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By Chris Burritt
WOONSOCKET - CVS Caremark Corp., the largest provider of prescription drugs in the U.S., reported first quarter profit that exceeded analysts’ estimates after grabbing customers from Walgreen Co.
Net income in the quarter ended March 31 rose 8.8 percent to $776 million, or 59 cents a share, from $713 million, or 52 cents, a year earlier, the Woonsocket-based company said today in a statement.
Excluding certain items, profit totaled 65 cents, compared to the 63-cent average of 20 analysts’ estimates compiled by Bloomberg.
Chief Executive Officer Larry Merlo increased marketing this year to lure customers from Walgreen, boosting demand for prescriptions and general merchandise.
Walgreen has lost customers after its contract to sell prescriptions through employee-benefits manager Express Scripts Inc. ended Dec. 31 amid a reimbursement dispute.
“We didn’t know it was going to be this good,” Judson Clark, an analyst with Edward Jones & Co. in Des Peres, Missouri, told Bloomberg News in a telephone interview.
“The customers bringing over prescriptions from Walgreen are probably going to stay with CVS regardless of what happens between Express Scripts and Walgreen,” said Clark, who recommends buying CVS shares.
CVS rose 1.2 percent to $45.26 at 10:25 a.m. in New York. The shares had gained 9.6 percent this year before today.
CVS boosted its full-year earnings forecast, citing benefits from the dispute between Walgreen and Express Scripts. Earnings this year will be as much as $3.33 a share, up from a previous projection of a maximum of $3.28. Analysts predicted $3.29, the average of 20 estimates compiled by Bloomberg.
Total revenue in the first quarter increased 20 percent to $30.8 billion. Analysts projected $30.3 billion, the average of 17 estimates compiled by Bloomberg.
Revenue in the pharmacy services business rose 32 percent to $18.3 billion in the quarter, while revenue in the retail pharmacy business increased 9.9 percent to $16 billion.