CVS First-Quarter Profit Hurt by Severe Winter WeatherMichelle Fay Cortez
CVS Caremark Corp., the largest provider of prescription drugs in the U.S., posted first-quarter profit that fell short of estimates as cold weather and a mild flu season hurt sales. The company reaffirmed its 2014 forecast.
Earnings, excluding one-time items, of $1.02 a share missed by 2 cents the average of 21 analyst estimates compiled by Bloomberg. Full-year profit is still expected to be $4.36 to $4.50 a share, the the Woonsocket, Rhode Island-based company said in a statement today.
The severe winter weather kept consumers out of storefront pharmacies during the quarter, reducing sales of prescription drugs and consumer goods. CVS joined Express Scripts Holding Co., its biggest rival in the pharmacy benefit management business, in receiving a subpoena from the U.S. Attorney’s Office for the District of Rhode Island, CVS Chief Executive Officer Larry Merlo said.
The subpoena requested documents similar to those from “one of our competitors as it relates to fees and rebates,” Merlo said on a conference call with analysts. “We are cooperating fully on that matter.”
Express Scripts said earlier this week it was asked for information about its contractual arrangements with Pfizer Inc., Bayer EMD Serono and Biogen Idec Inc. regarding the medicines Betaseron, Rebif and Avonex.
CVS hasn’t received any requests from the U.S. Department of Labor, he said. Earlier this month, the department’s Employee Benefits Security Administration asked Express Scripts about its client relationships from 2009 to the present, the St. Louis-based company disclosed in a regulatory filing.
CVS rose 1.1 percent to $73.86 at the close in New York. The shares have gained 25 percent in the past 12 months.
Net income increased to $1.13 billion, or 95 cents a share, from $954 million, or 77 cents, a year earlier, the company said in the statement. Revenue increased 6.3 percent to $32.7 billion from $30.8 billion a year earlier, beating the $32.3 billion average of analysts’ estimates.
A mild influenza season, introductions of generic drugs and the Easter holiday falling in April this year also hurt comparison with a year earlier, CVS said.