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CVS Caremark Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 3, 2011 04:44PM

CVS Caremark Corp. (CVS) filed Quarterly Report for the period ended 2011-09-30. Cvs Caremark has a market cap of $48.1 billion; its shares were traded at around $35.77 with a P/E ratio of 13.4 and P/S ratio of 0.5. The dividend yield of Cvs Caremark stocks is 1.4%. Cvs Caremark had an annual average earning growth of 13.4% over the past 10 years. GuruFocus rated Cvs Caremark the business predictability rank of 4.5-star.



Highlight of Business Operations:

Gross profit increased $41 million, or 4.7%, to $914 million in the three months ended September 30, 2011, as compared to the prior year period. Gross profit as a percentage of net revenues was 6.2% in the three months ended September 30, 2011, compared to 7.4% in the prior year period. Gross profit decreased $197 million, or 8.0%, to $2.3 billion in the nine months ended September 30, 2011, as compared to the prior year period. Gross profit as a percentage of net revenues was 5.3% in the nine months ended September 30, 2011, compared to 7.0% in the prior year period.

Net revenues increased $534 million, or 3.8%, to $14.7 billion in the three months ended September 30, 2011, as compared to the prior year period. This increase was primarily driven by a same store sales increase of 2.3% and net revenues from new stores, which accounted for approximately 130 basis points of our total net revenue percentage increase in the three months ended September 30, 2011. Net revenues increased $1.7 billion, or 3.9%, to $44.1 billion in the nine months ended September 30, 2011, as compared to the prior year period. This increase was primarily driven by a same store sales increase of 2.3% and net revenues from new stores, which accounted for approximately 140 basis points of our total net revenue percentage increase in the nine months ended September 30, 2011.

Gross profit increased $125 million, or 3.0%, to $4.3 billion in the three months ended September 30, 2011, as compared to the prior year period. Gross profit as a percentage of net revenues decreased to 29.3% in the three months ended September 30, 2011, compared to 29.5% in the prior year period. The increase in gross profit dollars in the three months ended September 30, 2011, was primarily driven by same store sales increases. The decrease in gross profit as a percentage of revenue was primarily driven by lower pharmacy margins due to continued reimbursement pressure partially offset by the positive impact of increased generic drugs dispensed. Additionally, the lower pharmacy margins were partially offset by higher front store margins as a result of higher private label sales as a percentage of our front store revenues. Front store revenues as a percentage of total revenues for the three months ended September 30, 2011 was 31.5%, as compared to 31.3% in the prior year period. Pharmacy revenues as a percentage of total revenues for the three months ended September 30, 2011 were 68.5%, compared to 68.7% in the prior year period.

Gross profit increased $463 million, or 3.7%, to $12.9 billion in the nine months ended September 30, 2011, as compared to the prior year period. Gross profit as a percentage of net revenues remained constant at 29.2% in both the nine month periods ended September 30, 2011 and 2010. The increase in gross profit dollars in the nine months ended September 30, 2011, was primarily driven by same store sales increases. Gross profit as a percentage of revenue was negatively impacted during the nine months by lower pharmacy margins due to continued reimbursement pressure which was entirely offset by the positive impact of increased generic drugs dispensed, and additionally offset by the positive impact of private label sales as a percentage of our front store revenues. Front store revenues as a percentage of total revenues for the nine months ended September 30, 2011 was 31.5%, as compared to 31.6% in the prior year period. Pharmacy revenues as a percentage of total revenues for the nine months ended September 30, 2011 were 68.5%, compared to 68.4% in the prior year period.

Operating expenses increased $41 million to $3.2 billion, or 21.7% as a percentage of net revenues, in the three months ended September 30, 2011, as compared to $3.1 billion, or 22.2% as a percentage of net revenues, in the prior year period. Operating expenses increased $168 million to $9.4 billion, or 21.3% as a percentage of net revenues, in the nine months ended September 30, 2011, as compared to $9.2 billion, or 21.8% as a percentage of net revenues, in the prior year period. The improvement in operating expenses as a percentage of net revenues for the three and nine months ended September 30, 2011, was primarily due to improved expense leverage from our same store sales growth and expense control initiatives.

Read the The complete Report



Stocks Discussed: CVS,
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