CVS Rivals Have Better Prescription

Wall Street Journal -

Nov-06-2009

CVS Rivals Have Better Prescription

(topic overview)
CONTENTS:

WOONSOCKET ''' CVS Caremark Corp. saw its stock price fall as much as 24 percent Thursday morning, the most in eight years, after the company said it lost $3.7 billion in pharmacy-benefit management (PBM) contracts during the third quarter. (More...)
The shares had recovered somewhat to $28.62, down 21 percent, at 2:50 p.m. Ryan said he will temporarily take over the PBM business from executive vice president Howard McLure, who is retiring, while the company searches for a new leader. (More...)
U.S. customers on average paid $85.32 per month for DirecTV's services, up 2 percent from last year, in part due to increases on plan prices, HD and DVR service fees. (More...)
Cigna Corp. The managed care company's third-quarter profit soared 92 percent, as improving equity markets spurred a big turnaround in a discontinued business that hurt the insurer last year. (More...)
Sales edged higher to $332.2 million from $320.3 million, better than the $324.5 million Wall Street expected. (More...)
Shares advanced, on the company's forecast for a 20% jump in adjusted income for next year. (More...)
All of that will lead to operating profit margins for the total company which are moderately below the record levels of last year. (More...)
Our long term value investing methodology is powered by the teachings of Ben Graham and it has proven to be very adept at identifying stock prices that are out of line with fundamental factors. (More...)
Results beat analysts' expectation. (More...)
The revised vehicle forecast was still a 7 percent drop from the more than 7.5 million vehicles Toyota, which makes the Prius hybrid and the Corolla subcompact, sold around the world in the last fiscal year. (More...)
Whole Foods Market ( WFMI ) reported strong fourth-quarter profit but announced a share dilution and gave lower than expected fiscal 2010 view. (More...)

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WOONSOCKET ''' CVS Caremark Corp. saw its stock price fall as much as 24 percent Thursday morning, the most in eight years, after the company said it lost $3.7 billion in pharmacy-benefit management (PBM) contracts during the third quarter. CVS CEO Thomas Ryan told investors the PBM business, which negotiates drug prices on behalf of companies and governments, lost more customers than expected from July through September and is likely to see its margins shrink by as much as 12 percent next year, Bloomberg News reported. Ryan disclosed the PBM client defections in a conference call with investors about two hours after CVS reported that its overall third-quarter profit rose 39 percent to top $1 billion. CVS had earlier forecast that its PBM earnings would post single-digit growth next year, '''which is not going to happen,''' Ryan said, according to Dow Jones Newswires. [1] Management revealed during the earnings call that profits at Caremark could drop as much as 10 or 12 percent. The latest contract losses contract losses include $1.7 billion in business for "dual eligible" people who can receive both Medicare and Medicaid benefits. This follows lost contracts in New Jersey state Blue Cross plan and Ohio's managed Medicare business. The company can take solace in that it's revenue from its drugstores rose 17.9 percent, with sales at stores open at least a year rising 5.7 percent. We removed shares of CVS from our "recommended" list today on the company's poor performance and disappointing news regarding its PBM business. CVS Caremark ( CVS ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.3 out of 5 stars.[2]

NEW YORK — CVS Caremark Corp. said Thursday its third-quarter profit jumped 39 percent, but shares plunged after the company said its struggling Caremark pharmacy benefits management unit lost $2 billion in business over the last few months. CEO Tom Ryan said CVS won't reach its own goals in 2010 because profits at Caremark could drop as much as 10 or 12 percent. Three months ago, Ryan said CVS would be "very disappointed" if its total per-share profit did not grow 13 to 15 percent next year. He said CVS won't reach that goal.[3] Volume reached 56 million shares, more than five times the daily average. CEO Tom Ryan said CVS will not meet its own 2010 forecast, because profits at its pharmacy benefits management unit Caremark could tank by 10% to 12%. Previously, Ryan said he would be disappointed if the company's profit didn't grow by 13% to 15% in 2010. CVS said it lost a contract worth $1.7 billion to provide prescriptions to "dual eligible" people who receive both Medicare and Medicaid benefits, as well as another $300 million in similar contracts with the New Jersey state Blue Cross plan and Ohio's managed Medicare business.[4] The earnings themselves were just about what the street had expected with profit from continuing operations coming in at $.65 per share, besting estimates by one penny. The company revealed that their Caremark pharmacy benefits management unit lost $2 billion in business in the period. The lost contracts include such as large deals with New Jersey state Blue Cross plan and Ohio's managed Medicare. Contracts such as these are a major loss for shareholders as they represent a steady stream of reliable income that adds to the stability of the pharmacy business.[5] Net income was up 39% to $1.02 billion or $.72 per share, but there was also a reported eleven cent tax benefit. Management was prompted to lift the lower end of its full year earnings guidance range by two cents per share to $2.61 to $2.64. The loss of these valuable contracts really put a damper on otherwise in-line results. The CEO said that the company will not reach its stated goal of 13% to 15% growth in earnings per share next year; growth that analysts had baked into consensus estimates at 14.5%. This disappoint is due to the Caremark unit, which could see earnings drop as much as 10% to 12%. We have an Undervalued rating on CVS coming into this report and following the sell-off we are likely to maintain this stance following the weaker results from Caremark. The company announced that it will buy back $2 billion worth of stock through 2011, suggesting that they are trying to support the stock. With the stock selling below its historically normal price-to-cash earnings and price-to-sales ranges, this stock still looks attractive to the long term investor. Although, according to our methodology, we continue to view its closest competitor Walgreen’s ( WAG ) as the most attractive stock in the pharmacy space.[5] Net income in the quarter rose 39% to $1.02 billion or 71 cents per diluted share compared to net income of $732.5 million or 50 cents per share a year ago. The company lifted its annual earnings outlook from continuing operations excluding the tax benefit between $2.61 and $2.64 a share from the previous estimate range of $2.59 and $2.64 a share.[6]

Net revenues for the third quarter rose 18.1% to $24.64 billion from $20.86 billion in the year-ago quarter, and beat analysts' consensus revenue estimate of $24.61 billion. Looking ahead, the company said it now expects full year 2009 adjusted earnings to be $2.61 to $2.64 per share, compared to its prior guidance of $2.59 to $2.64 per share.[7]

Shares rose 4 cents to $6.35 in morning trading. The decline in ad dollars has forced E.W. Scripps to make dramatic cuts this year. It froze pensions and contributions to 401(k) plans, cut pay for management by as much as 15 percent and shuttered Denver's Rocky Mountain News. MGM Mirage Its latest casino project isn't open yet, but a drop in the $8.5 billion complex's value combined with falling revenue to push the casino operator into the red in its third quarter. The company, in which billionaire Kirk Kerkorian has said he may cut his substantial stake, lost $750.4 million for the three months that ended Sept. 30 largely because it wrote down the value of the CityCenter project it is building with Dubai World on the Las Vegas Strip.[8] DirecTV, based in El Segundo, Calif., serves 18.4 million U.S. customers. Its shares rose 93 cents, or 3.5 percent, to $27.77 in morning trading. Thomson Reuters Corp. The news and information provider said Thursday its third-quarter net income tumbled 60 percent from a year ago, as revenue in its legal and market divisions fell and it booked large one-time costs. The company has weathered a difficult year, with the financial crises leading to layoffs and cost cutting at the financial and law firms that use its services. CEO Tom Glocer told analysts on a conference call that demand appears to have bottomed in the first half of the year but he expects a "long, slow improvement" as cutbacks among customers continue to filter through to the company's sales. Thomson Reuters offers many services, such as trading terminals, on a subscription basis.[8]

Revenue surged 18 percent to $24.64 billion from $20.86 billion. Cigna Corp. (NYSE: CI ) said that its third quarter net income soared 92 percent to $329 million, or $1.19 per share, from $171 million, or 62 cents per share, in the same quarter of 2008.[9] Continuing claims for the week ending October 24 dropped 68,000 to 5.75 million. Early on Thursday, CVS Caremark Corp. (NYSE: CVS ) announced that its third-quarter profit jumped 39 percent to $1.02 billion, or 71 cents per share, from $732.5 million, or 50 cents per share, in the same quarter last year.[9] The company employs about 215,000 colleagues in 44 states, the District of Columbia, and Puerto Rico. Earlier in August, the company boosted and narrowed its fiscal 2009 forecast for earnings from continuing operations, on a GAAP basis, to $2.41 - $2.46 per share from its prior range of $2.37 - $2.45. Adjusted earnings per share from continuing operations are now projected to range between $2.59 and $2.64 for the full year, up from its previous guidance of $2.55 - $2.63 per share. For the previous quarter, the Woonsocket, Rhode Island-based CVS Caremark posted higher profit, totaling $886.5 million or $0.60 per share, compared to $771.2 million or $0.53 per share, reflecting strong performance across all its business segments.[10] The sector is currently up just 0.2%; every other major sector is up in excess of 1%. Though the consumer staples sector's advancing issues outnumber its decliners considerably, the sector is being weighed down by a sharp drop in CVS Caremark (CVS 28.40, -7.75). The drug retailer actually posted better-than-expected earnings of $0.65 per share, but that has been overshadowed by a reduced outlook for its PBM business. The company also announced some reordering of its executive lineup and authorized a share repurchase program for up to $2 billion of common stock. Whole Foods (WFMI 28.31, -3.76) posted better-than-expected earnings of its own for the latest quarter, but disappointed investors by issuing a downside forecast.[11]

Shares of CVS Caremark ( ]] ) are down 21% so far today, following the company's third quarter earnings release in which the company said its pharmacy benefits management unit lost $2 billion in business over the last few months.[2] Shares of CVS Caremark are off more than 20 percent this morning - erasing about $11 billion in value - after its CEO said the company's pharmacy benefit management unit has lost several big clients for 2010. Chairman and CEO Tom Ryan, who bought Nashville-based Caremark for $27 billion in 2007, told analysts and investors on his company's conference call this morning that a number of clients are taking their PBM business elsewhere come Jan. 1.[12] CHICAGO, Nov 5 (Reuters) - CVS Caremark Corp ( CVS.N ) said its pharmacy benefits management business lost $4.8 billion in contracts heading into next year and will not meet its targets for 2010, sending shares down 21 percent.[13]

CVS is losing about 500,000 of the "dual eligibles," which will cost $1.7 billion in revenue. It said other companies were more aggressive and outbid CVS to win that coverage. It also lost contracts with the states of New Jersey and Ohio. Earlier this year, health insurer Coventry Health Care Inc. said it would not renew a contract with CVS. Retired employees of automaker Chrysler also turned elsewhere. Those clients cited pricing and customer service as key reasons for taking their business elsewhere, Ryan said. Other clients said they wanted to work with a smaller pharmacy benefits manager or one that did not also own a drugstore chain. That is a potential rebuke the company's business model.[14] During a conference call with analysts, CVS Chief Executive Officer and Chairman Tom Ryan said the company's pharmacy benefits management business lost $3.7 billion in contracts in the third quarter. The $3.7 billion in lost contracts brings this year's total to $4.8 billion, Ryan said.[7]

