No Rx Needed for CVS/Caremark: Fool by Numbers

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On May 8, CVS/Caremark (NYSE: CVS) released first-quarter earnings for the period ended March 31.

• The merger between CVS and Caremark closed on March 22, so the results reflect 10 days of the consolidated company.
• Merger and integration expenses are estimated to have shortened earnings by $25.3 million, lowering shareholder profits a penny.
• While increasing demand for generic drugs curtailed the top line, revenue still posted an impressive 32.1% surge.
• Front-end comparable sales rose a solid 6.6%, driven primarily by health and beauty products, digital photo services, and private label and proprietary brand sales.

(Figures in millions, except per-share data.)

Income Statement Highlights

	Q1 2007	Q1 2006	Change
Sales	$13,184.6	$9,979.2	32.1%
Net Profit	$405.4	$326.1	24.3%
EPS	$0.43	$0.39	10.3%
Diluted Shares	939.8	848.5	10.8%

Get back to basics with the income statement.

Margin Checkup

	Q1 2007	Q1 2006	Change*
Gross Margin	25.4%	26.6%	(1.2)
Operating Margin	5.6%	5.6%	(0.0)
Net Margin	3.1%	3.3%	(0.2)

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets	Q1 2007	Q1 2006	Change
Cash + ST Invest.	$738.2	$387.1	90.7%
Accounts Rec.	$4,485.4	$2,015.0	122.6%
Inventory	$7,427.1	$5,704.8	30.2%

Liabilities	Q1 2007	Q1 2006	Change
Accounts Payable	$3,371.1	$2,437.6	38.3%
Long-Term Debt	$2,895.4	$1,592.2	81.8%

The balance sheet reflects the company's health.

Cash Flow Highlights

	Q1 2007	Q1 2006	Change
Cash From Ops.	$707.7	$171.7	312.2%
Capital Expenditures	$311.9	$283.7	9.9%
Free Cash Flow	$395.8	($112.0)	N/A

Free cash flow is a Fool's best friend.

Related Foolishness:

• CVS/Caremark Tie the Knot
• CVS: Continued Vigorous Sales
• Uncertain Outlook on CVS

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean. This data has been provided by Netscribes. To provide feedback on this article, please click on the "feedback" button below.