Ever remember a time when everything you touched turned to gold? Like Starbucks during the 1990s, Apple since it discovered the iPod, or Google since it became Google. It's like some companies get in a "zone" where they just can't miss.
CVS Caremark
The company proved once again it's no sicko by posting third-quarter sales that increased 83% compared to last year, to $20.5 billion. Comparable-store sales were up 5%, with the script business contributing 4.3%, and the front end adding 6.5%. Operating margins expanded 140 basis points. Gross margins in the PBM segment were up 130 b.p. and increased 160 b.p. in the retail segment. Diluted earnings per share jumped 37% to $0.45, beating Street expectations by a penny.
CVS has been on a roll over the past nine months, with sales up 71% and earnnigs per share up 22%. Investors have noticed the stellar performance and have boosted the stock 25% higher since the beginning of the year.
In the conference call, president and CEO Tom Ryan described it as a "measured, evolutionary process that will continue to pick up steam in '08 and beyond." The company is adding Minute Clinics into the retail stores as fast as it can. Since last quarter, CVS has contracted an additional $600 million in new businesses for 2008, a combination of PBM and Medicare Part D. Even the Save-on and Osco stores acquired from Albertsons last year are showing sales and margin improvements.
It's not like competitors aren't trying to take a share of this market. Wal-Mart
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