CVS/Caremark 1Q Profit Rises 24 Pct

WOONSOCKET, R.I. – Pharmacy services provider CVS/Caremark Corp. said Tuesday its first-quarter earnings rose 24 percent on strong revenue growth.

Net income after paying preferred dividends grew to $405.4 million, or 43 cents per share, from $326.1 million, or 39 cents per share, a year ago. The results include 10 days of the operations of drug benefits manager Caremark, which was acquired by CVS for $26.5 billion on March 22.

That deal united the second-largest U.S. pharmacy benefits manager with the nation’s largest retail pharmacy chain by number of stores to better compete with rivals like Walgreen Co. , Wal-Mart Stores Inc., and Medco Health Solutions Inc., the largest benefits manager.

Excluding about three cents per share of merger and integration expenses as well as related share dilution, the company would have earned 46 cents per share in the latest period.

Revenue climbed 32 percent to $13.18 billion from $9.98 billion during the first quarter of 2006. Sales at stores open at least a year rose 7.5 percent, while pharmacy same-store sales climbed 7.8 percent and front-end same-store sales jumped 6.6 percent.

Analysts were seeking profit of 45 cents per share on revenue of $13.77 billion, according to a Thomson Financial poll.

CVS/Caremark shares rose 19 cents to $36.31 in morning trading.

"The underlying performance in CVS’ retail business was driven by healthy sales growth in the pharmacy and front end of our stores, solid expense control and continued improvements in margin," said Tom Ryan, president and CEO of CVS/Caremark. "The increasing usage of generic drugs and our successful front-end strategies are both driving higher margins at CVS."

For the first quarter, CVS/Caremark opened 21 new stores, closed 15 stores and relocated 51 others. As of March 31, CVS/Caremark operated 6,208 retail and specialty pharmacy stores and 52 specialty pharmacies in 44 states and the District of Columbia.