Wall Street analysts on average had expected earnings of 64 cents a share. CVS Caremark CEO Tom Ryan said several large clients canceled contracts would hurt the firm's prospects in 2010, and he projected growth rates would fall short. "To get to that 13% to 15% growth rate, I expected strong double digit growth in our retail business, which I still do, and I expected low- to mid-single digits in our pharmacy benefit management, which is not going to happen," he said in a conference call on Thursday.[15] NEW YORK — CVS Caremark disclosed more multibillion dollar contract losses in its pharmacy benefits management business and said the head of the unit will depart. CEO Tom Ryan said CVS, which also runs the nation's second-biggest drug store chain, won't reach its goals in 2010 because of the sharp reversal of fortunes at the Caremark unit, which administers drug benefits for employers. CVS shares plunged 20 percent and took their biggest one-day loss in eight years.[14]

CVS Caremark, the drugstore and benefit management company, saw its shares fall more than 20 per cent yesterday after it announced the loss of $3.7bn of prescription management contracts for 2010, and said that it has been under scrutiny by federal regulators. The company said that it had been informed in August by the Federal Trade Commission that it was the subject of a non-public investigation into some of its business practices. It said it is co-operating with the FTC but gave no further details.[16]

A year ago, Dynegy made $605 million, or 72 cents per share, driven by a $542 million after tax gain that reflected an updated estimate of what investments are worth based on current market values. The company said in August that it plans to sell about a quarter of its generation eight plants plus another under development to LS Power for about $1 billion in cash and $500 million in stock. Dynegy has said the sale will help the company reduce its near-term debt maturities and simplify the company's structure.[8] Net income in the quarter rose 92.4% to $329 million or $1.19 per diluted share compared to net income of $171 million or 62 cents per share a year ago.[6] Net income available to the common shareholders for the third quarter rose to $1.02 billion or $0.71 per share from $732.5 million or $0.50 per share in the prior-year quarter.[7]

Among CVS Caremark's rivals, Medco Health Solutions Inc. (MHS: News ) reported third-quarter net income of $335.6 million or $0.69 per share, compared to $295.7 million or $0.58 per share in the prior-year period, aided by new client wins and price inflation on brand-name drugs that led to an 18% increase in revenues.[10] Net income jumped to $1.02 billion, or 71 cents per share, from $732.5 million, or 50 cents per share, a year prior.[3] Earnings totaled $1.02 billion, or 71 cents per share, as compared to $732.5 million, or 50 cents per share, in the same quarter last year.[17] For the three months ended Sept. 30, Thomson Reuters earned $162 million, or 19 cents per share, down from $404 million, or 49 cents per share, a year earlier. Stripping out one-time costs related to its 2008 acquisition of the Reuters news service and other unusual items, it says earnings slipped to 43 cents per share from 47 cents a share a year ago.[8] The company has reduced prices in an effort to stem the tide, Ryan said, noting that some contracts were lost because of poor service and high costs. Ryan also said the PBM division'''s problems would likely prevent the company from meeting its previously announced 2010 target of 13 percent to 15 percent growth in earnings per share. The news sent CVS stock down as much as 24 percent, its biggest intraday decline since 2001, in morning trading on the New York Stock Exchange.[1]

The company said flu related prescriptions up more than 10 percent, and Ryan expects that to continue during the fourth quarter. He said sales of CVS brand merchandise surged because customers are looking for bargains during the recession. Looking ahead, the company narrowed its 2009 adjusted profit forecast to between $2.61 and $2.64 per share from prior guidance of $2.59 to $2.64 per share.[3] The company said Midwest production fell 7 percent in the quarter because of the mild summer, the economy and increased off-peak wind generation. In the Northeast, production was up 20 percent as low prices for natural gas boosted power sales from its natural-gas operations. Bruce Williamson, Dynegy's chairman, president and CEO, told analysts on a conference that with weak power prices and volatile natural-gas prices, the company is focusing on operating its plants efficiently and cutting costs by $400 million to $450 million over the next four years. When the deal with LS Power is done, Dynegy will have about 20 plants in seven states that will be more concentrated on its baseload coal and natural-gas plants and less on plants used only at times of peak demand for power. The company did raise its profit outlook on adjusted earnings before income taxes, depreciation and amortization for the year to $730 million to $760 million.[8] Shares of Toyota, which reported after the close of trade Thursday, closed down 0.8 percent at 3,580 yen ($39) in Tokyo. Sara Lee Corp. The food producer credited its leaner operations and more profitable product line for its first-quarter profit jump of 23 percent. It also raised its outlook for the year. The maker of products such as Jimmy Dean sausages, Hillshire Farm deli meats and its namesake desserts, Sara Lee lagged the rest of the food industry for some time in terms of profitability. The company said Thursday that its long-term efforts to cut costs and launch better-selling new products helped its bottom line, along with prices for key ingredients stabilizing below last year's highs.[8] Shares of Cigna rose 39 cents to $30.17 in Thursday morning trading. The shares have recovered since last year when they dove below $9 as the economy slumped and concerns about health care reform and its affect on insurers started to grow. Nasdaq OMX Group Inc. The global exchange operator said Thursday its profit rose as it cut costs and recorded fewer special charges during the third quarter.[8] Shares of Nasdaq OMX rose 13 cents to $18.33 in morning trading. DirecTV Group Inc. The nation's largest satellite TV operator said Thursday that its revenue grew 10 percent in the third quarter as it added more new customers, but its results suffered from higher marketing costs used to attract them.[8]

The first change involves the reclassification of certain administrative expenses previously recorded within the PBM and retail segments to a new corporate segment. The corporate segment consists of certain costs which benefit both operating divisions equally. These are primarily associated with executive management, corporate relations, legal, compliance, human resources, corporate information technology, and finance. Of course, this change had no impact on our consolidated results of operation but we now report on three operating segments -- pharmacy services, retail pharmacy, corporate. We believe that this change will give better visibility to the operating dynamics of both our retail and our PBM segments. We made a change to our PBM segment as it relates to our inter-segment activity, such as the maintenance choice program. This change impacts the gross profit and operating profit lines within the PBM segment. Under the maintenance choice program, a PBM client member can elect to pick up his maintenance prescriptions at one of our CVS pharmacy stores instead of receiving it through the mail. When this occurs, both the retail and the PBM segments now record the revenue, gross profit, and operating profit associated with this maintenance prescription on a standalone basis and corresponding inter-segment eliminations are created. Previously only the revenue was recorded by both segments. We believe that this new method more clearly portrays the true performance of the individual operating segments, regardless of which segment creates the sale or dispenses the product or service. This change is reflected in our segment results for the third quarter and in the year-to-date results.[18] CVS Caremark Corp. (NYSE: CVS ) beat out analyst expectation as its third quarter earning rose 39% from the previous quarter. CVS Caremark Corp used their revenue gains from it Pharmacy Benefits business to help fuel their profits. This upbeat results shows that their decision to acquire Caremark for their benefits business is actually paying off. CVS has also taken advantage of their '''Maintenance Choice ''' Program, which allows customers to get the same low price as if it was bought through the Pharmacy Benefits units mail service if they pick up 90 day prescriptions through drugstores.[19]

CVS Caremark's ( CVS - Analyst Report ) third-quarter earnings came in at 65 cents, a cent above the Zacks Consensus Estimate and higher than 60 cents reported in the year ago period. Revenues increased 18.2% year over year to $24.6 billion primarily due to robust growth of both segments - pharmacy services and retail pharmacy.[20]

CVS Caremark Corporation ( CVS ) plunged 20% or $7.27 to $36.15 after the pharmaceutical retailer reported third quarter sales rose 17.7% to $24.6 billion from $20.9 billion a year ago.[6] Dynegy Inc ( DYN ) dropped 5.0% or 10 cents to $1.87 after the power company reported third quarter sales fell 62% to $673 million from $1.76 billion a year ago.[6] DexCom, Inc ( DXCM ) rose 0.8% or 6 cents to $7.00 after the medical device company said third quarter revenues rose 284% to $7.3 million from $1.9 million a year ago.[6] EnergySolutions, Inc ( ES ) rose 2.4% or 21 cents to $8.93 after the provider of specialized, technology-based nuclear services said third quarter revenues fell 13% to $364.9 million from $419.5 million a year ago.[6] Conseco, Inc ( CNO ) rose 1.6% or 9 cents to $5.48 after the life and accident insurer said third quarter revenues rose 10% to $1.12 billion from $1.02 billion a year ago.[6] Dr Pepper Snapple Group, Inc ( DPS ) rose 0.6% or 19 cents to $28.01 after the distributor of non-alcoholic beverages reported third quarter sales fell 4% to $1.43 billion from $1.49 billion a year ago.[6] American Medical Systems Holdings Inc ( AMMD ) added 5.1% or 80 cents to $16.25 after the supplier of urological medical devices said third quarter sales rose 5% to $123.2 million from $117.5 million a year ago.[6] Bowne & Co., Inc ( BNE ) decreased 3.1% or 20 cents to $6.30 after the provider of shareholder and marketing communications services said third quarter sales fell 9.3% to $148.8 million from $164 million a year ago.[6]

The Andersons, Inc ( ANDE ) advanced 6.6% or $1.99 to $31.98 an agricultural and transportation company said third quarter sales fell 33.6% to $601.0 million from $905.7 million a year ago.[6] Career Education Corporation ( CECO ) surged 12.1% or $2.52 to $23.30 after the trade schools operator said third quarter sales rose 14% to $459.9 million from $403 million a year ago.[6]

Income from continuing operations for the quarter rose to $1.02 billion or $0.71 per share from $818.8 million or $0.56 per share a year ago.[21] Net loss in the quarter was $7.5 million or 21 cents per diluted share compared to net loss of $11.6 million or 41 cents per share a year ago.[6] The company posted a loss of $3.3 million, or 6 cents per share. That was an improvement over last year's third-quarter loss of $16.8 million, or 31 cents per share, when results included hefty one-time charges related to the spin-off of the company's cable networks and interactive media business.[8] Sara Lee reported that it earned $284 million, or 41 cents per share, up from $230 million, or 32 cents per share, earned in the same quarter last year. Adjusted for one-time items in both quarters, the company earned 38 cents per share, up from 31 cents per share in the prior year.[8]

CVS said that profits jumped to $1.02 billion, or 71 cents per share, from $732.5 million, or 50 cents per share, a year prior.[22] CVS posted a profit of $1.02 billion, or 71 cents a share, in the three months ended Sept. 30, up from a profit of $736 million, or 51 cents a share, in the same period a year earlier.[23]

