|2012 GUIDANCE RAISED AND NARROWED TO REFLECT STRONG PERFORMANCE YEAR-TO-DATE AND SOLID OUTLOOK FOR THE REMAINDER OF THE YEAR
WOONSOCKET, R.I., Aug. 7, 2012 /PRNewswire/ -- CVS Caremark Corporation (NYSE: CVS) today announced revenues, operating profit and net income for the three months ended June 30, 2012.
Second Quarter and Year-Over-Year Highlights:
- Net revenues increased 16.3% to a record $30.7 billion, with Pharmacy Services up 28.2% and Retail Pharmacy up 6.9%
- Retail Pharmacy same stores sales increased 5.6%
- Income from continuing operations increased 18.9%
- Adjusted EPS of $0.81, up 25.2%; GAAP diluted EPS from continuing operations of $0.75
- Generated free cash flow of $3.2 billion
- Cash flow from operations of $4.0 billion
- Full-year Adjusted EPS raised and narrowed to $3.32 to $3.38
- Full-year GAAP diluted EPS from continuing operations raised and narrowed to $3.09 to $3.15
- Confirmed full-year free cash flow guidance of $4.6 to $4.9 billion and cash flow from operations of $6.2 to $6.4 billion
Net revenues for the three months ended June 30, 2012 increased 16.3%, or $4.3 billion, to $30.7 billion, up from $26.4 billion in the three months ended June 30, 2011.
Revenues in the Pharmacy Services Segment increased 28.2% to $18.4 billion in the three months ended June 30, 2012. This increase was primarily driven by new client starts associated with our highly successful 2012 selling season, drug cost inflation, and new activity resulting from our acquisition of the Medicare prescription drug plan of Universal American Corp. ("UAM Medicare PDP Business") on April 29, 2011. Pharmacy network claims processed during the three months ended June 30, 2012 increased 13.7%, to 197.8 million, compared to 174.0 million in the prior year period. The increase in pharmacy network claims was primarily due to new client starts and the Company's 2011 acquisition of the UAM Medicare PDP Business. Mail choice claims processed during the three months ended June 30, 2012 increased approximately 15.5% to 20.5 million compared to 17.8 million in the prior year period. The increase in the mail choice claim volume was primarily driven by new client starts and the continued adoption of our unique Maintenance Choice® program.
Revenues in the Retail Pharmacy Segment increased 6.9% to $15.8 billion in the three months ended June 30, 2012. Same store sales increased 5.6% over the prior year period, with pharmacy same store sales increasing 7.2% over the prior year period. The increase in pharmacy same store sales included a significant benefit associated with Walgreens not being part of the Express Scripts pharmacy provider network during the quarter. Additionally, 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, our same store prescription volumes increased 9.8% in the quarter. Pharmacy same store sales were negatively impacted by approximately 500 basis points due to recent generic introductions. Front store same store sales increased 2.3% in the three months ended June 30, 2012.
For the three months ended June 30, 2012, the generic dispensing rate increased approximately 390 basis points to 78.0% in our Pharmacy Services Segment and 350 basis points to 79.1% in our Retail Pharmacy Segment, compared to the prior year period.
Income from Continuing Operations Attributable to CVS Caremark
Income from continuing operations attributable to CVS Caremark for the three months ended June 30, 2012 increased $153 million, to $967 million, compared with $814 million during the three months ended June 30, 2011. The increase in income from continuing operations attributable to CVS Caremark was primarily driven by an 18.5% increase in operating profit in our Retail Pharmacy Segment. Our retail business benefited significantly from the contractual impasse between Walgreens and Express Scripts, the impact of increased generic drugs dispensed, and the continued growth of our Maintenance Choice program. Adjusted earnings per share from continuing operations attributable to CVS Caremark ("Adjusted EPS") for the three months ended June 30, 2012 and 2011 were $0.81 and $0.65, respectively. Adjusted EPS excludes $123 million and $114 million of intangible asset amortization related to acquisition activity in the three months ended June 30, 2012 and 2011, respectively. GAAP earnings per diluted share from continuing operations attributable to CVS Caremark for the three months ended June 30, 2012 and 2011 were $0.75 and $0.60, respectively.
