CVS To Lose One-Third Of Subsidized Medicare Drug Members

   DOW JONES NEWSWIRES 
 

CVS Caremark Corp. (CVS) said the amount of subsidized members enrolled in its Medicare prescription-drug programs will likely fall one-third next year, resulting in up to a 4-cent per share impact on 2010 earnings.

Combined with the company's July disclosure of a regulatory change regarding the plans, the Medicare impacts will likely cut earnings 8 cents to 11 cents per share next year. Analysts surveyed by Thomson Reuters on average expected CVS - which besides being the second-largest drug-store operator in the U.S. is also among the biggest managers of pharmacy-benefit plans - projected 2010 profit of $3.01 a share.

The impact disclosed Friday follows CVS Caremark's preliminary review of the 2010 bidding process done by the Centers for Medicare and Medicaid. As a result, the company believes its SilverScript and/or Accendo plans qualified to cover low-income subsidy customers in 15 regions of 27 states in 2010, compared to 30 regions of 46 states and the District of Columbia this year.

Chief Financial Officer Dave Rickard said, "While we are disappointed that we will serve fewer auto enrollees in 2010, the Medicare Part D business will still provide good returns and remain solidly profitable."

Low-income susbsidy customers don't pay premiums or deductibles for their drug coverage. The amount of such customers CVS currently has, or the number of total Medicare drug members, wasn't immediately available from the company.

Shares were recently flat at $35.87. The stock is up 25% this year.

-By Kevin Kingsbury, Dow Jones Newswires; 212-416-2354; [e-mail]