Caremark quarterly profit rises 34 percent

Caremark Rx Inc on Thursday posted a 34 percent jump in quarterly profit, aided by higher use of mail-order deliveries and revenue from its $6.7 billion acquisition of rival AdvancePCS.
With the merger complete, Caremark now provides pharmacy benefit services for at least one quarter of the US population. The company also boosted its 2004 outlook and said it will realise $125 million in cost savings a quarter earlier than previously forecast.
Pharmacy benefit managers act as brokers for health insurers and employers seeking to buy pharmaceuticals at discounted rates for their clients and employees.
Nashville, Tennessee-based Caremark reported first-quarter net income of $84.2 million, or 29 cents a share, compared with $63 million, or 24 cents a share, a year earlier.
Results include one week of AdvancePCS operations in the latest quarter - which added a $465 million chunk of revenue from AdvancePCS.
Earnings excluding special items were 32 cents a share. On an operating basis, Wall Street analysts polled by Reuters Research, a unit of Reuters Group Plc, saw profit at 32 cents a share, as of Wednesday.
Shares slumped 31 cents or less than percent to $33.69 on the New York Stock Exchange, after earlier touching $33.
The boosted outlook was a bit back-end loaded, one analyst said, which may explain the stock decline.
"Maybe people were hoping for a little better guidance," said David Maule, a health care analyst at Thrivent Financial.
Caremark lifted its outlook slightly for the year, to between $1.37 and $1.39 per share from a previous range of $1.35 to $1.37. The new forecast, which excludes acquisition costs, is in line with analysts' estimates of $1.38 per share.
Broken down on a quarterly basis, it predicts earning 29 cents to 30 cents in the second quarter, 34 cents to 35 cents in the third quarter and 41 cents to 42 cents in the fourth quarter.
Revenue also rose 40 percent to $3.03 billion, up from $2.16 billion a year earlier.
The company projected net revenue for 2004 of between $25 billion and $26 billion, making it the second-biggest pharmacy benefit company behind Medco Health Solutions Inc, by revenue.
The Caremark-Advance PCS union trimmed to three the number of players in the pharmacy benefit management industry.
Caremark's stock has risen 34 percent since September 2, the day before the deal was announced.