CVS Narrows Full-Year 2013 Guidance

There won't be any need to take two aspirin and call CVS Caremark in the morning: It reported first-quarter earnings this week that came in ahead of top- and bottom-line consensus estimates by Capital IQ analysts, while narrowing its full-year guidance.

CVS reported revenues for the three months ending on March 31 of $30.76 billion, virtually unchanged from the same period last year when it recorded revenues of $30.79 billion, but that was still ahead of analyst expectations of $30.35 billion. The pharmacy chain recorded GAAP profits of $0.78 per share, up 30% and beating analyst forecasts of $0.73 per share.

As it looks out over the landscape for the rest of the year, CVS narrowed the range of both non-GAAP profits and earnings from continuing operations for 2013. It now expects adjusted earnings of $3.89 to $4.00 a share, compared to its previous expectations of $3.86 to $4.00 a share, while profits from continuing operations are anticipated to be in the range of $3.64 to $3.75, tightening up the low end again from $3.61 per share.

While noting the positive effects the strong flu season, CVS President and CEO Richard Merlo also said: "As expected, the influx of new generic drugs was a key driver across the enterprise, resulting in solid gross margin expansion as well as significant growth in operating profit and earnings. In fact, operating profit grew well beyond our expectations across the enterprise, and we delivered EPS that was three cents above the high end of our guidance."

Assuming it completes $4 billion in stock buybacks, the pharmacy and benefits manager also reconfirmed its 2013 free cash flow guidance of $4.8 billion to $5.1 billion, and its 2013 cash flow from operations guidance of $6.4 billion to $6.6 billion.


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