CVS Caremark (CVS) Sinks On PBM Contract Losses And Lower Expected Profits
More News related to CVS
- Brower Piven Encourages Investors Who Have Losses in Excess of $300,000 From Investment in CVS Caremark Corporation to Inquire About the Lead Plaintiff Position in Securities Fraud Class Action Lawsui
- CVS/pharmacy Kicks Off Annual Thanks and Giving(R) Campaign for the St. Jude Children's Research Hospital
- Stull, Stull & Brody Announces Class Action on Behalf of Shareholders of CVS Caremark Corporation
- Shalov Stone Bonner & Rocco LLP Announces Class Action Against CVS Caremark Corporation
- Law Offices Bernard M. Gross, P.C. Filed a Class Action Lawsuit Against Sunpower Corporation -- SPWRA, SPWRB
Shares for CVS Caremark Corp (NYSE: CVS) have plunged after the company announced on its conference call that its prescription benefits (PBM) business is seeing larger than expected contract losses.
CVS had approximately $4.5 billion in contract losses for the 2010 selling season, versus $1.4 billion in wins. CVS now expects PBM operating profits to decline as much as 10% to 12% in 2010, versus prior expectations for growth in low to mid single digits.
The losses include the business for dual-eligible customers who are able to receive both Medicare and Medicaid benefits. Also the company lost two contracts, including the New Jersey state Blue Cross plan and Ohio's managed Medicare business.
CVS shares have dropped to $29.10, 19 percent decline in early market movement.
During the third quarter CVS reported results nearly in-line with analyst estimates.
The Company reported third quarter earnings of 65 cents per share, 1 cent better than the market consensus of 64 cents. Revenue for the quarter was $24.60 billion, which was in-line with the analyst estimate of $24.61 billion.
Revenue for CVS rose 17.9 percent over the past year, with sales from stores that have been open over a year grew by 5.7 percent.
The Company narrowed its adjusted earnings per share to $2.61 to $2.64, from the prior forecast of $2.59 to $2.64 per share.
"We achieved solid revenue growth, healthy earnings growth and significant free cash flow. In addition, we recently completed the Longs integration, and the early customer feedback and improvement in financial results are quite positive," Tom Ryan, Chairman, President, and Chief Executive Officer, said in a press release prior to the company’s conference call.
Ryan also announced the appointment of David Denton as the new CFO for CVS Caremark. Denton will succeed David Rickard, who announced his intentions to retire in February, effective January 1, 2010.
Maybe in an attempt to smooth the blow of of the PBM business, CVS announced a $2 billion buyback.
Related Categories
EarningsGuidance
Hot List
Stocks Mentioned
+0.56Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
