May 1 (Bloomberg) -- CVS Caremark Corp., the largest provider of prescription drugs in the U.S., reported first-quarter profit that beat analysts’ estimates, helped by demand for flu medications and new generic drugs.
Net income increased 23 percent to $956 million, or 77 cents a share, from $776 million, or 59 cents, a year earlier, the Woonsocket, Rhode Island-based company said today in a statement. Excluding some items, profit totaled 83 cents a share. Analysts projected 79 cents, the average of 19 estimates compiled by Bloomberg.
Chief Executive Officer Larry Merlo cited the flu season and the introduction of new generic drugs as key drivers of profitability during the quarter. The flu hit the U.S. earlier than normal this year, with 47 states reporting widespread instances of the virus in early January, according to the U.S. Centers for Disease Control and Prevention. Retail pharmacy same-store prescription volumes rose 2 percent in the quarter.
“The strong incidence of flu in January/February helped boost prescription volume,” Tom Gallucci, an analyst at Lazard Capital Markets in New York, wrote in a note April 25. He recommends buying CVS shares.
CVS advanced 1 percent to $58.75 at the close in New York. The shares have climbed 22 percent this year, outpacing a gain of 11 percent by the Standard & Poor’s 500 Index.
The company raised the lower end of its full-year earnings forecast, projecting adjusted per-share profit of $3.89 to $4. It had estimated a minimum of $3.86 in February. Analysts expected $3.96, on average.
First-quarter gross margin, the percentage of sales left after cost of goods sold, widened to 18.1 percent from 16.6 percent a year earlier, helped by rising demand for more-profitable generic drugs.
Revenue was little changed at $30.8 billion, topping the $30.2 billion average of analysts’ estimates.
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