CVS Caremark posts higher profit, narrows outlook

By Jessica Wohl

CHICAGO (Reuters) - CVS Caremark Corp <CVS.N> posted a bigger-than-expected jump in quarterly profit on Thursday as consumers filled more prescriptions and said this year's profit should come in towards the higher end of its forecast.

Shares of CVS rose 1 percent in premarket trading.

CVS has benefited from its "Maintenance Choice" program, which allows customers to pick up 90-day prescriptions in its drugstores at the same lower price they would pay if getting the drugs through its pharmacy benefits unit's mail service.

That plan boosted pharmacy sales at stores open at least a year by about 2.5 percentage points in the quarter. Still, same-store sales of general merchandise rose just 0.8 percent, and overall same-store sales fell short of CVS's target.

Profit got a boost as the company dispensed more generic drugs at its stores and through the pharmacy services unit. While generic drugs carry lower revenue, they are typically more profitable than branded products.

CVS earned $1.02 billion, or 71 cents per share, up from $732.5 million, or 50 cents per share, a year earlier.

Adjusted third-quarter earnings from continuing operations were 65 cents per share, while analysts' average forecast was 64 cents, according to Thomson Reuters I/B/E/S.

CVS said it now expects 2009 adjusted earnings per share from continuing operations of $2.61 to $2.64, versus a prior forecast of $2.59 to $2.64. Analysts expect $2.62.

Net revenue in the third quarter jumped 18.1 percent to $24.64 billion, topping analysts' average forecast of $24.61 billion. CVS also got a boost from an extra reporting day in this year's quarter.

Revenue climbed 23.4 percent in the pharmacy services unit and 17.9 percent in the retail unit.

Same-store sales rose 5.7 percent. In August, CVS had forecast an increase of 6 percent to 8 percent.

On Tuesday, rival Walgreen Co <WAG.N> said its same-store sales rose 4.9 percent in October, aided by flu vaccinations.

Walgreen administered 5 million seasonal flu shots this year, up from 1.2 million in 2008. CVS cut its flu shot clinics short last month due to delays in getting vaccines.

(Reporting by Jessica Wohl, editing by Maureen Bavdek, Dave Zimmerman)

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