MGM Mirage's third-quarter loss of $1.70 per share contrasts with a profit of $61.3 million, or 22 cents per share, in the period a year earlier.[8] Excluding amortization of intangible assets, earnings per share guidance was raised to $2.80 - $2.82 from the prior range of $2.76 - $2.81. Another peer, Express Scripts Inc. (ESRX: News ) reported lower profit for the third quarter, totaling $197.6 million or $0.71 per share, compared to $201.9 million or $0.81 per share for the year-ago quarter.[10] Adjusted earnings, which exclude special charges tied to a debt conversion, asset retirement, severance costs and merger expenses, totaled $89 million, or 42 cents per share, during the most recent quarter.[8] On an adjusted basis, net earnings from continuing operations available to common shareholders for the quarter increased to $1.01 billion or $0.76 per share from $877.5 million or $0.60 per share in the year-ago quarter.[21] Total net revenues increased to $14.795 billion from $12.559 billion in the previous year. For fiscal 2009, Medco revised its GAAP earnings guidance to a range of $2.58 - $2.60 per share from the previous range of $2.54 - $2.59.[10] Revenue improved 3% to $5.62 billion from $5.45 billion in the previous year. Given the strong underlying fundamentals in its core business, Express Scripts lifted its full-year 2009 earnings guidance to a range of $3.76 - $3.82 per share from its prior range of $3.72 - $3.82 per share. Both the ranges exclude any impact related to the NextRx deal.[10] Analysts polled by Thomson Reuters forecasted earnings of $1.03 per share on $4.59 billion in revenue. Cigna includes results from one of its discontinued businesses in its adjusted profit, but many analysts do not in their projections.[8] Analysts expected DirecTV to report earnings of 39 cents per share on revenue of $5.42 billion, according to a Thomson Reuters survey.[8] Analysts expected the restaurant company, based in Atlanta, to earn 6 cents per share on revenue of $916.5 million. Its shares rose 19 cents, or 4.6 percent, to $4.35 in pre-market trading Thursday.[8] Analysts expected the company to earn 16 cents per share on $3.16 billion revenue, according to a poll by Thomson Reuters.[8] Analysts expect full-year profit of 89 cents per share and revenue of $13.12 billion.[8] Wall Street analysts forecast earnings of 64 cents per share and $24.61 billion in revenue.[22] Analysts polled by Thomson Reuters, on average, forecast earnings of 42 cents per share on revenue of $354.9 million. Analysts do not typically include special charges in their estimates.[8]

Adjusted earnings per share from continuing operations as well as net revenues for the quarter grew from last year and beat analysts' estimates. Looking ahead, the company lifted the lower end of its adjusted earnings forecast for fiscal year 2009.[21] Analysts expect $3.85 per share. Company officials said Thursday they expect flat to low single-digit earnings growth next year.[8] Analysts expect profit of $2.62 per share. CVS said David Denton, its controller and chief accounting officer, will replace David Rickard as chief financial officer starting Jan. 1, 2010. Rickard said early this year that he would retire.[3] Analysts surveyed by Thomson Reuters expect profit of $2.62 per share, on average. Toyota Motor Corp. The Japanese automaker reported a surprise profit and cut its projected red ink for the year by half, adding to growing evidence that carmakers are starting to recover from the deepest industry downturn in years.[8] Analysts surveyed by Thomson Reuters expect profit of $2.62 per share, on average. Associated Press Writers Damian Troise in New York and Tom Murphy in Indianapolis contributed to this story.[14]

In the latest quarter DirecTV earned $366 million, or 37 cents per share, compared with $363 million, or 33 cents per share, in the same quarter a year ago.[8] Qualcomm (NASDAQ: QCOM ) reported Wednesday that fiscal fourth quarter net income declined to $803 million, or 48 cents per share, from $878 million, or 52 cents per share, in the prior-year period.[9] Whole Foods Market, Inc. (NASDAQ: WFMI ) said Wednesday that fiscal fourth quarter net income jumped to $28.7 million, or $0.20 per diluted share, compared to $1.5 million, or $0.01 per diluted share, in the comparable quarter last year.[9]

For the July-September quarter Toyota, the world's largest car company, posted better-than-expected net income of 21.8 billion yen ($242 million) after three straight losing quarters, defying some expectations of another loss. That marked an 84 percent tumble from the 139.8 billion yen the company earned in the same quarter a year ago, but was still one of the clearest signs yet Toyota was rebounding from its biggest loss ever during the last fiscal year.[8] For the first fiscal half, Toyota lost 56 billion yen ($622 million), a reversal from 494 billion yen in profit, on 8.378 trillion yen ($93 billion) in sales, down 31 percent from the same period the previous year. Honda, Japan's No. 2 automaker, last month raised its profit outlook for the full fiscal year to 155 billion yen ($1.7 billion), nearly four times its initial projection. Earlier this week, Nissan, the nation's third-largest automaker, said it expects a narrower net loss of 40 billion yen ($444 million) for the fiscal year through March 2010, better than its earlier forecast for a 170 billion yen ($1.8 billion) loss.[8] Especially positive were gains in China, where Toyota vehicle sales last quarter surged to a record at more than 204,000 vehicles, up 39 percent from the same period the previous year. China's auto market is on track to become the world's biggest, replacing the U.S., this year. With sales proving better than expected the last six months, Toyota upped its sales forecasts for the fiscal year through March 2010, from 7.03 million vehicles from 6.6 million. It also expected a smaller loss for the fiscal year of 200 billion yen ($2.2 billion) less than half the 450 billion yen ($5 billion) loss it predicted earlier.[8]

'''We lost more PBM business than we expected.''' CVS estimates it has lost a total of $4.8 billion in PBM contracts for 2010 since the start of this year, including a $1 billion contract with the state of New Jersey and a $500 million agreement with Ohio'''s government, Ryan said.[1] '''We'''re committed to turning around the PBM business,''' Ryan said. CVS entered the PBM business with its $22 billion purchase of Caremark Rx Inc. in 2007. '''We'''ll be watching carefully who they pick to replace McClure,''' Jason Pride, director of research at Radnor, Pa. -based Haverford Investments, which owns CVS shares, told Bloomberg. '''We'''re not standing behind management and saying everything they have done is perfect, but we continue to believe the model they'''ve created will increase returns.''' Ryan also announced that CVS has picked David Denton, its controller and chief accounting officer, to become its new chief financial officer on Jan. 1. He will replace David Rickard, who announced his retirement earlier this year.[1]

The comments overshadowed the company's quarterly results report earlier on Thursday. CVS posted a bigger-than-expected jump in quarterly profit and said this year's profit should come in toward the higher end of its forecast. The PBM tallied about $4.8 billion in net losses for 2010 during the recent selling season, and almost $3.7 billion of those losses came after CVS's August conference call. Ryan stressed that CVS did not lose business because of the combination of the PBM and retail businesses and said he still believes the combined model is the right approach. He said it was "fairly common knowledge" that the PBM's marketing message was unclear and too focused on the retail side.[13]

NEW YORK (Dow Jones)--CVS Caremark Corp.' s (CVS) so far disappointing 2010 pharmacy benefits selling season dismayed investors Thursday, renewing concerns about combining a retail drug store and a pharmacy benefits manager. The 2007 combination, valued at $27 billion, was seen as a natural fit, bringing together two leaders in their respective sectors. Since the merger, the Caremark pharmacy benefits business has struggled against its pure-play peers--which some blame on CVS' failure to market that business effectively--although the company's retail operations have benefited.[24] The group alleges that CVS overcharges consumers, sells private customer data and favors higher-priced drugs in order to collect manufacturer rebates. CVS denies those assertions. The company fills or manages more than 1 billion prescriptions a year through its retail stores, mail-order business and the Caremark pharmacy benefits manager.[25]

"We think there are serious issues with the company," Change to Win spokesman Ahmer Qadeer told The Associated Press. "We think there's a real question of privacy problems, how they may use patient data, and real questions with this business model." CVS reported its third-quarter results on Thursday, and also said the Caremark pharmacy benefits management unit has lost billions of dollars in contracts in recent months, which will keep the company from reaching its profit expectations in 2010.[26] WOONSOCKET, R.I. ( TheStreet ) -- Shares of CVS Caremark ( CVS Quote ) plunged 20% Thursday morning, after the drugstore chain said its pharmacy benefits-management unit recently lost $2 billion worth of business, causing it to issue a profit warning. On top of all that, the drugstore said the Federal Trade Commission is investigating some of its business practices.[4] Shares of Woonsocket-based CVS Caremark Corp. took a beating Thursday, driven down by a report that its pharmacy-benefits division lost $2 billion in business contracts in mid-2009.[22]

CVS shares posted the biggest drop in eight years today after saying the pharmacy-benefits management unit lost $3.7 billion in contracts in the third quarter and forecasting narrower margins next year.[25]

Stocks have spent the entire session sporting impressive gains as participants offer a broad-based bid following a couple of pleasing economic reports and a strong quarterly report from Cisco. Cisco (CSCO 23.90, +0.61) announced last night top and bottom line results that bested analysts' expectations and authorized $10 billion to add to its share repurchase plan, which now stands around $13 billion. The company also issued during its conference call a solid outlook. Initially that report didn't do much for the broader market, but interest in the stock has grown throughout this session and spread to the rest of the tech sector, which is the largest in the S&P 500 by market weight and is now sporting a 2.0% gain. That's better than any other sector at the moment. Better-than-expected third quarter productivity data and modest improvement in weekly jobless claims totals helped firm up the mood of participants this morning.[27] Broad-based buying on the back of a strong quarterly report from Cisco and a couple of pleasing economic reports helped stocks net robust gains ahead of tomorrow's potentially pivotal nonfarm payrolls report. Cisco (CSCO 23.93, +0.64) won support for itself and other large-cap tech issues by posting better-than-expected top and bottom line results for its latest quarter and announcing that it has authorized an additional $10 billion to add to its share repurchase plan, which now stands at roughly $13 billion. Cisco went one step further and issued a solid outlook during its conference call. Strength among large-cap tech issues helped hand the Nasdaq its best single-session percentage advance since July.[28]

Retailer Macy's Inc. (NYSE: M ) on Thursday said that same store sales fell 0.8% in October. Late on Wednesday, networking giant Cisco Systems Inc. (NASDAQ: CSCO ) said that its fiscal first-quarter net income fell to $1.8 billion, or 30 cents a share, from $2.2 billion, or 37 cents a share, in the-year earlier quarter.[9]

Nasdaq OMX's adjusted earnings during the same quarter in 2008 totaled $108 million, or 51 cents per share.[8] Nasdaq OMX earned $60 million, or 28 cents per share, during the quarter ended Sept. 30. It earned $58 million, or 27 cents per share, during the year-ago period.[8] Dynegy said it lost $212 million, or 25 cents per share, for the quarter ended Sept. 30.[8] Overall, the insurer earned $329 million, or $1.19 per share, in the three months that ended Sept. 30. That compared to $171 million, or 62 cents per share, in the same quarter of 2008.[8]

The latest quarter's results include loss from discontinued operations of $1.8 million of lease-related costs, compared to loss of $82.8 million or $0.06 per share of lease-related costs in the previous-year period.[21] The latest quarter's results include previously unrecognized tax benefits of $155.7 million, or $0.11 per share, related to the expiration of various statutes of limitation and settlements with tax authorities.[21]

We expect to deliver adjusted earnings per share from continuing operations excluding the effect of the tax benefit of $2.61 to $2.64, up from our previous guidance of $2.59 to $2.64.[18] Adjusted earnings totaled 76 cents per share, easily beating estimates. CVS raised its full-year earnings out look to the high end of its previous range. It is now looking for earnings per share from continuing operations of $2.61 to $2.64 per share, as compared to its old outlook of $2.59 to $2.64 per share.[17]

Sara Lee now predicts it will earn $1.12 to $1.18 per share for the year, or 90 cents to 96 cents per share excluding one-time items, on revenue of $12.9 billion to $13.2 billion.[8] For the three months that ended Sept. 27, Wendy's/Arby's earned $14.7 million, or 3 cents per share. That figure included a 3 cents per share charge related to last year's merger.[8] Hhgregg earned $4.9 million, or 13 cents per share, compared with $3.4 million, or 10 cents per share, in the year-earlier period.[8]

