Moody's lowers CVS outlook on Caremark struggles

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NEW YORK -Moody's Investors Services lowered its outlook on CVS Caremark Corp. Tuesday, saying it wants to see evidence the Caremark pharmacy benefits management division is keeping more business.

Moody's changed its outlook on the Woonsocket, R.I., company to "stable" from "positive." That means the agency is unlikely to raise any of CVS Caremark's credit ratings. Moody's said upgrades are unlikely until CVS can show it has solved the problems that have caused Caremark to lose billions of dollars in contracts over the last few months.

"Moody's will need to feel certain that the lost contracts were due to correctable missteps by the company and are unlikely to recur prior to taking any positive rating action," the agency said.

However, Moody's said contract losses for Caremark are not expected to have much effect on the company's credit.

Caremark administers drug benefits for employers, and is one of the largest pharmacy benefits managers in the US. Earlier this month, the company said Caremark had lost $4.8 billion in contracts for 2010. Around $2 billion of that total was lost in the last three months. That could cause Caremark's profits to fall 10 or 12 percent next year.

In afternoon trading, CVS shares slid 11 cents to $31.78.

2009-11-24 14:35:30