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CVS Caremark Corp. Reports Operating Results (10-Q)

November 06, 2012 | About:
10qk

10qk

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CVS Caremark Corp. (CVS) filed Quarterly Report for the period ended 2012-09-30.

Cvs Caremark Corp has a market cap of $58.6 billion; its shares were traded at around $46.99 with a P/E ratio of 15.1 and P/S ratio of 0.6. The dividend yield of Cvs Caremark Corp stocks is 1.4%. Cvs Caremark Corp had an annual average earning growth of 15.7% over the past 10 years. GuruFocus rated Cvs Caremark Corp the business predictability rank of 4-star.

Highlight of Business Operations:

(2) Intersegment eliminations relate to two types of transactions: (i) Intersegment revenues that occur when Pharmacy Services Segment customers use Retail Pharmacy Segment stores to purchase covered products. When this occurs, both the Pharmacy Services and Retail Pharmacy segments record the revenue on a standalone basis, and (ii) Intersegment revenues, gross profit and operating profit that occur when Pharmacy Services Segment customers, through the Companys intersegment activities (such as the Maintenance Choice program), elect to pick-up their maintenance prescriptions at Retail Pharmacy Segment stores instead of receiving them through the mail. When this occurs, both the Pharmacy Services and Retail Pharmacy segments record the revenue, gross profit and operating profit on a standalone basis. Beginning in the fourth quarter of 2011, the Maintenance Choice eliminations reflect all discounts available for the purchase of mail order prescription drugs. The following amounts are eliminated in consolidation in connection with the item (ii) intersegment activity: net revenues of $841 million and $657 million for the three months ended September 30, 2012 and 2011, respectively, and $2.5 billion and $1.8 billion for the nine months ended September 30, 2012 and 2011, respectively; gross profit and operating profit of $106 million and $42 million for the three months ended September 30, 2012 and 2011, respectively, and $279 million and $117 million for the nine months ended September 30, 2012 and 2011, respectively.

(2) Intersegment eliminations relate to two types of transactions: (i) Intersegment revenues that occur when Pharmacy Services Segment customers use Retail Pharmacy Segment stores to purchase covered products. When this occurs, both the Pharmacy Services and Retail Pharmacy segments record the revenue on a standalone basis, and (ii) Intersegment revenues, gross profit and operating profit that occur when Pharmacy Services Segment customers, through the Companys intersegment activities (such as the Maintenance Choice program), elect to pick-up their maintenance prescriptions at Retail Pharmacy Segment stores instead of receiving them through the mail. When this occurs, both the Pharmacy Services and Retail Pharmacy segments record the revenue, gross profit and operating profit on a standalone basis. Beginning in the fourth quarter of 2011, the Maintenance Choice eliminations reflect all discounts available for the purchase of mail order prescription drugs. The following amounts are eliminated in consolidation in connection with the item (ii) intersegment activity: net revenues of $841 million and $657 million for the three months ended September 30, 2012 and 2011, respectively, and $2.5 billion and $1.8 billion for the nine months ended September 30, 2012 and 2011, respectively; gross profit and operating profit of $106 million and $42 million for the three months ended September 30, 2012 and 2011, respectively, and $279 million and $117 million for the nine months ended September 30, 2012 and 2011, respectively.

Gross profit increased $167 million, or 18.3%, to $1.1 billion in the three months ended September 30, 2012, as compared to the prior year period. Gross profit as a percentage of net revenues was 6.0% in the three months ended September 30, 2012, compared to 6.2% in the prior year period. Gross profit increased $211 million, or 9.3%, to $2.5 billion in the nine months ended September 30, 2012, as compared to the prior year period. Gross profit as a percentage of net revenues was 4.5% in the nine months ended September 30, 2012, compared to 5.3% in the prior year period.

Net revenues increased $810 million, or 5.5%, to $15.5 billion in the three months ended September 30, 2012, as compared to the prior year period. This increase was primarily driven by the same store sales increase of 4.3% and net revenues from new stores, which accounted for approximately 100 basis points of our total net revenue percentage increase in the three months ended September 30, 2012. Net revenues increased $3.3 billion, or 7.4%, to $47.4 billion in the nine months ended September 30, 2012, as compared to the prior year period. This increase was primarily driven by the same store sales increase of 6.1% and net revenues from new stores, which accounted for approximately 115 basis points of our total net revenue percentage increase in the nine months ended September 30, 2012.

Operating expenses increased $186 million to $3.4 billion, or 21.7% as a percentage of net revenues, in the three months ended September 30, 2012, as compared to $3.2 billion, or 21.7% as a percentage of net revenues, in the prior year period. Operating expenses increased $542 million to $9.9 billion, or 21.0% as a percentage of net revenues, in the nine months ended September 30, 2012, as compared to $9.4 billion, or 21.3% as a percentage of net revenues, in the prior year period. Operating expenses as a percentage of net revenues for the three months ended September 30, 2012 was flat. The improvement in operating expenses as a percentage of net revenues for the nine months ended September 30, 2012 was primarily related to expense leverage from our same store sales growth and expense control initiatives.

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