As for the company's overshadowed third-quarter results, CVS said it earned $1.02 billion, or 71 cents a share, compared with $732.5 million, or 50 cents a share, in the year-ago period.[4] Daniels, who joined CVS Caremark in 1997, was most recently Vice President of Finance and Retail Controller for CVS/pharmacy. Separately, CVS Caremark announced that its Board of Directors has approved a new share repurchase program for up to $2.0 billion of its outstanding common stock.[29] WOONSOCKET ''' CVS Caremark Corp. on Thursday said its third-quarter earnings topped $1 billion, setting a new record for the company, as pharmacy sales continued to grow.[23] Among the companies whose shares are actively trading in the session are Whole Foods Market Inc, (WFMI), CVS Caremark Corp. (CVS) and IMS Health Inc. (RX). Whole Foods' ($28.75, -$3.31, -10.32%) fiscal fourth-quarter earnings soared as revenue climbed and unusual items took less of a bite from the bottom line, leading the high-end grocer to declare that its sales have "officially turned the corner."[30]

Disappointment over the pharmacy benefit management business at CVS Caremark (CVS 28.87, -7.28) overshadowed the company's better-than-expected earnings and additional share repurchase authorization, and caused the stock to drag on the consumer staples sector.[28] David Magee, an analyst at SunTrust Robinson Humphrey, suggested in a Tuesday preview note that the pharmacy benefit management unit would be a weak link. "Visibility on the PBM part of the business isn't great and it looks like overall PBM revenue will be flat to down," he wrote. "It seems that Caremark is still having difficulty gaining net share from the larger competitors." He said the stock was cheap at its current price, and kept his Buy rating. Bottom Line: Buy People will always get sick, and a dip this large should present a buying opportunity, despite the PBM unit weakness.[15]

CVS Caremark Corp. (NYSE: CVS ]] CVS ]] CVS ) Q3 net profit jumped by 39 percent following a fillip from pharmacy benefits services and drugstore sales. CVS Caremark Corp. ( CVS ) stock closed on Wednesay above its 200 days and 50 days moving average, and a bullish RSI of around 37.[31]

CVS Caremark Corp. ( CVS ) net profit jumped to $1.02 billion, from $732.5 million in the Q3, a year back.[31]

In our PBM segment, third quarter net revenues of $13 billion increased 23.4%. RX America contributed approximately $1 billion of that growth during the quarter, while one extra day this year added approximately $136 million.[18] Now what about the retail drug store side of our business? We saw revenues increase by 17.9% to $13.6 billion in the third quarter. Long'''s contributed approximately $1.0 billion of that growth during the quarter, while one extra day this year added approximately $167 million.[18]

Revenue fell 8 percent to $4.5 billion. That translates into an overall profit margin of 7.3 percent, well above the 3.4 percent Cigna recorded last year in the third quarter but below double-digit margins seen in other industries. The insurer's margin in its health care segment, which includes employer-sponsored group health insurance, was 6.3 percent. Insurers have been bombarded with criticism over their profits during the health care overhaul debate in Congress.[8]

ATP Oil & Gas Corporation ( ATPG ) plunged 9.4% or $1.71 to $16.40 an oil and gas company reported third quarter revenues fell 36.6% to $75.0 million from $118.3 million a year ago.[6] Net revenue from U.S. cash equity trading fell to $24 million from $66 million during the third quarter last year.[8]

Net revenues for the third quarter increased 18.1% to $24.64 billion from $20.86 billion in the year-ago quarter, and beat analysts' consensus revenue estimate of $24.61 billion.[21]

Drilling down a little deeper, the PBM pharmacy network revenues in the quarter rose 28.3% over 2008 levels to $8.8 billion. That was largely due to the change in revenue recognition method from net to gross for the RX America contracts that began in the second quarter.[18]

CVS CEO Thomas Ryan, shown above left with Caremark Rx Inc. CEO Mac Crawford in 2006, said Thursday the company has lost more than $4 billion in pharmacy contracts this year.[1] In total, the company lost about $2 billion in 2010 revenue in the last three months. It now believes Caremark has lost $4.8 billion in contracts for next year.[14]

The disappointment was in the details. CVS lost $3.7 billion in contracts for the quarter and warned investors to expect slimmer margins next year, with its pharmacy-benefits management unit losing 10% to 12% in margins.[32]

Sara Lee Chairman and CEO Brenda Barnes said years of cost-cutting and planning for new products work paid off during the first quarter and will continue to. The company plans to launch several new products soon, it has secured new partnerships such as an exclusive distribution deal for its commercial products with Sysco Corp. and it has plans to sell two business segments. Sara Lee has slowly been shedding less profitable products and business segments to focus on its core food and beverage products. It expects to sell its personal care products business to Unilever NV for $1.88 billion in 2010. Executives said they are in discussions to sell the company's household products unit but did not provide details.[8] The company was formed last September when Arby's owner Triarc Cos. Inc. bought Wendy's in an all-stock deal valued at $2.34 billion. Because of the merger, it's difficult to compare third quarter results to the same figures last year.[8] Cigna Corporation ( CI ) increased 5.1% or $1.47 to $29.78 after the health insurer reported third quarter sales fell 7% to $4.52 billion from $4.85 billion a year ago.[6] Cisco Systems, Inc ( CSCO ) increased 2.5% or 58 cents to $23.88 after the maker of networking equipment said first quarter sales decreased 13% to $9.0 billion from $10.3 billion a year ago.[6]

For the latest quarter, the company recorded 4.542 trillion yen ($50 billion) in sales, down 24 percent from the same period a year earlier.[8]

According to the Center for Research in Security Prices at The University of Chicago Booth School of Business, CVS shares last fell 20 percent in one day on Oct. 30, 2001. CVS, based in Woonsocket, R.I., said Thursday that its third-quarter profit jumped 39 percent to $1.02 billion.[14] Premiums and fees in health care fell 6 percent to $2.8 billion due to the enrollment decline, which was partially offset by rate increases. Cigna maintained its 2009 adjusted profit outlook of $1.04 billion to $1.1 billion, or $3.80 to $4 per share.[8]

As of Sept. 30, CVS said it had 7,008 retail pharmacy stores, 49 specialty pharmacy stores, 20 specialty mail-order pharmacies and 6 mail-order pharmacies in 43 states, Washington, D.C., and Puerto Rico. The company also narrowed its full-year profit forecast to between $2.61 and $2.64 a share, compared with its earlier estimate of $2.59 to $2.64 a share.[23] The company also said that the attorney general of Texas issued two civil investigative demands in October relating to the processing of Medicaid and other government agency claims. The investigation announcements came hours after CVS said that its pharmacy benefits business lost billions of dollars of business heading into 2010. Its shares fell as much as 24.3 percent.[33] State attorney generals sued and CareMark ended up paying $38.5 million in a very large settlement announced in 2008. It is no surprise that New Jersey then walked away from CareMark. CVS was very stupid to buy CareMark for $22 billion just as WalMart moved into the marketplace with its cheap prescription fills. Some of these drugs that CareMark was supposed to manage as a pharmacy benefits manager could be purchased at less cost at WalMart. That plus the rebate scandal that ended up with CVS settling for $38.5 million in 2008 has really shaken up this market.[1] CVS Caremark has come under criticism from various groups and lawmakers who have asked the FTC to review the nearly $27 billion merger of a major drug-store chain and large pharmacy benefits manager that formed the company in March 2007.[34]

NEW YORK, Nov 5 (Reuters) - Shares of CVS Caremark Corp ( CVS.N ) plunged in premarket trading on Thursday after comments from CEO Tom Ryan on weakness in the pharmacy benefit management business.[35] NEW YORK (Dow Jones)--CVS Caremark Corp. (CVS) Chairman and Chief Executive Tom Ryan said in an earnings call the company had some "big client losses" in its pharmacy benefits business for the 2010 selling season.[36] NEW YORK (Dow Jones)--A disappointing 2010 pharmacy-benefit selling season took the sheen off of CVS Caremark Corp.' s (CVS) stronger-than-expected third-quarter earnings Thursday. Chief Executive Tom Ryan said in an earnings conference call the company had some "big client losses" in its Caremark business for next year's season, adding the hybrid drugstore chain and pharmacy-benefits manager experienced more losses on the latter front than previously expected.[37]

The shares had recovered somewhat to $28.62, down 21 percent, at 2:50 p.m. Ryan said he will temporarily take over the PBM business from executive vice president Howard McLure, who is retiring, while the company searches for a new leader. [1] CVS shares closed at $36.15 on Wednesday in trading on the New York Stock Exchange. The stock has gained 26 percent this year through Wednesday.[23] In morning trading, CVS stock tumbled $7.50, or 21 percent, to $28.65. The latest contract losses include $1.7 billion in business for "dual eligible" people who can receive both Medicare and Medicaid benefits.[3] In afternoon trading, CVS stock tumbled $7.23, or 20 percent, to $28.92. CVS, based in Woonsocket, R.I., said Thursday that its third-quarter profit jumped 39 percent to $1.02 billion.[8]

Operating profit for the quarter increased to $1.57 billion from $1.47 billion in the prior-year period. Commenting on the results, Tom Ryan, Chairman, President, and Chief Executive Officer of CVS Caremark, said, "I'm very pleased with our performance across the enterprise this quarter.[21] The authorization, which is effective immediately, expires at the end of 2011. Earlier Thursday, CVS Caremark reported a 39% rise in its third quarter profit, reflecting double-digit segmental revenue growth.[7] Pharmacy same store sales were negatively impacted by 380 basis points due to recent generic introductions whereas Maintenance Choice program had a positive impact of 250 basis points. Generic dispensing rate increased both in the pharmacy services and retail segment by 320 basis points to 68.3% and 210 basis points to 70.1%, respectively. Based on the strong third quarter performance, CVS Caremark increased the lower end of its guidance for 2009.[20] The inter-segment eliminations as a percent of PBM retail network revenues increased by approximately 400 basis points over the prior year period, from 18.1% to 22.2%. This is up sequentially from last quarter'''s 330 basis point increase, further tangible evidence that there is an expanding base of our PBM customers choosing CVS as their retail pharmacy and an expanding number of PBM clients who choose to leverage the CVS retail service offerings, including maintenance choice.[18]

We expect total company operating expenses as a percent of revenues will be modestly up. That reflects the integration and one-time cost of Long'''s, the increase in litigation reserves we saw in the first quarter, as well as the first year economics of a large amount of new PBM business.[18]

For the total company, we expect revenue growth of around 12% to 14% for the full year after inter-company eliminations of over $7.5 billion.[18]

Wall Street analysts expect the company to earn 22 cents a share, down from 40 cents a year ago. Deutsche Bank analyst Doug Mitchelson said in a preview note on Oct. 23 that he'd raised his own 12-month price target 18%, to $13.00 a share. He said ad pacings are ramping up.[15] On average, 19 analysts polled by Thomson Reuters expected the company to report earnings of $0.64 per share.[21] The company now expects earnings per share in the range of $2.61-$2.64, up from the previous guidance of $2.59-$2.64.[20]

Elsewhere on the earnings calendar, Sirius XM Radio ( SIRI - news - people ) booked a wider loss than expected, losing 4 cents a share on sales of $623 million.[32] Dynegy said it expects to report a loss of $175 million to $250 million next year. It reaffirmed its expected adjusted earnings before interest, taxes, depreciation and income taxes, depreciation and amortization of $425 million to $550 million.[8]

