(Bloomberg) — CVS Caremark Corp., the largest provider of prescription drugs in the U.S., posted fourth-quarter profit that topped analysts’ estimates as pharmacy sales rose on new medicines and new customers.
CVS (NYSE:CVS) is reporting $1.3 billion in net income for the quarter on $33 billion in revenue, compared with $1.1 billion in net income on $31 billion in revenue for the fourth quarter of 2012.
Excluding one-time items, earnings were $1.12 a share, topping by 1 cent the average of 25 estimates compiled by Bloomberg.
The new drugs and an expanded roster of clients for specialty pharmaceuticals, along with higher prices, increased revenue from pharmacy services to $20 billion, the company said.
CVS acquired Caremark for $27 billion in 2007. The deal made CVS the biggest mail-order and retail medicine provider in the United States.
The company has announced plans to stop selling tobacco products at its 7,600 pharmacies Oct. 1. The decision could cost it about $2 billion in annual revenue, but it was greeted with an “overwhelmingly positive” response last week, Chief Executive Officer Larry Merlo said today.
“We’re doing this from a position of strength,” Merlo said on a conference call. “All see the health benefit and the role that pharmacy can play in advancing smoking cessation and improving control of disease. We strongly believe this decision will strengthen our position as a health care leader.”
CVS rose 2.8 percent to $68.81 at 9:44 a.m. in New York. The shares have climbed 31 percent in the past 12 months through yesterday.
The company expects to benefit from the Patient Protection and Affordable Care Act (PPACA).
PPACA exchange plan enrollment seems to be overcoming a “slow and bumpy” start, Merlo said.
The company is encouraged by recent progress with expanded insurance coverage, is in a good position to support new customers and expects a “modest net positive” benefit from the changes this year, he said.
“The beat this quarter appears clean and solid, with upside coming from the Pharmacy Services segment and solid volumes,” David Larsen, an analyst with Leerink Partners in Boston, wrote in a note to investors today.
–Editors: Kevin Orland, Bruce Rule