The Woonsocket, Rhode Island-based pharmacy health care services company said Wednesday morning that net revenues during the fourth quarter increased 10.9 percent to a record $31.4 billion as sales in its pharmacy services arm rose 17.4 percent to $18.6 billion and by 5.1 percent to $16.3 billion in its retail pharmacy operations. Net income totaled $1.13 billion, or 90 cents per share, in the latest quarter, compared to $1.06 billion, or 81 cents per share, in the year prior quarter. Adjusted earnings, excluding $138 million of intangible asset amortization, were $1.14 per share, a 27.9 percent increase over the year prior period.
Wall Street analysts were expecting adjusted earnings of $1.10 per share and revenue of $31.13 billion.
"I'm very pleased with our fourth quarter results. Both the PBM and retail segments turned in strong performances at the high end of our expectations. And we also realized below-the-line benefits in the quarter from a lower effective tax rate and fewer shares than we originally anticipated, resulting in EPS exceeding the high end of our guidance by approximately three cents per share," said CVS President and Chief Executive Officer Larry Merlo.
Sales at stores opened more than one year grew by 4.0 percent in Q4 2012 versus Q4 2011. In the latest quarter, CVS opened 37 new retail drugstores and closed two retail drugstores, while relocating eight retail drugstores. At the end of the year, CVS operated 7,525 locations in 45 states, the District of Columbia and Puerto Rico.
For the full year 2012, net revenue increased 15.0 percent to an historic high of $123.1 billion as the pharmacy services were up 24.7 percent and retail pharmacy sales rose 6.8 percent. On an adjusted basis, excluding the loss on early extinguishment of debt, CVS earned $3.43 per share.
Looking ahead, CVS said it expects first-quarter adjusted earnings per share between 77 and 80 cents and GAAP diluted earnings per share from continuing operations between 71 and 74 cents. For all of 2013, CVS raised its adjusted earnings per share to the range of $3.86 to $4.00 and GAAP diluted earnings per share from continuing operations, which includes the impact of debt refinancing, between $3.61 and $3.75. The company had previously forecast adjusted earnings of $3.84 to $3.98 per share and GAAP earnings per share from continuing operations of $3.59 to $3.73.
Shares of CVS closed trading on Tuesday at $51.72, ahead 1.4 percent on the day. Across the past 52 weeks, shares have appreciated by about 20 percent, including hitting an all-time high of $52.73 in January.
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