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Earnings Preview: CVS reports 1Q results Thursday

Tue, 05/03/2011 - 10:45am
The Associated Press

Drugstore operator and pharmacy benefits manager CVS Caremark Corp. reports its first-quarter results before the stock market opens Thursday.

WHAT TO WATCH FOR: For the last few years the Caremark pharmacy benefits management business has struggled to win new clients and add to revenue, so Wall Street will be looking for details on its ability to gain new contracts. Despite its difficulties, Caremark has had some significant wins: on Jan. 1 it began a 12-year contract with Aetna Inc. that is expected to add $8.2 billion to its revenue in 2011. And on Friday the company acquired Universal American Corp.'s Medicare Part D business in a $1.25 billion deal that more than doubled the size of Caremark's Medicare Part D business. That acquisition is expected to add 8 cents per share to its annual profit.

Investors will also be examining results from CVS stores and the effects of the economy on the company's sales.

WHY IT MATTERS: The Woonsocket, R.I., company handles hundreds of millions of prescriptions every year. With 7,100 drugstores, it is the second-biggest chain after Walgreen Co. Caremark is one of the biggest pharmacy benefits management companies.

WHAT'S EXPECTED: Analysts polled by FactSet expect CVS Caremark to report a profit of 55 cents per share on $25.76 billion in revenue.

LAST YEAR'S QUARTER: In the first quarter of 2010, CVS Caremark reported a profit of $771 million, or 55 cents per share, on $23.76 billion in revenue.

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