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CVS chief sees new growth

01:00 AM EDT on Tuesday, March 25, 2008

By Tim Catts

Bloomberg News

Woonsocket-based CVS Caremark Corp. chief executive officer Thomas Ryan said yesterday that slowing consumer spending is having a “limited effect” on the biggest U.S. drugstore chain by number of stores.

“People will keep filling prescriptions and taking care of personal hygiene and nutrition,” Ryan said in an interview on Bloomberg Television. About 85 percent of the company’s revenue comes from purchases of drugs and health-care products.

Consumers are trimming spending as they face higher gasoline and food prices, declining house values and more uncertainty about employment after further job losses.

“You have about 3 percent of our business that’s affected by the economy,” Ryan, 55, said.

Revenue will rise to “well over $85 billion” this year, CVS said in a statement. That’s in line with a January forecast for sales growth of 13 percent to 16 percent compared with a year earlier, spokeswoman Carolyn Castel said by telephone. Eighteen analysts surveyed by Bloomberg estimated revenue of $87.1 billion this year.

Ryan rang the opening bell at the New York Stock Exchange to commemorate the first anniversary of CVS’s $27-billion acquisition of Caremark Rx Inc. in a deal that made it the second-largest manager of employee-pharmacy benefits.

“As the nation’s number-one prescription provider, we are leveraging our unique combination to help payers control costs more effectively, improve patient access and promote better health outcomes,” Ryan said. “Our integrated model provides us with an opportunity to gain share and create new sources of growth in 2008 and beyond.”

The company operates the largest retail pharmacy chain by store count with 6,300 CVS/pharmacy stores; the largest and fastest-growing retail clinic business through MinuteClinic; the largest specialty pharmacy and health-management programs; and one of the leading mail-order pharmacies.

CVS rose $1.07, or 2.7 percent, to $40.92 at 4 p.m. in New York Stock Exchange composite trading. The shares have climbed 2.9 percent this year.

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