Larry Merlo, president and CEO, stated, "I'm very pleased with our strong operating performance this quarter, as we delivered results that were at or above our expectations in both the retail and PBM segments. Our retail business continued to benefit from the market disruption caused by the contractual impasse between two of our competitors, and we have detailed plans in place to maximize retention following their mid-September resolution. While the 2013 PBM selling season is still underway, we have achieved positive net-new business to-date and we are focused on the opportunities that remain. With our stable business and differentiated offerings, we remain very well positioned in the marketplace."
Real Estate Program
During the three months ended June 30, 2012, the Company opened 36 new retail drugstores and closed eight retail drugstores and one onsite pharmacy. In addition, the Company relocated 24 retail drugstores. As of June 30, 2012, the Company operated 7,457 locations, including 7,381 retail drugstores, 28 onsite pharmacies, 31 retail specialty pharmacy stores, 12 specialty mail order pharmacies and five mail order pharmacies in 44 states, the District of Columbia and Puerto Rico.
The Company raised and narrowed its earnings guidance for the full year 2012, reflecting its strong performance year-to-date and a solid outlook for the remainder of the year. The new guidance includes the anticipated benefit in the third and fourth quarters combined of approximately $0.05 per share related to the prescription business expected to be retained from the contractual impasse between Walgreens and Express Scripts. On July 19, 2012, Walgreens and Express Scripts announced that Walgreens will re-enter Express Scripts' broadest retail pharmacy network as of September 15, 2012. In the fourth quarter, the Company expects to retain at least 50% of the prescription business gained during the impasse. The Company currently expects to deliver Adjusted EPS of $3.32 to $3.38 for the full year 2012, up from its previous guidance of $3.23 to $3.33. The Company currently expects to deliver GAAP diluted earnings per share from continuing operations of $3.09 to $3.15 for the full year 2012, up from its previous guidance of $3.01 to $3.11. The Company now expects the Retail Pharmacy Segment's operating profit to increase between 14% and 15%, and the Pharmacy Services Segment's operating profit to increase between 13% and 15%. The Company reiterated its 2012 free cash flow guidance and expects to generate between $4.6 billion and $4.9 billion for the year. Further, the Company confirmed that it expects to generate cash flow from operations in 2012 in the range of $6.2 billion to $6.4 billion. These 2012 guidance estimates assume the completion of the remaining $1.0 billion in previously authorized share repurchases.
Teleconference and Webcast
The Company will be holding a conference call today for the investment community at 8:30 a.m. (EDT) to discuss its quarterly results. An audio webcast of the call will be broadcast simultaneously for all interested parties through the Investor Relations section of the CVS Caremark website at http://info.cvscaremark.com/investors. This webcast will be archived and available on the website for a one-year period following the conference call.
About the Company
CVS Caremark is dedicated to helping people on their path to better health as the largest integrated pharmacy company in the United States. Through the Company's approximately 7,400 CVS/pharmacy® stores; its leading pharmacy benefit manager serving more than 60 million plan members; and its retail health clinic system, the largest in the nation with approximately 600 MinuteClinic® locations, it is a market leader in mail order, retail and specialty pharmacy, retail clinics, and Medicare Part D Prescription Drug Plans. As a pharmacy innovation company with an unmatched breadth of capabilities, CVS Caremark continually strives to improve health and lower costs by developing new approaches such as its unique Pharmacy Advisor® program that helps people with chronic diseases such as diabetes obtain and stay on their medications. Find more information about how CVS Caremark is reinventing pharmacy for better health at http://info.cvscaremark.com/.
This press release contains certain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially. For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The Company strongly recommends that you become familiar with the specific risks and uncertainties outlined under the Risk Factors section in our Annual Report on Form 10-K for the year ended December 31, 2011 and under the section entitled "Cautionary Statement Concerning Forward-Looking Statements" in our most recently filed Quarterly Report on Form 10-Q.
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SOURCE CVS Caremark Corporation
Investor Contact: Nancy Christal, Senior Vice President, Investor Relations, +1-914-722-4704; or Media Contact: Eileen H. Boone, Senior Vice President, Corporate Communications & Community Relations, +1-401-770-4561