DOW JONES NEWSWIRES
CVS Caremark Corp. (CVS) said the amount of subsidized members
enrolled in its Medicare prescription-drug programs will likely
fall one-third next year, resulting in up to a 4-cent per share
impact on 2010 earnings.
Combined with the company's July disclosure of a regulatory
change regarding the plans, the Medicare impacts will likely cut
earnings 8 cents to 11 cents per share next year. Analysts surveyed
by Thomson Reuters on average expected CVS - which besides being
the second-largest drug-store operator in the U.S. is also among
the biggest managers of pharmacy-benefit plans - projected 2010
profit of $3.01 a share.
The impact disclosed Friday follows CVS Caremark's preliminary
review of the 2010 bidding process done by the Centers for Medicare
and Medicaid. As a result, the company believes its SilverScript
and/or Accendo plans qualified to cover low-income subsidy
customers in 15 regions of 27 states in 2010, compared to 30
regions of 46 states and the District of Columbia this year.
Chief Financial Officer Dave Rickard said, "While we are
disappointed that we will serve fewer auto enrollees in 2010, the
Medicare Part D business will still provide good returns and remain
solidly profitable."
Low-income susbsidy customers don't pay premiums or deductibles
for their drug coverage. The amount of such customers CVS currently
has, or the number of total Medicare drug members, wasn't
immediately available from the company.
Shares were recently flat at $35.87. The stock is up 25% this
year.
-By Kevin Kingsbury, Dow Jones Newswires; 212-416-2354;
kevin.kingsbury@dowjones.com