The company’s CEO said:
The retail pharmacy business continued to capitalize on the market disruption resulting from the impasse between two of our competitors, and our retention of the prescriptions we gained during that impasse has been strong since their dispute was resolved in mid-September. Given what we have seen to date, we are optimistic that we will exceed our initial retention goal for the fourth quarter and now expect to retain at least 60% of the prescriptions gained during the impasse.
CVS was able to take advantage of the contract dispute between Walgreen Co. (NYSE: WAG) and Express Scripts Inc. (NASDAQ: ESRX) to attract new business and the company appears confident in its ability to retain these new subscribers.
The company also raised its full-year EPS guidance from a range of $3.32 to $3.38 to a range of $3.38 to $3.41. The company based the revision on an accelerated share repurchase program of $1.2 billion that it put into place in September.
The one sore spot in this quarterly report has to be the 9% drop in same-store pharmacy sales, which CVS attributed to the recent introduction of generic drugs. That is worrisome because the retail pharmacy segment generates about 80% of the company’s gross profit.
The company’s shares are up about 2% in premarket trading this morning, at $47.60, in a 52-week range of $36.44 to $49.23. The consensus target price for the shares was around $53.00 before today’s report.