Year-to-date, we opened or relocated 256 stores, so we are right on track to add about 3% retail square footage growth for '''09. We also completed 37 file buys in the quarter and we expect to do about 250 for the year, which is up about 10% versus last year and it'''s good to have this obviously because this is a great return for us and in fact many times the pharmacy staff and the owners actually come to work for us. Let me touch on minute clinic, which has now surpassed 5 million patient visits since its inception. We opened up eight new clinics during the quarter and now we have 565 clinics across 25 states, about 100 of those operate seasonally. In the third quarter, we saw better than expected growth in the clinics, and this growth was really excluding the flu shot.[18] Our share in markets in which we operate grew over 100 basis points. Total same-store sales increased 5.7% in the third quarter and when we came into this year, we told you we expected to see comps accelerate, pharmacy comps accelerate in the second half and we are seeing it -- pharmacy comps increased a solid 8%, better than the last quarter and in fact the highest level we have seen in two years and I guess almost close to twice the industry average. That occurred even as our generic dispensing rate surpassed 70% on the retail side.[18] Growth in private label sales during the quarter more than doubled the rate of other sales in the front store. Obviously this is good for us from a margin standpoint. in the third quarter private label accounted for 17% of front store sale, up 120 basis points versus last year.[18]

Net capital expenditures amounted to approximately $416 million in the third quarter. This was the result of offsetting the $661 million of gross capital expended with approximately $245 million worth of sale leaseback proceeds.[18] The large improvement was due to the recognition of approximately $155.7 million of previously unrecognized tax benefits relating to the expiration of various statutes of limitation and settlements with tax authorities. Excluding the impact of this reserve release, the effective income tax rate for the third quarter would have been approximately 39.8%.[18] Adjusted EPS from continuing operations was $0.76; excluding the $0.11 tax benefit, it was $0.65, an increase of 8% over last year'''s third quarter and just guidance.[18]

Turning to the balance sheet and cash flows, we generated over $490 million in free cash flow in the third quarter. That compares to $386 million in the prior year'''s third quarter, so we'''ve made some nice progress there.[18]

DynCorp International Inc ( DCP ) climbed 0.7% or 13 cents to $17.12 after the military contractor said second quarter revenues rose 5.4% to $821.4 million from $779.2 million a year ago.[6] Nasdaq OMX made some changes to trading fees that are expected to increase revenue by as much as $15 million in the fourth quarter, assuming the exchange operator maintains the market share and volume it saw in October for the remainder of the quarter, Greifeld said.[8] Lower average net fee per traded share also attributed to the decline in Nasdaq's U.S. equity-related revenue during the third quarter. Acknowledging the declining revenue and market share of U.S. equities trading, Nasdaq OMX CEO Bob Greifeld said during a conference call with analysts, "we have taken actions to address these issues and as we exited the third quarter, we saw noticeable improvements in many of the drivers of our cash equity business."[8]

The quarter was otherwise pretty decent for CVS with revenue rising 18% to $24.64 billion, which was on pace with analysts' expectations.[5] Revenue for the quarter was $1.01 billion, which compares to the estimate of $1.13 billion. U-Store-It Trust (YSI) reports Q3 FFO of $0.18, versus the $0.26 reported in the same quarter last year.[38] Revenue fell by more than half, to $673 million, down from $1.76 billion last year.[8]

No, we didn'''t go to an extreme. We actually -- we used the same approach we used in the past and as you know, Meredith, we had, as David said, about 500 million lives and half of those -- 500,000, excuse me, 500,000 lives and 1.7 billion but the -- half of those lives, you lose it on a premium that is $0.50 to $0.75 off, so obviously we thought we made a good bet on the premiums and it'''s a balance depending on the region and we used the same approach with our actuaries and we lost those lives. We didn'''t get -- we didn'''t really raise the prices significantly because we just -- we thought we appropriately bid them. My understanding of the Med D business is that once you lose those members, it is fairly hard to get them back, just because of the way the math works if you hit the benchmark for the following year, you are still not going to get all those numbers back. Well, you -- yeah, you know, there'''s going to be some other members -- there'''s some regions that others lost that we are still in that we may pick up business in but you are right -- it'''s hard once they move to get them back. We think we'''ve got some up-take on some regions that we are in where there will be few players, so we might have some upside there but you are right -- it'''s hard once they make the decision.[18] Well, we can go through the individual pieces but as I mentioned, the $5 billion that we lost, one was service on one of the health plan side and we lost on the Medicaid Med D business last year, and it was just a natural move to move the commercial business.[18]

Now before turning it over to Dave, I am also pleased to announced that our board of directors approved a new share repurchase program for up to $2 billion of outstanding common stock. This reflects our confidence in the future growth of our business and our ongoing commitment to improve and increase shareholder value.[18] Shares rose 3 percent before the bell. Research In Motion ( RIMM ) rose 2.7 percent after it said it would repurchase up to $1.2 billion of its own stock.[39]

Through the end of October, we have repurchased 57.7 million of our shares for $1.99 billion at an average share cost of $34.66, including commissions. We nearly completed our $2 billion share repurchase authorization and we expect to complete the remainder this month.[18] Then as Tom said, the board of directors just approved a new $2 billion share repurchase program and we expect to purchase shares from time to time between now and the end of 2011.[18]

Shares of CVS closed down $7.28 to $28.87. The shares are now worth about 13 percent less then they were when Caremark shareholders approved the CVS deal.[33] At about 10:10 a.m., CVS shares (Ticker: CVS ) were off close to 21 percent at $28.73, erasing seven months worth of gains. When CVS acquired Caremark 31 months ago, its shares were changing hands at more than $34.[12]

Shares were 2 percent higher ahead of the bell. CVS Caremark Corp. ( CVS ) reported Thursday that third-quarter net income rose 39 percent from the year-earlier period and narrowed its adjusted full-year forecast.[39]

CVS Caremark (NYSE: CVS ) posted a third quarter profit that soared nearly 40 percent higher.[17] My name is Regina and I will be your conference operator today. At this time, I would like to welcome everyone to the CVS Caremark Corporation'''s third quarter 2009 earnings conference call. (Operator Instructions) I would now like to turn the call over to Nancy Christal, Senior Vice President, Investor Relations.[18]

On a go-forward basis, we are certainly going to be appropriately aggressive on price and where we should be for appropriate contracts but the wins are really around the service level and the clinical opportunities and savings that we can provide our clients. No, I don'''t see -- this is not going to be a case of CVS Caremark out in the marketplace just pricing to get contracts. We are going to be appropriate, we are going to look -- you have to look at this from a return standpoint and we will be -- we will measure our pricing appropriately. All right, and just my second question for you is on the retail business -- what is your level of confidence in this 13% to 16%? I mean, the business itself in this given quarter, this current quarter, was up 5%.[18] Various groups have asked the government to look into CVS Caremark's practices since drugstore chain CVS bought pharmacy benefits management business Caremark Rx Inc in March 2007. They claim that changes to services in the pharmacy benefits business since the acquisition have led to higher prices, compromised quality of care and pushed patients to choose CVS drugstores over other pharmacies. "We were recently notified by the FTC that it's conducting a non-public investigation relating to certain of our business practices," Chief Financial Officer Dave Rickard told Reuters during a telephone interview.[33] The company also said on Thursday that the U.S. Federal Trade Commission is investigating certain business practices. In another announcement likely to throw doubt on its March 2007 acquisition of pharmacy benefits management (PBM) company Caremark, CVS said that Caremark Pharmacy Services President Howard McLure, 52, would step down as of Nov. 27 and a search for a successor would begin.[40]

Speaking of 2011, we announced on Monday that we renegotiated and extended our $4 billion contract to provide retail pharmacy benefit services and all clinical services for Blue Cross Blue Shield and known as the federal employee program, FEP. The three-year contract originally due to expire at the end of 10 has been extended through the end of 11.[18]

What has changed? Well, as I just said, we lost more PBM business than we expected since the call, $2 billion in contracts.[18] Obviously when we lose significant business that we lost, almost $4 billion of business since the call, that 2% to 4% changes on the PBM side.[18]

When you think about your free cash flow for next year, I think you said $2 billion to buy back through the end of 2011 -- I mean, given where the stock is today or trading today, I mean, you would think that you would complete that relatively quickly, i.e. in 2010. John, we will obviously consider the stock price as well as the ebb and flow of cash within our business, but those decisions will be made weekly and monthly as we go, so I don'''t want to give you an indication that we are going to front-load or middle load or back load right now.[18] The company also said it will buy back up to $2 billion in stock through the end of 2011. Associated Press Writer Damian Troise in New York contributed to this story.[3] The company'''s board of directors has also approved a new buyback program to repurchase as much as $2 billion of CVS''' common stock.[1]

The company said it processed 146.5 million pharmacy claims during the quarter, up 9 percent from a year earlier. '''They were very solid results, but not blow-out results,''' Scott Mushkin, an analyst at Jefferies who has a '''buy''' rating on the stock, told Dow Jones Newswires.[23] Cigna was no exception. It said Thursday its medical enrollment fell 7 percent to 11.1 million from the third quarter of 2008. The insurer started the year with medical enrollment of about 11.7 million and expects a decrease of 5 to 5.5 percent in 2009, although company executives say those numbers will stabilize next year.[8]

The average daily rate was $105 during the third quarter, compared with $136 a year earlier.[8]

Philadelphia-based Cigna said it generated $16 million in income during the quarter from variable annuity products in a segment the insurer maintains but no longer sells or markets. Those products lost $133 million in the same quarter last year.[8] Dynegy reported adjusted earnings before interest, taxes, depreciation and income taxes, depreciation and amortization of $388 million, up from $269 million last year.[8]

The hot beverage giant reported fourth quarter earnings of 24 cents per share, jumping from the 10 cents per share earned in the same quarter last year.[38] Starbucks forecast that the company will see a 15 to 20 percent growth in earning per share in 2010 over the earnings in 2009.[38] Growth in per-share results outpaced the increase in overall earnings because the company had fewer shares in the latest quarter.[8]

The company reported earnings of 71 cents a share, up from 50 cents a share a year earlier.[15]

The company's shares advanced 17 cents, or 9.1 percent, to $2.04 in afternoon trading.[8] The higher-than-expected profit and strong outlook sent shares of Sara Lee, which is based in Downers Grove, Ill., up 44 cents, or nearly 4 percent, to $11.84 in midday trading Thursday.[8]

Cigna reported an adjusted profit, which excludes one-time items, of $1.13 per share.[8] The results included charges of $1.72 per share related mostly to CityCenter, a 67-acre complex that starts opening next month.[8] Analysts polled by Thomson Reuters, whose estimates typically exclude one-time items like charges, expected MGM Mirage to post a loss of 7 cents per share.[8] Excluding a tax benefit of 11 cents per share, adjusted profit from continuing operations totaled 65 cents per share.[3] Excluding a tax benefit, CVS earned 65 cents a share in the quarter, beating analysts' expectations by a penny.[4]

Stifel, Nicolaus & Company Inc. analyst Christopher Growe told investors the company benefited by comparison with a tremendously weak quarter a year ago and after stripping out several one-time items, produced a less impressive quarter than it appears. He said the company is "no doubt headed in the right direction" and maintained a "hold" rating on its shares.[8] Shares rose over 3.5 percent in premarket trade. Toyota Motor Corp. ( TM ) posted a surprise profit last quarter -- its first after three losing quarters -- and trimmed its projected red ink for the year.[39] BX's market share of U.S. cash equities was 2.7 percent in the third quarter, but rose to 3.7 percent in October, Greifeld said during the call.[8]

