CVS 4Q profit climbs nearly 4 percent

WOONSOCKET, R.I. (AP) - CVS Caremark Corp.'s fourth-quarter earnings climbed nearly 4 percent, as the drugstore operator's pharmacy services revenue swelled because of a long-term contract and new business.

The Woonsocket, R.I., company also raised its 2012 earnings forecast by 3 cents per share to account for gains it expects because of a contract dispute between competitors Walgreen Co. and Express Scripts Inc.

CVS Caremark's net income rose to $1.06 billion, or 82 cents per share, in the three months that ended Dec. 31. That compares with $1.03 billion, or 75 cents per share, in the final quarter of 2010.

Adjusted earnings were 89 cents per share, in line with the average analyst forecast, according to FactSet.

Revenue rose 15 percent to $28.32 billion, above the $28.09 billion analysts expected.

CVS Caremark runs the second-largest chain of drugstores in the U.S., after Walgreen. Its Caremark business is one of the largest pharmacy benefits managers. Those businesses handle prescription drug benefits and are paid to reduce costs for health plan sponsors and members.

Revenue from the company's PBM side jumped 32 percent to $15.9 billion in the quarter due to the addition of a long-term contract with health insurer Aetna Inc. and new sales that came from the acquisition of insurer Universal American Corp.'s Medicare prescription drug business.

CVS Caremark said it now forecasts 2012 adjusted earnings of $3.18 to $3.28 per share because of business it expects to gain in the first quarter from the Walgreen-Express Scripts dispute. The company said its new forecast doesn't reflect a benefit beyond the first quarter.

Analysts expect, on average, earnings of $3.26 per share.

Walgreen said in June that it would stop filling prescriptions for Express Scripts, a PBM, at the end of 2011, when a contract between the two companies ran out. The companies were unable to agree on how much money Express Scripts should pay Walgreen to fill prescriptions.

The dispute has taken a chunk out of Walgreen's sales, but the Deerfield, Ill., company said it would prefer to lose that business rather than fill unprofitable prescriptions.

Walgreen said Friday that January revenue from stores open at least a year fell 4.6 percent, as the Express Scripts split and a weak flu season hurt business.

CVS Caremark opened 24 drugstores in the fourth quarter and closed one. It operated 7,327 as of Dec. 31.