CVS (CVS) Issues 16% Rise in Q4 Profit as Pharmacy Services Segment Outperforms
Net revenue increased 15.2 percent year over year to a record $28.3 billion and fell just short of the Street’s consensus of $28.12 billion. The retail pharmacy segment's same-stores sales rose 2.5 percent while revenue increased 4 percent to $15.5 billion. Revenue in the Pharmacy Services segment grew 32.4 percent to $15.9 billion.
The cost of revenue totaled $22.76 billion for the quarter, an increase of 19 percent year over year.
Gross profit rose slightly to $5.55 billion and accounted for 20 percent of total sales. Operating profits rose to $1.96 billion and totaled 7 percent of revenue.
Income from continuing operations increased $79.0 million to $1.1 billion.
Adjusted EPS of $0.89 was up 16.2 percent from the same quarter last year, versus the analyst consensus estimate of $0.89. GAAP diluted EPS from continuing operations were $0.84.
The company finished the quarter and year with $1.413 billion in cash and cash equivalents, slightly lower than the $1.427 it had at the beginning of the year.
President and Chief Executive Officer, Larry Merlo, said, "2011 was a year of great accomplishment for CVS Caremark. We executed successfully on a number of key initiatives across the Company and reported solid financial results, delivering on our promises. Our retail business continued to post strong top- and bottom-line results, and our PBM enjoyed strong revenue growth, another very successful selling season, and great progress on several important initiatives. These include the development of a number of unique, new integrated offerings as well as the streamlining initiative, which is expected to produce cumulative savings from 2011 through 2015 of more than $1 billion. We generated $4.6 billion in free cash for the year, exceeding our goal, and returned more than $3.5 billion to our shareholders in the form of dividends and share repurchases."
For the first quarter of fiscal 2012, CVS forecasts adjusted EPS from continuing operations of $0.61 to $0.63 and GAAP diluted EPS from continuing operations of $0.55 to $0.57. The Street is looking for earning of $0.61 per share for the quarter.
The company currently expects adjusted EPS of $3.18 to $3.28 and GAAP diluted earnings per share from continuing operations of $2.96 to $3.06 per share in 2012. The Street’s consensus is calling for $3.24 per share in earnings. CVS now expects the Retail Pharmacy segment's operating profit to increase between 8.5-10.5 percent, up from a prior guidance range of 7-9 percent, while the Pharmacy Services segment's operating profit growth is still expected to increase between 11-15 percent.