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Second Quarter Year-Over-Year Highlights:
-- Adjusted EPS from continuing operations of $0.60, which excludes $97.8million in amortization of intangible assets, up 17.1%
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Revenues:
Net revenues for the second quarter ended June 28, 2008, increased $437.0million to $21.1 billion, up from $20.7 billion during the second quarterended June 30, 2007.
Revenues in the retail drugstore segment increased 4.6% to $11.8 billionin the second quarter, while same store sales (sales from stores open morethan one year) in the Company's CVS/pharmacy division for the second quarterrose 3.1% over the prior year period. Pharmacy same store sales rose 3.7% andwere negatively impacted by approximately 280 basis points due to recentgeneric introductions, while front-end same store sales increased 1.8%. Samestore sales for the second quarter were negatively impacted by an earlierEaster, which shifted more holiday sales into March. The Company estimates theEaster shift had a negative impact of approximately 110 basis points on front-end same store sales for the quarter ended June 28, 2008.
Revenues in the pharmacy services segment increased 1.0% to $10.7 billionin the second quarter ended June 28, 2008. Retail network claims processedduring the second quarter ended June 28, 2008, increased 2.7% to 136.3 millioncompared to 132.7 million in the prior year period. The increase in retailnetwork claims was driven primarily by increased enrollment in the MedicarePart D business. Mail service claims processed during the second quarter endedJune 28, 2008 decreased 18.9% to 15.0 million compared to 18.5 million in theprior year period primarily due to the termination of the Federal EmployeesHealth Benefit Plan mail contract effective December 31, 2007.
Earnings from continuing operations:
Earnings from continuing operations for the second quarter ended June 28,2008, increased 13.8% to $823.5 million or $0.56 per diluted share on a GAAPbasis, compared with earnings from continuing operations of $723.6 million or$0.47 per diluted share in the comparable 2007 period. Adjusted earnings pershare from continuing operations, which excludes $97.8 million in amortizationof intangible assets primarily related to acquisition activity, for the secondquarter were $0.60, compared with $0.51 per share in the comparable 2007period. Earnings from continuing operations for the six months ended June 28,2008, increased 38.8% to $1,572.0 million or $1.07 per diluted share on a GAAPbasis, compared with earnings from continuing operations of $1,132.5 millionor $0.91 per diluted share in the comparable 2007 period. Adjusted earningsper share from continuing operations, which excludes $195.7 million inamortization of intangible assets primarily related to acquisition activity,for the six months were $1.15, compared with $0.99 per share in the comparable2007 period.
Tom Ryan, Chairman, President and Chief Executive Officer of CVS Caremarksaid, "This was another quarter of strong financial performance across ourbusinesses. We delivered solid improvement in sales and gross margins andcontinued to exercise disciplined expense control. That enabled us to hit arecord operating profit margin this quarter. At the same time, we've furtheradvanced our new PBM/retail model and our clients have expressed growingenthusiasm for our unique new product offerings."
Loss from discontinued operations:
In connection with business dispositions completed between 1991 and 1997,the Company continues to guarantee store lease obligations for a number offormer subsidiaries, including Linens 'n Things ("Linens"). On
