UPDATE 3-CVS says won't meet pharmacy benefits view in 2010

By Jessica Wohl CHICAGO, Nov 5 (Reuters) - CVS Caremark Corp said it would not meet its targets for its pharmacy benefits management business in 2010 and would search for a new executive to lead the unit, sending shares down 20 percent. In an announcement likely to throw doubt on its acquisition of pharmacy benefits management company Caremark in March 2007, CVS said on Thursday that Caremark Pharmacy Services President Howard McLure would step down as of Nov. 27 and a search for a successor would begin. CVS Chief Executive Tom Ryan will take on the role in the interim.

McClure was chief operating officer of Caremark when the acquisition closed. CVS told investors on a conference call it no longer expected low to mid-single digit growth in its PBM business in 2010, and forecast a drop of PBM operating profit of 10 percent to 12 percent for the period. "I'm not Polyanna here. We get it. We've got to produce better results on the PBM side," Ryan said. The company's shares fell $7.22 to $28.93 in morning trading on the New York Stock Exchange. CVS posted a bigger-than-expected jump in quarterly profit earlier on Thursday as consumers filled more prescriptions and said this year's profit should come in toward the higher end of its forecast. SAME-STORE SALES FALL SHORT 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. (Reporting by Jessica Wohl, editing by Maureen Bavdek, Dave Zimmerman) (([e-mail] [phone]; Reuters Messaging: [e-mail];)) Keywords: CVSCAREMARK/ (See http://blogs.reuters.com/shop-talk/ for Shop Talk -- Reuters' retail and consumer blog.) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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