This excerpt taken from the CVS 8-K filed Aug 3, 2006.
QUARTERLY NET EARNINGS RISE 22.5%, LEADING TO RECORD FIRST HALF RESULTS
WOONSOCKET, RHODE ISLAND, August 3, 2006 - CVS Corporation (NYSE: CVS), today announced record revenues and earnings for the quarter ended July 1, 2006.
Net earnings for the quarter increased 22.5% to $337.9 million or $0.40 per diluted share, compared with net earnings of $275.9 million or $0.33 per diluted share in the second quarter of 2005. The Company estimates that the acquisition of 701 standalone Sav-on and Osco drugstores on June 2, 2006, had a negative impact of approximately one and a half cents per diluted share in the second quarter of 2006. The Companys second quarter results compared to last year were driven by significant sales growth, improved gross margins and solid expense control in the core business offset, in part, by costs attributable to the integration of the acquired business. Net earnings for the first half of 2006 increased 18.0% to $667.5 million or $0.78 per diluted share, compared with net earnings of $565.6 million or $0.67 per diluted share in the first half of 2005.
Tom Ryan, Chairman, President, and Chief Executive Officer, stated: The second quarter was another milestone quarter for the company. Not only did we complete the acquisition of 701 Sav-on and Osco standalone drugstores and negotiate a deal to purchase MinuteClinic, the leader in retail-based health clinics, but we also delivered record-breaking financial results. Sales growth was strong across all markets in both the front and pharmacy, and we continued to improve our operating efficiencies.
Mr. Ryan continued, The integration of the newly-acquired drugstores is on schedule. I am very optimistic about the opportunities we see there to improve sales and profitability over the medium- and long-term.
CVS previously reported that net revenues for the second quarter of 2006, increased 15.8% to $10.6 billion, up from $9.1 billion during the second quarter of 2005. Same store sales (sales from stores open more than one year) for the quarter rose 8.8%, while pharmacy same store sales rose 9.1% and front-end same store sales increased 8.1%. Same store sales do not include the sales results of the drugstores acquired on June 2, 2006. These acquired stores will be included in same store sales following the one-year anniversary of the acquisition, beginning in fiscal July 2007. The Company estimates the Easter shift (April 16th this year versus March 27th last year) had a positive impact of approximately 200 basis points on front-end same store sales in the quarter. Total pharmacy sales represented 69.5% of total company revenues, while third party prescription sales were 94.3% of pharmacy sales, in the second quarter of 2006.
Excluding the impact of the acquisition, during the first six months of 2006, CVS opened 61 new stores, relocated 70 stores and closed 28 stores. As of July 1, 2006, CVS operated 6,205 retail and specialty pharmacy stores in 44 states and the District of Columbia.
The Company will be holding a conference call today for the investment community at 8:30am (EDT) to discuss the quarterly results. An audio webcast of the conference call will be broadcast simultaneously through the Investor Relations portion of the CVS website for all interested parties. To access the webcast, visit http://investor.CVS.com. This webcast will be archived and available on the web site for a one-month period following the conference call.
CVS is Americas largest retail pharmacy, operating over 6,100 retail and specialty pharmacy stores. With more than 40 years of dynamic growth in the retail pharmacy industry, CVS is committed to being the easiest pharmacy retailer for customers to use. CVS has created innovative approaches to serve the healthcare needs of all customers through its CVS/pharmacy® stores; its recently acquired stores; its online pharmacy, CVS.com®; and its pharmacy benefit management, mail order and specialty pharmacy subsidiary, PharmaCare®. General information about CVS is available through the Investor Relations portion of the Companys website, at http://investor.CVS.com, as well as through the press room portion of the Companys website, at www.cvs.com/pressroom.
This press release contains certain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially. For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The Company strongly recommends that you become familiar with the specific risks and uncertainties outlined under the caption Cautionary Statement Concerning Forward-Looking Statements in its Quarterly Report on Form 10-Q for the quarter ended April 1, 2006.