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CVS Profit Rises 3%, Outpacing Analysts' Estimates

Drugstore chain CVS posted a 3% increase in quarterly profit on Thursday, driven by strong sales of prescription medications and greater use of generic drugs, which are more profitable for pharmacies.

CVS, which hopes to buy pharmacy benefits manager Caremark Rx, also said that sales at stores open at least a year rose 8.6% in January.

Net income rose to $417.2 million, or 49 cents a share, from $406.4 million, or 48 cents a share, a year earlier. The results were hurt by the June acquisition of 701 Sav-on and Osco stores, which trimmed its results by about 5 cents a share.

The Woonsocket, R.I., company was expected to earn 44 cents a share, according to a Thomson Financial consensus estimate,

Sales jumped 24% to $12.1 billion from $9.73 bilion, helped by the addition of the Albertson's stores. Sales at stores open more than one year rose 8.7%.

Separately, total January sales soared 24.2% to $3.7 billion, benefiting from the addition of the Sav-on and Osco stores.

Pharmacy same-store sales rose 8.7% in January, while sales of "front-end," or general merchandise, rose 8.2%.

Caremark RX accepted CVS's all-stock bid in November. A Caremark rival, Express Scripts , entered the fray in December with an unsolicited cash-and-stock offer, but Caremark still favors the CVS takeover.

In January, CVS sweetened its offer with plans to pay a special $2-per-share dividend to Caremark shareholders once the deal closes.

The agreement between CVS and Caremark has already received antitrust approval. Caremark shareholders will meet Feb. 20 to consider the CVS deal, and CVS shareholders will meet Feb. 23.