Wed., May 2, 2012 9:02am EDT (Reuters) — CVS Caremark Corp raised its full-year forecast on Wednesday after reporting a sharp rise in first-quarter sales as the drugstore operator and pharmacy benefits manager continued to win over former patrons of Walgreen stores.
CVS, which operates the CVS drugstore chain and the CVS Caremark pharmacy benefits management business, said sales rose 19.9% to $30.8 billion in the quarter, helped by an 8.4% increase in sales at drugstores open at least a year and more business from Medicare recipients.
Walgreens, the largest U.S. drugstore chain, stopped filling prescriptions at the end of 2011 for patients of Express Scripts, a pharmacy benefits manager. CVS, with more than 7,352 U.S. stores, is among the retailers benefiting as Express Scripts patients go elsewhere.
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."
Pharmacy services revenue rose 32.3% to $18.3 billion. Drugstore revenue rose 9.9% to $16 billion.
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.
Merlo said he was "optimistic" at this early stage of the so-called PBM "selling season," the annual campaign to land more corporate accounts.
Its two largest PBM rivals, Express Scripts and Medco, merged last month, but at least one analyst does not expect that deal to hurt CVS Caremark's ability to win new contracts.
"It doesn't pose a threat. In many ways this can be good for CVS because they're the clear alternative," said Judson Clark, an analyst with Edward Jones.
(Reporting By Phil Wahba in New York and Jessica Wohl in Chicago; Editing by Gerald E. McCormick, John Wallace, Dave Zimmerman)
© 2011 Thomson Reuters. Click for Restrictions.
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