Summary
CVS Caremark Corporation reported solid revenue growth for the second quarter and first half of 2011, driven by a combination of a significant new contract win in its Pharmacy Services segment and continued strength in its Retail Pharmacy segment. Revenue increased by 10.9% for the quarter and 9.9% for the year-to-date period, reflecting the integration of the acquired UAM Medicare Part D Business and organic growth. While revenue saw a healthy increase, gross profit margins experienced some compression, particularly in the Pharmacy Services segment, due to contract renewals with lower pricing and increased sharing of manufacturer rebates. The company's operating expenses also saw an increase, largely attributed to integration costs from the UAM acquisition and efforts to streamline operations, though these were partially offset by disciplined expense controls and improved operating leverage in the retail segment. Despite margin pressures, the overall financial results indicate continued business expansion and strategic execution.
Financial Highlights
57 data points| Revenue | $26.41B |
| Cost of Revenue | $21.33B |
| Gross Profit | $5.09B |
| Operating Expenses | $3.60B |
| Operating Income | $1.48B |
| Interest Expense | $149.00M |
| Net Income | $815.00M |
| EPS (Basic) | $0.60 |
| EPS (Diluted) | $0.60 |
| Shares Outstanding (Basic) | 1.35B |
| Shares Outstanding (Diluted) | 1.36B |
Key Highlights
- 1Net revenues increased by 10.9% to $26.6 billion for the three months ended June 30, 2011, and by 9.9% to $52.5 billion for the six months ended June 30, 2011, compared to the prior year periods.
- 2The Pharmacy Services segment saw significant revenue growth of 23.2% for the quarter, driven by a new large health insurance carrier contract and the acquisition of the UAM Medicare Part D Business.
- 3The Retail Pharmacy segment reported a 3.6% revenue increase for the quarter, supported by same-store sales growth and new store openings.
- 4Gross profit margin declined in the Pharmacy Services segment from 6.9% to 5.0% for the quarter, attributed to pricing compression on contract renewals and increased sharing of manufacturer rebates.
- 5Operating expenses increased by 2.4% for the quarter, driven by acquisition integration costs and operational streamlining efforts in Pharmacy Services.
- 6The company repurchased approximately $971 million of common stock in the first six months of 2011 under its $2.0 billion share repurchase program.
- 7CVS Caremark successfully raised $1.5 billion in long-term debt to repay commercial paper and other corporate debt, strengthening its capital structure.