In the third quarter, newspaper advertising revenue dropped 27 percent from the year before.[8] Revenue fell 15 percent for the quarter to $1.53 billion from $1.79 billion, but it topped Wall Street's forecast of $1.47 billion.[8] DirecTV's U.S. operations posted revenue of $4.7 billion, up 9 percent from last year.[8] Net revenue rose 18 percent to $24.64 billion from $20.86 billion.[3] Net revenues advanced 17.6% to $24.87 billion from $21.14 billion reported in the previous year.[10]

Revenue was up 18 percent, to $24.6 billion, driven in part by strong performance in prescription sales.[17] Revenue slumped 19 percent to $2.7 billion from $3.3 billion. European Central Bank on Thursday left its key interest rate steady at 1%. U.S. stocks finished mostly higher on Wednesday after Federal Reserve left benchmark interest rate unchanged at near zero and said that it will keep them low for an extended period.[9] Revenue declined 4 percent to $3.22 billion, in part because of unfavorable foreign exchange rates.[8] Revenue fell 7 percent to $2.59 billion, as it sold fewer products, shed some product lines and saw a negative impact from the stronger dollar.[8]

Revenues in the quarter rose 17.7% year-over-year to $24.6 billion, inline with consensus estimates.[41] We lost about 0.5 billion lives -- sorry, 0.5 million lives and that represented about $1.7 billion of revenue and yes, that'''s about $0.03 to $0.04.[18]

We ended the quarter with total debt net of cash and cash equivalents of $10.8 billion. That'''s up approximately $400 million from year-end and largely reflects normal swings in our working capital.[18] Moving to the consolidated income statement, we saw net interest expense in the quarter increase to $123 million, largely reflecting the increased debt position due to Long'''s.[18]

Net profit grew to $150 million from $5.4 million in the year-ago quarter.[38]

During the quarter, Dynegy recorded a $234 million after-tax charge to write down the value of the eight plants. The company also recorded a $128 million loss on its forward contracts.[8] While pharmacy netwok claims processed during the quarter increased 9% year over year to 146.5 million due to the addition of RxAmerica claims and new client wins, offset partially by a reduction in claims due to the termination of two large contracts (effective beginning of 2009), mail choice claims increased 11.4% to 16.4 million.[20]

Barring any new and currently unforeseen financial market problems, we still expect that we will be able to complete the sale of the remaining $900 million or so in properties we had planned when the year began.[18] Sales in locations open at least a year, an important performance measure, slid 9 percent at Arby's during the period. Executives said they hoped a new focus on $5 combo meals and a $1 menu the chain plans to expand to new markets will shore up results at the restaurant in the future. Wendy's and its cheaper menu fared better than its higher-priced sibling, with flat sales in sites open at least a year. "We are developing more effective value strategies at each brand during this very challenging economic climate," CEO Roland Smith said in a statement.[8]

CVS SAID quarterly sales at its stores open for a year or more rose nearly 6 percent, mostly due to higher pharmacy revenue, which increased 8 percent.[23] Revenue at CVS drugstores rose 17.9 percent, with sales at stores open at least a year rising 5.7 percent.[3]

Revenue at CVS drugstores rose 17.9 percent while revenue from the Caremark pharmacy-benefits management business rose 23.4 percent.[22] Revenue from Caremark pharmacy benefits management business rose 23.4 percent.[3]

NEW YORK (Dow Jones)--CVS Caremark Corp.' s (CVS) third-quarter profit rose a stronger-than-expected 39% amid revenue gains at its pharmacy-benefits business. The hybrid pharmacy-benefit manager and drugstore chain now sees 2009 earnings at the high end of its forecast.[42] Amid an increasingly competitive marketplace, Nasdaq OMX's revenue dipped 10 percent. It was able to offset some of that decline by reducing costs. The New York-based exchange operator also recorded fewer special charges during the quarter which helped its profit rise about 3 percent.[8] Qualcomm Inc. ( QCOM ) fiscal fourth-quarter profit dropped 8.5 percent, missing estimates, as charges, lower revenue and drooping margins weighed on results. It also provided a downbeat forecast for the current quarter.[39]

For the third quarter, the Woonsocket, R.I., company's profit and revenue were about equal to Wall Street's estimates.[3] The gross profit margin in the retail segment declined by approximately 100 basis points in the third quarter to 29.4%. That reflects pressure on third party reimbursement rates as well as a higher mix of promotional sales, which more than offset the positive impact of new generics.[18] Time Warner Cable Inc. ( TWC ) posted a third quarter profit that beat expectations thanks to growth in sales of voice and Internet services.[39]

Additional costs would be passed on to consumers. For this year's third quarter, the largest publicly traded health insurers all reported better-than-expected profits. They've also seen their health insurance enrollment shrink, as companies continue to trim jobs and reduce the number of people covered by employer-sponsored health insurance.[8]

The dollar has traded at 90 yen levels in recent months, down from about 108 yen a year ago. Toyota said unfavorable exchange rates erased 180 billion yen (about $2 billion) from its latest quarterly profit.[8]

CVS bought Caremark for $21.2 billion in March 2007, forming one of the largest drug purchasers in the country. Caremark aims to save money for health plans by cutting drug costs, and the combination with CVS makes it convenient for plan members to fill their prescriptions at CVS, bringing more customers to the stores.[14] CVS, which operates more than 7,000 drugstores, entered the pharmacy-benefits management business in 2007 with the purchase of Caremark Rx Inc. for about $22 billion.[25] The move wiped about $10 billion off the market value of CVS, reflecting fears Caremark will struggle to improve anytime soon.[43]

CVS Caremark gapped open sharply lower Thursday and is now down 7.77 at $28.38. The stock has dropped to a 7-month low and has fallen below its 200-day moving average.[44] In heavy afternoon trading, CVS stock tumbled $7.28, or more than 20 percent, to $28.87.[14] MGM Mirage's stock gained 58 cents, or 6.2 percent, to $9.90 in morning trading.[8] In afternoon trading, the stock sank $7.29, or 20.2 percent, to $28.85.[26]

U.S. customers on average paid $85.32 per month for DirecTV's services, up 2 percent from last year, in part due to increases on plan prices, HD and DVR service fees. [8] We had $1.4 billion in wins in 2010. Approximately $600 million of those gross wins came since the last quarterly call. We had $4.5 billion in losses and approximately $2 billion plus of those came from the last call, since the last call, and those would be Horizon, I think you know about the State of New Jersey. This was a bid that the state wanted on a standalone basis so it was kind of a price and carve out issue.[18] Well, we had $9 billion of new business '''08 and we have new clients.[18] All right. It'''s the contracts and -- you know, and the Med D. You put those together, it'''s $6 billion plus of business.[18] Net net, it'''s about $4.8 billion in net loss for 2010 and approximately almost $3.7 billion since the last call. If you look at the losses, total losses with Med D and the $4.5 billion contract losses, they really come from four contracts plus the Med D lives, the two really that I mentioned and then Chrysler and Coventry. What does this all mean for 2010? As you all know, on our last quarterly call, I said I would -- we were not in a position to provide 2010 guidance at that time, which we weren'''t because we hadn'''t done our budget.[18] We extended the $4 billion FAP contract through 2011 at the client'''s request. This was an early renegotiation, not at our request but at the client'''s request.[18]

Then we had another $600 million miscellaneous. These were basically smaller clients around RX America or Pharmacare that just really wanted essentially smaller PBMs. So in total, that was about $2 billion plus since the last call.[18]

The Children's Place Retail Stores, Inc ( PLCE ) increased 7.9% or $2.56 to $34.96 after the specialty retailer of children's apparel and accessories today announced net sales of $149.8 million for the four-week period ended October 31, 2009, a 3% increase compared to net sales of $144.9 million for the four-week period ended November 1, 2008.[6] Same store general merchandise sales stalled, gaining only 0.8% and overall same stores failed to beat the company'''s expectations. Their rival Walgreens (NYSE: WAG ) saw their same store sales gain 4.9% behind flu vaccinations. The positive earnings have prompted the company to narrow their earnings forecast range of $2.59 - $2.64 to $2.61 to $2.64.[19] Sara Lee Corp. ( SLE ) fiscal first-quarter earnings rose 23.5 percent amid lower costs as results exceeded analysts' expectations. The company raised its fiscal-year earnings forecast and affirmed its sales guidance.[39]

The combination is working against CVS because plan sponsors feel the company's attentions are split between cutting drug costs and bringing more business to the drugstores, BMO Capital analyst Dave Shove said in an interview. "The drug store wants to sell more pills and they want to sell more expensive pills, and the PBM wants to sell less pills and they want to sell cheaper pills," Shove said.[14] "The headwinds on the PBM segment are greater than investors had contemplated heading into 2010," said JMP Securities analyst Constantine Davides. CVS told investors on a conference call it no longer expected low to mid-single digit growth in its PBM business in 2010, and forecast a drop of PBM operating profit of 10 percent to 12 percent for the period.[13]

Ryan profits at Caremark could drop as much as 10 or 12 percent compared to 2009. Three months ago, Ryan said CVS would be "very disappointed" if its total per-share profit did not grow 13 to 15 percent next year. He said CVS won't reach that level.[14] Along with Thursday's sales report, the company disclosed the division's president will leave CVS Caremark by the end of November. CVS Caremark Chairman Tom Ryan said he will take over the division temporarily after the departure of Howard McClure. CVS Caremark confirmed it will move the headquarters for its MinuteClinic operations to Rhode Island and lay off about 150 MinuteClinic employees in Minnesota.[22] The Federal Trade Commission notified CVS Caremark Corp. (CVS) in August that it is conducting a nonpublic investigation into some of the company's business practices, the pharmacy concern disclosed Thursday.[34] CHICAGO (Reuters) - CVS Caremark Corp ( CVS.N ) has been the subject of a U.S. Federal Trade Commission investigation over some of its business practices since August, the company said on Thursday.[33]

NEW YORK — The Federal Trade Commission is investigating some of CVS Caremark Corp.' s business practices, the company said Thursday.[26]

Pharmacy operator CVS Caremark ( CVS ]] CVS ) shares stumbled down more than 20% on Thursday morning after they reported earnings.[5] The drive for lower health-care costs may have claimed its first big victim. CVS Caremark shares slid 20% Thursday after CVS said Caremark, its pharmacy-benefit manager, was bleeding major clients.[43] The move will facilitate sharing of infrastructure function and services and will improve speed to market for CVS Caremark'''s chronic care and patient engagement and disease management initiatives. The cost of this move is approximately a penny a share, which will be primarily in 2010.[18]

In September, labor consortium Change to Win asked the FTC to reexamine the merger, saying the deal has led to higher drug prices. Two weeks later, eight U.S. congressmen asked the FTC to reopen its investigation into the deal, accusing CVS of using Caremark data on consumers to steer them to its drugstores. CVS said it is confident that it is conducting its business in compliance with antitrust laws. It said its practices and the services it offers are designed to cut healthcare costs and expand choices for consumers. Special interest groups, Rickard said, have "repeated their unfounded accusations so often that the commission has understandably decided that it should look into these allegations about our practices.[33]

