CVS Caremark Corporation (NYSE:CVS) posted an increase of 18.4 percent in its net income for the second quarter. Major contributions from its pharmacy benefits management segment and new business for its drugstore chain, helped to increase the revenue even higher.

CVS caremark

The company benefited from a shift in customers to its drugstore, due to a recently settled split between rival drugstore chain Walgreen Company (NYSE:WAG) and Express Scripts Holding Company (NASDAQ:ESRX). The split between the rivals helped it to attract between 6.5 million to 7 million prescriptions to its pharmacies that contributed about 3.5 cents per share to earnings. Not only this, but CVS Caremark expects to gain about 5 cents per share in the third and fourth quarters combined from the split, and also it is confident of keeping at least 50 percent of the business it gained from the split.

For the second quarter, the company earned $966 million, or 75 cents per share, against $816 million, or 60 cents per share, a year ago. CVS Caremark’s adjusted earnings of 81 cents a share beats analyst’s estimates of, on average, 79 cents per share. Revenue for the quarter rose by 16 percent to $30.71 billion, from $26.4 billion. Revenue from its PBM business jumped 28 percent to $18.4 billion, mainly due to the acquisition of Universal American Corp.’s Medicare prescription drug coverage business. CVS Caremark’s, Retail pharmacy revenue increased by 7 percent to $15.8 billion, despite getting severe competition from some generic drug introductions. Some of its top selling medicines, like the cholesterol fighter, Lipitor, and the blood thinner Plavix, came off from U.S. patent protection last year. As a result, generic versions of the same were available in the market, these eroded the revenue of the company as generic versions cost less than brand-name products. But these also help to increase the profitability, as margins are higher between the cost for the pharmacy to purchase the drugs and the reimbursement received.

CVS Caremark Corporation (NYSE:CVS) has the second-largest chain of drugstores in the United States after Walgreen, and manages one of the largest pharmacy benefits management businesses. Its retail locations at the end of the quarter added up to 7,381.

Since, the company’s adjusted earnings were more than the expectation of Wall Street, accordingly the company has raised its forecast for 2012. CVS shares gained more than 2 percent in premarket trading.