CVS Caremark has reported a drop in second-quarter profit, hurt by the loss of contracts and higher costs, but cheered investors with the announcement of a major new contract with insurer Aetna.

For the three months, net profit was down 7% to $821m, as it incurred higher costs and demand remained weak. Overall revenue was down 3% to $24bn, although drugstore sales were up 4% to $14.3bn, and like-for-like sales rose by 2.1%. The overall results were dragged down by the Caremark unit, where revenue fell by 9% to $11.8bn, due to the loss of major clients. However, it could regain some of that revenue through its new deal with Aetna.

Starting 1 June 2011, Caremark will administer the health insurers Aetna's pharmacy benefits management services for 12 years. Caremark will serve about 9.7 million Aetna PBM members and administer $9.5bn in drug spending per year. It will also handle purchasing, manage inventories, and fill prescriptions for mail order and specialty pharmacies. Aetna will still own its PBM business, but it will transfer 800 employees to Caremark.

CVS also dropped its full-year profit forecast for the year and said it expects slower revenue growth on a like-for-like basis.

NamNews - Thursday 29th July 2010

 

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