CVS suggested that the FTC inquiry is connected to complaints made by the Change to Win coalition of labor unions, which has accused CVS of stocking expired products and violating patients' privacy, among other issues. Chief Executive Officer and Chairman Tom Ryan said he will take over the pharmacy benefits division business from Executive Vice President Howard McLure, 52, who is retiring, until a new leader is found.[45] Pharmacy benefit manager CVS Caremark ( CVS ) doled out bitter medicine to investors Thursday after the pharmacy announced it had lost some important customers for the 2010 buying season.[15] CVS Caremark, one of the U.S. largest pharmacy benefit managers, provides plan sponsors and participants access to a network of about 60 thousand pharmacies including 7,000 CVS/pharmacy stores.[10]

"CVS Caremark is struggling to explain to customers the benefit of a retail and pharmacy management business.[24]

The 417 clients adopting maintenance choice represent only about 13% of our book, so there is clearly room to grow. Our early adopters of maintenance choice are telling us they are satisfied with the implementation process and that their members view the offering as a major enhancement to their benefit since now they have the convenient option of obtaining their prescriptions at any CVS retail store or mail order and they still get the benefit of mail order pricing. Remember, this program is just an extension of our mail offering. It lowers cost for patients and payers. It is being so well-received in the marketplace.[18] Whether a patient uses mail pharmacies, our minute clinics, our retail pharmacies, our specialty pharmacies, the CEE will further enhance the benefits of our integrated model by distilling data down to actionable messaging for our clients and our pharmacists. It may highlight opportunities for cost savings around formula recompliance or generic substitution. It may improve patient care through better compliance. Patients using our call centers, using our website, receiving outbound letters or interacting with pharmacists will all receive targeted messages to help them save money, save time, and stay healthy. CVS pharmacists will be able to restart someone on therapy from a mail order prescription that they may have discontinued, or help a member at retail get started on mail order. This will provide us with an unprecedented capability to engage patients and to eliminate gaps in care, improve adherence, and help drive cost savings. It will be rolled out to our core channels in mid 2010 and we will have evidence in the -- and drive it in the selling season for 2011.[18]

We saw approximately 250 basis point benefit in pharmacy comps from maintenance choice. That'''s up 190 basis points in the second quarter and 120 from the first quarter. Our integrated products continue to gain traction in the marketplace and they gained traction for two simple reasons -- they helped reduce -- help clients reduce pharmacy and overall healthcare costs and they help save patients time and money.[18]

GAAP diluted EPS from continuing operations came in at $0.71 for the quarter, or $0.60 when adjusted for the tax benefit. That'''s also approximately an 8% increase over last year.[18] Keep in mind that the full year rate will be impacted by the tax benefit we recognized in the third quarter.[18] DirecTV added 136,000 new U.S. subscribers in the third quarter, down from 156,000 added in the same quarter last year.[8] Like last quarter, our average front store transaction on a comp basis grew slightly in the third quarter. The better news is that this quarter we saw comp traffic up slightly. That'''s a positive sign that the economy has started to improve.[18]

We expect the initial impact of the comps to be slightly negative because of the remodels but we look forward to continuing to narrow the sales productivity and margin gaps between the former Long'''s stores and core CVS stores. As for new stores, on the real estate side we reached a milestone this quarter.[18] Larry Murlow, our President of CVS Pharmacy, opened our 7,000th store in Little Canada, Minnesota -- who knew? In total, we opened up 87 new and relocated CVS pharmacy stores in the quarter and closed six others, resulting in 59 net new stores in the quarter.[18]

CVS also lost contracts with the New Jersey state Blue Cross plan and Ohio's managed Medicare business. Earlier this year, health insurer Coventry Health Care Inc. said it would not renew a contract with CVS. Retired employees of automaker Chrysler also turned elsewhere.[3] Within the PBM segment, the gross profit margin was down approximately 50 basis points. That was expected due to the change in the revenue recognition method for RX America, as well as the pricing decisions we made last year for a few key contracts.[18] Our generic dispensing rate increased 320 basis points to a best-in-class 68.3 versus LY. Operating profit in the PBM was up 13% and EBITDA per adjusted claim increased 8% to 489 on an apples-to-apples basis.[18]

Cigna Corp. The managed care company's third-quarter profit soared 92 percent, as improving equity markets spurred a big turnaround in a discontinued business that hurt the insurer last year. [8] The company now expects to report full year 2009 EPS between $2.61 and $2.64, compared to prior expectations of $2.59 to $2.64.[44] Over the last year, the shares have traded in a range of $1.81 to $16.89. This copyrighted material may not be re-published without permission.[8] Shares of CVS, the largest U.S. provider of prescription drugs, plunged $7.51, or 21 percent, to $28.64.[45] Shares of CVS (CVS:NYSE) closed at $28.87 for the day, falling $7.28, or 20.1 percent.[22]

Investors, however, sold ferociously on the outlook, and CVS shares dropped 20.5% to $28.73 in afternoon trading.[4]

Shares for Starbucks have moved up 4 percent to $20.49 in the afterhours market.[38]

DirecTV's Latin America units saw a 16 percent increase in revenue to $761 million.[8] Revenue for the quarter was $million, which compares to the estimate of $49.12 million.[38] Nasdaq OMX's total revenue after liquidity rebates and fees fell to $349 million from $399 million, during the year-ago period.[8]

The $24.6 billion in consolidated revenues is net of $2 billion of inter-segment eliminations.[18] Net capital expenditures are expected to be in the range of $1 billion to $1.2 billion for 2009.[18]

Then lastly, we had $1.7 billion that we lost in Med D business. This was the 500,000 lives that we lost in the, and once again this was since the last call.[18] We lost the State of Ohio on the managed Medicare business. It was carved in, which was about $500 million plus.[18]

We maintained a healthy balance sheet and generated more than $490 million of free cash flow for the quarter, so a pretty good quarter all the way around.[18] The company said pharmacy network claims processed rose 9 percent to 146.5 million during the quarter, while mail choice claims rose 11.4 percent to 16.4 million.[3] U.S. comparable store sales declined by 1 percent, marking the eighth straight quarter the company has seen a drop.[38] Right now we have private label is about 11% of front store sales. That'''s obviously lower than our core business but up 700 basis points since the second quarter.[18] "We lost more business than we expected." Deutsche Bank analyst Bill Dreher spotlighted some positive aspects, such as an 8% increase in pharmacy same-store sales and a lower-than-expected margin drop of 71 basis points.[15]

Despite industry wide pricing pressure in the pharmacy business, results over the past several quarters have demonstrated strong sales trends with comparable same-store sales growing at solid rates.[20]

I don'''t want to lose sight of the solid quarter we had, with great revenues and profits and cash flow and leading comps and private label sales and maintenance choice up.[18] Cisco Systems Inc. ( CSCO ) posted a stronger-than-expected profit for its fiscal first quarter and said business was recovering as customers are buying more network equipment again. Its revenue outlook for the current quarter also exceeded Wall Street expectations.[39]

Starbucks (Nasdaq: SBUX ) profit showed substantial growth in the fourth quarter due to the company's lower costs.[38] Net revenue for the company fell by 3.7 percent amid cost cutting initiatives that saw the closing of stores to combat the lower consumer demand during the weak economy.[38] Revenue at drug stores increased 17.9% which was aided by a 10% increase in flu related prescriptions, which the company expects to remain strong through the fourth quarter.[5] While MGM Mirage's casino revenue was down for the quarter, the company's 6 percent drop in slot revenue decline was smaller than the second quarter's 11 percent decline and the first-quarter slip of 13 percent.[8]

Net revenues for the quarter were positively impacted by one more reporting day compared to the third quarter of 2008.[21] Revenue for European equity markets also dipped during the quarter as the value of shares traded declined and because of currency exchange rates.[8]

The company's better-than-expected earnings and additional share repurchase authorization have been overshadowed by concern for the company's PBM business.[27] We renewed contracts. We are getting more share of the spend from those contracts but we in fact when you lose -- we lost Coventry, which we lost the Med D business and then we obviously expected to lose the commercial business.[18] It'''s about getting the appropriate price, a competitive price in the marketplace, one on new business and two on retained business, but then growing a share of that business and getting that client more profitable going forward.[18] Excluding a tax gain, CVS earned 65 cents a share, a penny more than the 64-cent average of analysts''' estimates compiled by Bloomberg News.[23] The sector's relative underperformance stems from considerable weakness in shares of CVS Caremark (CVS 29.06, -7.09).[27] I'm here with Tom Ryan, Chairman, President and CEO of CVS Caremark, who will provide a business update, and Dave Rickard, Executive Vice President and CFO, who will provide a financial review and guidance.[18] I just want to ask a question about your approach to the last couple of selling seasons because I think you are probably right in saying the integrated model per se is probably not putting people off the business and in the longer term, I am sure maintenance choice and other programs are going to be an enhancement to employers. At the heart of this deal between CVS and Caremark, you created the biggest buying organization around generic drugs possibly in the world.[18]

Just one qualification on next year, is it fair to say because obviously the CVS retail business is larger than the PBM, that if the large one is growing at 13% to 16%, that overall EBIT would be up next year because of that mix. That'''s correct.[18] I mean, I feel as I said earlier on the call when we did the projections, when I talked about the 13 to 15, I talked about where I thought the retail business would be and that has not changed. That has not changed from the second quarter call to now and obviously we are further along in the planning process and we have more confidence in the -- I am confident in the retail number not only next year but on a go-forward basis on what we have in the hopper.[18] I mean, I think it'''s fairly common knowledge that our message early on was not clear, to be honest. It was not simple for managers, benefit managers to understand. It focused a little too much on the retail side of the business as opposed to a coordinated effort and Len has deep PBM experience, he has disease management experience on the marketing side, so yes, he'''s brought in to help change that message on a go-forward basis and we'''ve had a lot of discussions with clients and consultants around that, so that message has changed as we speak and he starts obviously in about a week. As far as plan design, we are seeing obviously people reaching out for step therapies, for high performance formularies, for generic first, and obviously a move to the maintenance choice because they obviously can save money but we are seeing more people thinking about high performance formularies and obviously any way to get faster uptake on generics, whether it is through co-pays or step therapies.[18] Recall that mail choice is our metric that includes mail order claims plus 90 day claims filled at retail via maintenance choice. We believe that this provides a clearer picture of our business as it has become more channel agnostic in regard to 90 day claims. Those were previously overwhelmingly filled in mail order facilities. Related to this, since maintenance choice is included in our mail choice metric, what we now refer to as pharmacy network is simply the PBM'''s retail network less those maintenance choice scripts that moved to mail choice.[18]

The quarter was characterized by continued industry-leading performance in our retail business, solid performance in our PBM, and record results from MinuteClinic.[21]

Obviously the Achilles Heel I think for the stock and certainly it looks like for next year in terms of overall growth is going to be the selling side on the PBM business.[18] Our next question comes from the line of Robert Willoughby with Banc of America Merrill Lynch. You know, Tom, how do we look at the revised PBM outlook as anything but proof that no real clear synergy does exist here? You speak about improving the business but I mean, what are the credible data points we can put forward that this can happen? I just don'''t see how you can restore growth given the performance over the past couple of years.[18]

Now on to guidance for the year -- for the retail segment, we continue to expect revenue growth of between 12% and 14% for the year with total same-store sales in the range of 4% to 6%.[18] MarineMax Inc. The Clearwater-based boat retailer's same-store sales rose for the first time in two years and posted a better-than-expected revenue, helped by inventory reduction as well as recovering demand.[8]

