the fourth quarter, topping the $32.7 billion average of analysts’ estimates.
The company forecast profit of $4.36 to $4.50 for this year. Analysts expected $4.46 on average.
CVS has increased its health-care sales in the past decade, opening 800 in-store clinics nationwide with nurses and physician assistants who can diagnose and write prescriptions for minor illnesses.
CVS acquired Caremark for $27.2 billion in 2007, creating the biggest mail-order and retail medicine provider in the U.S.
--Editors: Kevin Orland, Bruce Rule