CVS profits jump 39%

WOONSOCKET, R.I. (AP/WPRI) - CVS Caremark Corp. has announced its third-quarter profit jumped 39%, but shares plunged after the company said its struggling Caremark pharmacy benefits management unit lost $2 billion in business in recent months.

CEO Tom Ryan says CVS will not reach its own expectations in 2010 because profits at Caremark could drop as much as 10 to 12 percent.

In August, Ryan said CVS would be "very disappointed" if its per-share profit did not grow 13 to 15 percent next year. He said CVS will not reach that goal.

Caremark President Howard McClure will retire before the end of the month, and Ryan will take over the business temporarily.

In early trading, CVS stock tumbled $7.50, or 21 percent, to $28.65. The latest contract losses include $1.7 billion in business for "dual eligible" people who can receive both Medicare and Medicaid benefits.

CVS also lost contracts with the New Jersey state Blue Cross plan and Ohio's managed Medicare business.

Revenue at CVS drugstores rose 17.9% with sales at stores open at least a year rising 5.7 percent. 

The company says flu-related prescriptions up more than 10%, and Ryan expects that to continue during the fourth quarter.

Ryan says sales of CVS brand merchandise surged because customers are looking for bargains during the recession.

The company also said it will buy back up to $2 billion in stock through the end of 2011.