CVS Caremark Corp. (CVS) announced that the number of subsidized members enrolled in its Medicare prescription-drug programs is likely to reduce by one-third next year. This will result in a 4 percent share impact on 2010 earnings.
 
Medicare is the U.S. federal insurance health plan for the elderly and disabled. Beneficiaries who have a limited income can get a low-income subsidy which is aimed at providing assistance to help pay for prescription drugs.
 
CVS had said on a previous occasion that the regulatory change linked to Medicare Part D would decrease 2010 earnings by 5-7 percent per share. Medicare Part D is the subscription drug option managed by private insurance companies.
 
The drugstore manager and pharmacy benefits manager said that these changes could together cut down 8011 cents per share from next year’s profit.
 
The company has not yet given an estimate of profits for 2010. The CEO, Tom Ryan, said that he would be disappointed if the earnings did not rise per share by at least 13-15 percent.
 
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".