Sales edged higher to $332.2 million from $320.3 million, better than the $324.5 million Wall Street expected. [8] We expect total consolidated amortization for 2009 to be a little shy of $450 million.[18] We expect somewhat less next year, maybe $0.04 to $0.05 and we expect to break-even in 2011 on an all-in basis.[18] Customers on average paid $59.80 a month, up 1 percent from a year before.[8]

The guiding principle behind our work is that there must be a good reason for brokerage firms to spend billions of dollars a year on stock research. Obviously, these investment experts know something special that may be indicative of the future direction of stock prices. From day one, we were determined to unlock that secret knowledge and make it available to our clients to help them improve their investment results.[20] Today I am pleased to report that we now have 417 clients representing over 5 million lives who have adopted maintenance choice or will adopt it in the first quarter of '''10. That'''s up from 270 clients in the second quarter and 200 at the beginning of the year, so clearly maintenance choice is gaining acceptance in the marketplace.[18] We added another 4.5 million additional lives to the network in the third quarter so now 80%, slightly over 80% of the visits are third party paid.[18] All 30 Dow components advanced and helped the blue chip index close above 10,000 for the first time in two weeks. The positive tone among this session's participants was also helped by news that third quarter nonfarm productivity surged 9.5% in its preliminary report. That is considerably better than the 6.5% increase that had been widely expected.[28] With job conditions still weak, unit labor costs dropped 5.2% in the third quarter. They were expected to fall 4.2%.[28] Third quarter preliminary nonfarm productivity surged 9.5%, which is far better than the 6.5% increase that was widely expected.[27]

Our overall mail choice penetration rate of 23.8% was up approximately 50 basis points from the rate in the third quarter 2008 on a reported basis.[18] Good morning, everyone and thanks for joining us today for our third quarter earnings call.[18] As Tom mentioned, our third quarter comps increased 5.7%, with pharmacy comps up a very solid 8% and front-store comps up 0.8%.[18] Good morning, everyone. This morning I will walk you through our third quarter financial results.[18]

Thanks, Nancy, and good morning, everyone. We reported another excellent quarter this morning and I am certainly pleased with our results across the company, especially given the economic climate we are in.[18] The company's third-quarter results are likely to reflect the performance of its pharmacy benefit management businesses as well as the effects of the flu shots.[10] "We had some good wins" in the 2010 pharmacy benefits selling season, Ryan said in the Thursday call, adding the company.[36]

The move raised questions from analysts about CVS' strategy as a combined drugstore operator and pharmacy benefits manager.[3] The announcement refueled concern for investors, who had worried about underperformance at Caremark since the drugstore chain and pharmacy benefits manager, or PBM, joined forces two.[37] The Pharmacy Benefits Management business is in for a rough ride as health care reforms move forward.[1]

Pharmacy network claims grew 9%. This growth was driven by the addition of RX America, as well as the impact of net new business.[18] While our retail business is still expected to achieve strong double-digit operating profit growth in 2010, which will likely be -- the retail range will likely be in the 13% to 16% range.[18] The network scatter market - the market for ads bought during the TV season, as opposed to the one for ads purchased during the spring "upfronts" period, when programs are launched - is better than expected, and management commentary that TV production profits will stay flat for 2010 improved the picture for CBS. That's not to say CBS is in a growth business. Bottom Line: Hold This business isn't going away, but its grasp on the airwaves isn't what it used to be, either.[15]

To get to that 13% to 15% growth rate, I expected strong double-digit growth in our retail business, which I still do, and I expected low to mid single digit in our PBM business, which is not going to happen.[18] I said I would be disappointed if we weren'''t in that range and I said it was too early to give guidance from a budgeting standpoint but now I'''m just giving you full disclosure -- I'''m telling you what we were thinking about on the 13 to 15 and how one could get there, and one could get there very easily with a PBM growth rate in the 2% to 4% range, when you look at where the retail side was growing, interest rates and share buy-back, et cetera, and all the pieces, it was pretty straightforward.[18]

Shares advanced, on the company's forecast for a 20% jump in adjusted income for next year. [32] We are forecasting approximately 1.45 billion weighted average shares for the year.[18]

"In addition, demand-stimulating measures by governments worldwide have contributed to our revised targets." If Toyota can manage the latest forecast, it would be a major improvement over the 437 billion yen loss it posted during its last fiscal year, the worst performance in the company's 72-year history.[8] Dynegy Inc. The power company posted a second straight big quarterly loss as it continues to write down the value of plants that it is selling as part of a deal to bolster finances. The Houston company also said it expects its net loss for the full year to be bigger than previously forecast, and hinted that the company may be interested in other transactions with power companies after the deal with former development partner LS Power Associates closes before year end.[8]

Denton, who is currently the company's Senior Vice President, Controller and Chief Accounting Officer, will succeed David Rickard who announced in February this year his intention to retire as CFO. Denton joined the company in 1999. The selection of Denton as Chief Financial Officer ends an eight month search that included both internal and external candidates, CVS said in a statement.[7] The investigation could be connected to complaints made by the Change and Win coalition of labor unions, which has argued that CVS' size and buying power is bad for consumers, and accused the company of stocking expired products and violating patients' privacy, among other issues The news comes as the drugstore reported a 39% jump in quarterly earnings.[4] Last Modified: Thursday, November 5, 2009 at 3:43 p.m. Hhgregg Inc. The Indianapolis-based electronics retailer said its second-quarter profit jumped 46 percent as the company opened seven new stores and spent less on advertising.[8] News Corp. ( NWS ) reported an 11 percent increase in fiscal first-quarter profits. Strong results in its film and cable network businesses offset weakness in television, newspapers and book publishing.[39]

All of that will lead to operating profit margins for the total company which are moderately below the record levels of last year. [18] Dave has been with the company for more than 10 years, working almost exclusively for Dave Rickard. He has experience in all key areas of finance, including serving as a CFO of our PBM PharmaCare, as well as in retail and corporate positions. His broad financial experience, industry expertise, and a deep understanding of our customers will help make him an outstanding CFO.[18] Before opening it up for questions, I want to update you all on the CFO search. Earlier this year, as you know, Dave Rickard announced his intention to retire and we launched an internal and external search for our new CFO. Today I am extremely pleased to announce the appointment of Dave Denton to the role of Executive Vice President and Chief Financial Officer effective January 2, 2010. Currently our senior VP, Controller, and Chief Accounting Officer, Dave brings nearly 20 years of financial management experience with a focus on healthcare and retail drug to his new position.[18]

NEW YORK, Nov 5 (Reuters) - CVS Caremark Corp ( CVS.N ) named a new chief financial officer on Thursday, more than 8 months after saying its current CFO planned to retire by year-end. The drugstore chain said David Denton, its chief accounting officer, would assume the roles of executive vice president and chief financial officer on Jan. 1.[46] CVS Caremark Corp., the largest U.S. provider of prescription drugs, said the Federal Trade Commission is probing some its business practices.[25]

CVS said McLure had planned to retire for several months. CVS said Ryan will be spending 80 percent of his time dealing with Caremark and has already found some areas for improvement.[14] CVS acquired Caremark in March 2007. President of the division, Howard McLure, is stepping down on Nov. 27, and the company is currently in the process of searching for his replacement.[4]

Our long term value investing methodology is powered by the teachings of Ben Graham and it has proven to be very adept at identifying stock prices that are out of line with fundamental factors. Ockham Research provides its research in a variety of forms and products including our company specific reports, portfolio analytics tools, newsletters, and blog posts. We also offer a white labeling research solution that can give any financial services firm their own research presence without the time and cost associated with building such a robust coverage universe of their own. [5] Toon van Beeck, an analyst at IBISWorld, said the most probable reasons for CVS losing these contracts is that they were unable to compete on service and price.[4] The company credited the increase in adjusted EDITDA to the sale of a multiyear power-sales contract and higher realized prices for power that was sold before power prices fell in the Midwest.[8]

Sales at CVS/pharmacy stores rose 17.9 percent, while same-store sales increased 5.7 percent, rising 8 percent in the pharmacy and 0.8 percent in general merchandise.[23] Walgreen Co. (WAG) sales rose 4.9 percent, higher than the 4.8% increase expected by analysts.[39] Ryoichi Saito, auto analyst with Mizuho Investors Securities in Tokyo, said Toyota's recovery appeared to be slower than Honda's because of costs related to withdrawing from F1 and closing a California plant it ran with General Motors Co., called NUMMI, short for New United Motor Manufacturing Inc. "Although vehicle sales may be turning out better than expected, Toyota still has a long ways to go in the second half," he said.[8] Sales were growing in Asia compared to a year ago. Executive Vice President Yoichiro Ichimaru said Toyota made good progress on "emergency" efforts to combat its crisis by cutting costs, while acknowledging that global uncertainties remained. "We continued to make improvements in our reductions in fixed costs," he said.[8]

The Maintenance Choice Program help boost sales of stores open for less than a year, increasing sales by 2.5%.[19]

With the gross margin decline only partially offset by improvements in SG&A as a percentage of sales, operating margin declined as expected. It was down approximately 67 basis points to 6.4% of revenues.[18] Revenue it records from new sales or losses from cancellations is spread over several months.[8]

The $0.03 to $0.04 relates to the revenue loss and it'''s on top of the $0.05 to $0.07 of lock or spread loss that we had before.[18]

We lost the Med D duos in 15 regions, which was $1.7 billion, which I just referred to.[18] Public Storage (NYSE: PSA ) reports Q3 adj-FFO of $1.30, 5 cents better than the analyst estimate of $1.25.[38] First Financial Bancorp (NASDAQ: FFBC ) reports Q3 EPS of $0.15, 7 cents better than the analyst estimate of $0.08.[38]

Results beat analysts' expectation. DPS boosted the low end of its 2009 earnings outlook, but lowered revenue. [39] We achieved solid revenue growth, healthy earnings growth and significant free cash flow."[21]

Revenue per available room is considered a key gauge of a lodging company's performance.[8] The company's casino revenue dipped 1 percent, with table revenue rising 7 percent and slot revenue falling 6 percent. Gamblers are spending less during the economic downturn and visiting less often as they trim their discretionary spending.[8] The casino operator also reported a 21 percent room revenue decline, with revenue per available room on the Las Vegas Strip off 23 percent.[8]

For the PBM segment, revenues should be up between 16% and 18% for the year.[18] I mean, it'''s obviously very important for you to go out and end the year next year with net wins. No, I don'''t think so -- it'''s -- this is all -- pricing environment is relatively rational, sans a few big contracts and I think that has been the policy of the program for PBMs for the last 10 years.[18]

Apart from the pharmacy-benefits contracts, other parts of CVS' business appeared on track with Wall Street estimates.[22]

Chrysler, Viva we explained. I guess the Horizon one from the standpoint of the State of New Jersey, that they wanted a standalone PBM model and there was some price issues there, I guess that was more aggressively priced from a competitor than we would have done. This much business, Neil, it wasn'''t -- the majority of that business was not lost on price.[18]

The revised vehicle forecast was still a 7 percent drop from the more than 7.5 million vehicles Toyota, which makes the Prius hybrid and the Corolla subcompact, sold around the world in the last fiscal year. [8] Gross margin declined to 20.3% in the reported quarter compared to 21.1% in the year ago period.[20] Change to Win also opposed CVS' acquisition of Longs Drugs Stores last year.[26]

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