The city of Woonsocket sent forth some good news for a change this morning, with local drugstore giant CVS Caremark trumpeting a 9% spike in its first-quarter profit that has its stock price near a 52-week high at this writing. Here are some highlights from the coverage.
• John Kell, Dow Jones: “The drugstore-chain raised its full-year adjusted-earnings guidance for the second time this year on a greater-than-expected benefit from business being driven away from rival Walgreen Co., which left pharmacy-benefits manager Express Scripts Holding Co.’s network at the beginning of the year due to a contract rate dispute. … Same-store sales increased 8.4% over the prior-year period, with pharmacy same-store sales rising 9.8% as CVS outperformed all main competitors even more so than in prior quarters, according to Merlo. The overall 8.4% jump was the largest increase CVS has reported since late 2006, before it acquired Caremark. The increase contrasts with Walgreen, which has reported slumping same-store sales since the beginning of the year.”
• Tom Murphy, AP: “CVS Caremark Corp. gained millions of new prescriptions in the first quarter due to a contract impasse between two rivals, and now the drugstore chain wants to keep the growth going by ensuring that those customers stick around and use the rest of its store. … [T]he new customers CVS snared will likely stick around, analyst Dave Shove said in a research note. … ‘We suspect that sales will continue to benefit throughout the year, with or without a resolution by the companies,’ Shove wrote.”
• Bruce Japsen, Forbes: “While Walgreen Co. and Express Scripts remain at odds, rival CVS Caremark Corp. is taking their lunch money. … So far this year, the imbroglio in the market has been an unprecedented windfall to CVS. … But [CEO Larry] Merlo cautioned Wall Street analysts and investors this morning to take the financial benefit to CVS one quarter at a time.”
• Chris Burritt, Bloomberg: ”‘We didn’t know it was going to be this good,’ Judson Clark, an analyst with Edward Jones & Co. in Des Peres, Missouri, said today in a telephone interview. ‘The customers bringing over prescriptions from Walgreen are probably going to stay with CVS regardless of what happens between Express Scripts and Walgreen,’ said Clark, who recommends buying CVS shares.”
• Phil Wahba, Reuters: “CVS Chief Executive Larry Merlo told Reuters that the boost from his rivals’ fallout could be long lasting. ‘The longer the impasse lasts, the stickier that customer is going to be,’ Merlo said. ‘They’re going to have an opportunity to visit a CVS multiple times and begin to establish a relationship with the CVS pharmacists.’ … The only things that slowed down the company’s pharmacy sales were a weak flu season and new generic drugs, which carry lower prices than brand name drugs.”
(photo: CVS Caremark Corp.)