Caremark’s second-quarter profit rises 53 percent

After the news, Caremark’s shares rose $2.30, or 5.2 percent, to close at $46.96 Thursday on the New York Stock Exchange.

Caremark, which provides drug-benefit services to health-plan sponsors and operates a nationwide retail pharmacy network, reported earnings of $212.8 million, or 47 cents per share, compared with $139.2 million, or 30 cents per share, in the year-ago period.

Wall Street’s consensus estimate was for earnings of 46 cents per share on estimated revenue of $8.19 billion, according to Thomson Financial.

Revenue rose 13 percent to $8.24 billion, driven by mail-pharmacy revenue, which jumped 34 percent to $2.8 billion.

Glenn Garmont, an analyst with New York-based First Albany Capital, said Caremark and other prescription-benefits management firms continue to see high growth in mailing drugs because it’s more cost-effective and convenient for plan members.

“It goes beyond Caremark,” Garmont said. “Caremark did have two big things going for it: the addition of the federal employee health benefits-plan contract in January 2005, which amounts to about 10 million mail claims a year. Also about a year ago, they acquired AdvancePCS, which had a a lot of retail-only type accounts.”

Nashville-based Caremark forecast third-quarter net profit of 51 cents per share, a penny above analysts’ consensus forecast of 50 cents.

For the full year, the company projected earnings ranging from $1.95 to $1.97 per share, on revenue growth of 28 percent to 30 percent. Its previous forecast called for earnings of $1.92 to $1.94 per share on 25 percent to 28 percent revenue growth.

Wall Street’s average estimate for 2005 is $1.93 per share on $33.26 billion in revenue.

“Caremark continues to perform well both operationally and financially,” Chief Executive Mac Crawford said during a conference call with analysts.

Crawford has said 2006 would be a transition year for Nashville-based Caremark as Medicare gears up to provide drug coverage for seniors for the first time. He said the company was still assessing what the impact would be. The company has submitted bids to become a prescription drug plan under the name SilverScript Insurance Co. in all 34 regions designated by the Centers for Medicare and Medicaid Services.

Caremark provides drug benefit services to over 2,000 health plan sponsors and their participants throughout the U.S. The company’s clients include corporate health plans, managed care organizations, insurance companies, unions and government agencies.

The company also operates a retail pharmacy network with over 60,000 participating pharmacies, seven mail-service pharmacies and 21 licensed specialty pharmacies for delivery of advanced medications.

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On the Net:

http://www.caremark.com