CVS On Track for New Annual High

For the quarter, the pharmacy benefits management and retail sales firm posted adjusted diluted earnings per share (EPS) of $1.14 on revenues of $31.4 billion. In the same period a year ago, the company reported $0.89 per share on revenues of $28.32 billion. Fourth-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $1.10 and $31.13 billion in revenues.

For the full year, CVS reported adjusted EPS of $3.43 on revenues of $123.1 billion, compared with 2011 EPS of $2.80 on $107.1 billion in revenues. The consensus estimate called for EPS of $3.40 on revenues of $122.88 billion.

On a GAAP basis, fourth-quarter EPS came in at $0.90 and full-year EPS totaled $3.03. In addition to other adjustments, adjusted earnings exclude a loss of $0.17 per share due to early extinguishment of debt.

The company’s CEO said:

Both the PBM [pharmacy benefits management] 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.

CVS raised its full-year 2013 guidance for adjusted EPS to a range of $3.86 to $4.00. The company anticipates free cash flow of $4.8 billion to $5.1 billion. The consensus analysts’ estimate calls for 2013 EPS of $3.94 on revenues of $124.92 billion.

Same-store pharmacy sales rose 4% year-over-year in the quarter, reversing a decline of 9% in the third quarter. In its benefits management business, CVS’s revenues jumped 17.4%, mainly due to new clients the company picked up during the spat between Walgreen Co. (NYSE: WAG) and Express Scripts Holding Co. (NASDAQ: ESRX) in the first half of 2012.

The company’s shares are up 1.5% in premarket trading this morning, at $52.50 in a 52-week range of $42.43 to $52.73. The consensus target price for the shares was around $56.60 before today’s report.