NEW YORK - CVS Caremark Corp., said Thursday that its net income in the first quarter declined 8% that its pharmacy benefits management company has continued to report lower profits.
The company said it expects results of the Caremark to begin to improve in 2012, when it will be reaping the benefits of a wave of cost-effective generics and low-cost. In his first conference call as the CEO, Larry defended Merlo model of CVS Caremark business, which has faced criticism of some shareholders and a review of competitors and regulators.
"Despite the speculation on the market, there is no intention to split the company," he said. "Breaking the company would be a step in the wrong direction to members, retail customers and certainly our payers."
Merlo, who became CEO in March when Thomas Ryan retired, also said the charges that Caremark steers improperly business to CVS stores are "false, baseless and false".
Critics have said benefit of CVS plans reduces the choice to participants and that society is facing a conflict of interest, as its pharmacies get revenues from filling of prescriptions and pharmacy benefits unit attempts to reduce costs for its sponsors and beneficiaries.
The pharmacy benefits management company benefits Caremark fell because of the costs related to a new contract with Aetna Inc.. The 12-year agreement came into force on 1 January and Caremark programs are gradually removed. The company also reported lower prices of drugs to a contract with the Government Federal health benefits, a Union of employees of the Government plan.
The company has already said that these issues will reduce for the benefit of the Caremark this year. Caremark profit also decreased in 2010.
Woonsocket, R.I., the company said its profit fell to $ 713 million, or 52 cents per share, in the quarter ending in March, 771 million, or 55 cents per share. Its turnover increased 9% 25,88 billion from $ 23.76 billion.
The exclusion of acquisition and other charges, the company said it earned 57 cents per share. FactSet said analysts expected a profit of 55 cents per share and 25,76 billion in revenue.
Revenues from the retail company stores rose 4.4% to $ 14.6 billion, while revenue at stores open at least a year increased by 2.6%. Revenues from Caremark has increased by 18.4% to $ 14 billion with the addition of the Aetna contract. Approximately 2.7 billion in revenue is accounted for the two companies.
The company opened 57 stores during the quarter and closed 13, giving him a total of 7,226. CVS pharmacy chain is the country second behind Walgreen Co., which has approximately 7,700 stores.
CVS Caremark has maintained its annual profit Outlook, saying: it expects to earn between $2.72 and $2.82 per share excluding non-recurring items and discontinued operations. Analysts expect $2.77 per share.
The company expects to earn 63 and 65 cents per share in the second quarter and forecast revenue will increase from 10 to 12%, which implies a total of 26.41 billion to 26,89 billion. The company said revenues from the sale in the retail and pharmacy benefits management companies will grow, but the Caremark profit declines by about a quarter of the same period in 2010.
Analysts expect a profit adjusted 64 cents per action and NKJV billion on average.
CVS Caremark sharing roses 51 cents to $36.63 in afternoon trading.
No comments:
Post a Comment