By TOM MURPHYAP Business Writer
CVS Caremark Corp.'s second-quarter earnings jumped 16 percent, as the drug store operator and pharmacy benefits manager continued to reap bottom-line gains from generic drugs.
The Woonsocket, R.I., company also said Tuesday it had narrowed its 2013 earnings forecast in part to account for share repurchases.
CVS Caremark earned $1.12 billion, or 91 cents per share, in the three months that ended June 30, up from $966 million, or 75 cents per share, a year ago. Adjusted earnings totaled 97 cents per share.
Analysts expected 96 cents per share, according to FactSet.
Revenue rose about 2 percent to $31.25 billion. Analysts expected $31.14 billion in revenue.
CVS Caremark runs the nation's second-largest drugstore chain, with more than 7,500 stores. Its Caremark unit also is one of the nation's largest pharmacy benefits managers, or PBMs.
PBMs run prescription drug plans for employers, insurers and other customers. They process mail-order prescriptions and handle bills for prescriptions filled at retail pharmacies.
CVS Caremark said new generic drugs "significantly improved" its operating profit in both business segments.
Drugstore operators and pharmacy benefits managers have benefited from an influx of patent expirations for brand-name drugs for several quarters now. This exposes those drugs to cheaper generic competition. Those generics then help drugstore or PBM profitability because they provide a wider margin between what it costs for the pharmacy to purchase the drugs and the reimbursement received.
However, generics also can hurt drugstore and PBM revenue.
CVS Caremark said its retail pharmacy revenue climbed about 2 percent to $16.14 billion, while revenue from its PBM side rose 2 percent to $18.8 billion. Generic drugs held back revenue growth compared to last year, when the company also saw a gain from the Easter holiday, which fell in April as opposed to the first quarter of this year.
CVS Caremark now expects 2013 adjusted earnings of $3.90 to $3.96 per share. That compares a previous forecast for $3.89 to $4 per share. Analysts expect, on average, earnings of $3.97 per share.
The company's shares rose 19 cents to $61.81 in premarket trading about 90 minutes before markets opened Tuesday and after CVS Caremark released its results.
CVS Caremark shares have climbed about 27 percent so far this year after closing 2012 at $48.35. The stock price has set several all-time high prices so far this summer.
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