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Greensboro, N.C. - CVS Caremark Corp., the largest provider of prescription drugs in the United States, on Tuesday posted third-quarter profit that exceeded analysts' estimates and raised its earnings forecast for the year after winning customers from Walgreen Co.
Net income rose 16 percent to $1.01 billion, or 79 cents a share, from $868 million, or 65 cents, a year earlier, Woonsocket, R.I.-based CVS said in a statement. Excluding some items, profit was 85 cents a share, topping the 84-cent average estimate of 19 analysts surveyed by Bloomberg.
CVS boosted revenue 13 percent to $30.2 billion after luring shoppers from Walgreen, which last year ended a contract to sell prescriptions to customers of employee-benefits manager Express Scripts Holding Co. CVS stepped up marketing and promotions to retain those customers after Walgreen and Express Scripts renewed their contract in September.
"CVS is retaining more Walgreen scripts than we originally expected," John Heinbockel, an analyst at Guggenheim Securities in New York, wrote Tuesday in a note. He rates the shares a buy. The "retail segment results remained robust."
The company said it expects to keep at least 60 percent of the prescriptions it gained from Walgreen's dispute with Express Scripts. The company previously said it expected to keep at least 50 percent of those prescriptions in the fourth quarter.
Retail pharmacy same-store sales increased 4.3 percent, helped by a "significant" benefit from former Walgreen customers, CVS said. That equated to the retention of about 6.5 million to 7 million prescriptions formerly filled by Walgreen, Chief Executive Officer Larry Merlo told analysts Tuesday on a conference call. Adjusted profit this year will be as much as $3.41, CVS said Tuesday.