CVS Caremark finalizes Longs acquisition; announces Q3 earnings, generic Rx discount program

WOONSOCKET, R.I. CVS Caremark—which is expecting to close today the acquisition of Longs Drug Stores—announced record third quarter revenues, operating profit and earnings. In addition, the pharmacy retailer is entering into the discount generic drug program arena with its new Health Savings Pass program.

“Despite the difficult macro economic environment we posted solid third quarter results right in line with our plan. In the third quarter, we received record sales, record operating profit, record earnings per share and record cash flow,” Tom Ryan, chairman, president and chief executive officer told analysts during a conference call to discuss results.

Net revenues for the third quarter ended Sept. 27 increased $368.2 million to $20.9 billion, up from $20.5 billion in the year-ago period.

Revenues in the retail segment increased 5.3 percent to $11.5 billion in the third quarter, while same-store sales rose 3.7 percent. Pharmacy same-store sales increased 3.8 percent and were negatively impacted by about 280 basis points due to recent generic introductions. Front-end same-store sales increased 3.3 percent.

Revenues in the pharmacy services segment decreased 0.9 percent to $10.6 billion. Retail network claims processed during the quarter increased 2.7 percent to 134.4 million compared with 130.9 million in the year-ago period.

The increase in retail network claims was driven primarily by increased enrollment in the Medicare Part D business. Mail service claims processed during the quarter decreased 19.6 percent to 14.7 million compared with 18.3 million in the year-ago period primarily due to the termination of the Federal Employees Health Benefit Plan mail contract, effective Dec. 31, 2007.

Net earnings available to common shareholders rose to $732.5 million, or 50 cents a share, from $686.1 million, or 45 cents a share, in the year-ago period.

In addition to discussing third quarter results, Ryan unveiled details of the company’s new Health Care Savings Program that offers a 90-day supply of more than 400 generic drugs beginning Nov. 9.

Aimed at helping the uninsured in today’s challenging economy, the new Health Savings Pass has a $10 annual enrollment fee for a 90-day prescription for one of more than 400 common generic maintenance medications that treat such conditions as diabetes, high blood pressure and high cholesterol for $9.99 at a CVS pharmacy.

In addition, the Health Savings Pass will provide access to services and screenings at MinuteClinic, the retail-based health clinics, at a 10 percent discount for cash-paying patients.

Consumers can obtain a Health Savings Pass at any of the more than 6,300 CVS locations nationwide but calling 888-616-2273 or online www.cvs.com/healthsavingspass where they can find a list of the medications covered.

Meanwhile, CVS is set to close today its acquisition of Longs, a move that will add 521 retail locations in California, Hawaii, Nevada and Arizona, as well as Longs’ PBM services.

CVS has completed the subsequent offering period of its tender offer for all of the outstanding common stock of Longs, as reported Wednesday by Drug Store News.