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CVS 2Q profit climbs 11 percent, forecast rises

Specialty drugs are very expensive, usually injected, drugs for complex chronic health conditions -- a category that is driving overall spending on medications. CVS Caremark has started a new program called Specialty Connect that allows customers with these prescriptions to either pick them up at pharmacies or through the mail.

CVS Caremark didn't detail the program's impact on its results, but CEO Larry Merlo said it gives the company a chance to “not just manage the specialty drug but manage the specialty patient.” That can lead to better cost control and more business from those patients.

Overall, CVS Caremark earned $1.25 billion, or $1.06 per share, in the quarter that ended June 30. That's up from $1.12 billion, or 91 cents per share, in the same quarter a year ago.

Earnings, adjusted for amortization costs, came to $1.13 per share. The average estimate of analysts surveyed by Zacks Investment Research was for earnings of $1.10 per share.

The company said revenue climbed 11 percent to $34.6 billion from $31.25 billion in the same quarter a year ago. That also beat the average analyst expectation of $33.42 billion.

CVS Caremark said revenue from its established drugstores climbed 3.3 percent in the quarter despite a consumer that executives described as “a cautious purchaser of products” and a hit from its decision earlier this year to phase out tobacco sales from its stores by this fall. The company has said it expected to take an annual revenue hit of about $2 billion from the latter move, which it is making due to its increased focus on health care.

CVS Caremark now expects 2014 adjusted earnings to range between $4.43 and $4.51 per share, compared to its previous forecast for earnings of $4.36 to $4.50 per share.

Analysts expect $4.46 per share, on average, according to FactSet.

Shares of CVS Caremark climbed 20 cents to $77.57 in midday trading Tuesday while the Standard & Poor's 500 index slipped. The stock had climbed about 8 percent to $77.37 since the beginning of the year, as of Monday's close.

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