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Caremark Posts Higher Quarterly Profit, Revenue

Reuters
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Pharmacy benefits manager and takeover target Caremark Rxon Tuesday reported higher earnings and net revenue for the fourth quarter, driven by an increase in retail and mail sales.

The company earned 71 cents a share on net revenue of $9.27 billion, compared with 64 cents a share on net revenue of $8.37 billion in the year-ago quarter.

Analysts, on average, were expecting revenue of $9.36 billion and net earnings of 69 cents per share, according to Reuters Estimates.

The company said its fourth-quarter results include $5.4 million in expenses related to Caremark's proposed takeover by CVS and a favorable $5.3 million settlement related to a former AdvancePCS client.

CVS has proposed paying $23.4 billion in stock, based on Caremark's average number of shares reported for the fourth quarter. It has also proposed a special $6 cash dividend.

Hostile bidder Express Scripts has offered $26.8 billion in cash and stock.

The battle is partly being fought in court as investors push Caremark to give more consideration to the Express Scripts offer.

A Delaware Chancery Court judge expects to rule by Feb. 23 on requests for a preliminary injunction against the CVS purchase.

CVS announced its plans to buy Caremark in November, and Express Scripts swooped in with a higher offer in mid-December. Since then, CVS has sweetened its offer twice.

Caremark, which manages pharmacy benefits for corporations, has maintained that its deal to be acquired by drugstore chain CVS would bring more value to shareholders than Express Scripts'.

Caremark on Tuesday said fourth-quarter revenue for mail pharmacy -- essentially drugs sold by mail -- rose 5% to $3.2 billion even though claims were down 1% from a year earlier primarily due to contract terminations that have been disclosed.

Medicare and other new prescription claims pushed retail pharmacy claims up 1% to 112.8 million. Retail revenue rose 14% to $6.0 billion.

For fiscal 2007, Caremark expects adjusted earnings per share of between $2.89 and $2.92, a 19% to 21% increase over fiscal 2006. That forecast does not include expenses related to the proposed CVS deal.

The company forecast first-quarter earnings per share of 68 cents.

Wall Street expects adjusted earnings of $2.83 a share for the fiscal year and 63 cents a share for the first quarter, according to Reuters Estimates.