Revenue from the company’s PBM side jumped 32 percent to $15.9 billion in the quarter because of the addition of a long-term contract with health insurer Aetna Inc.
Associated Press
Drugstore chain Walgreen’s loss of a big client is turning into rival CVS Caremark’s gain so far this year.
A contract squabble between Walgreen Co. and pharmacy benefits manager Express Scripts Inc. has driven more customers to CVS pharmacies — known as Longs Drugs in Hawaii — prompting that company to raise its 2012 earnings forecast by 3 cents per share.
CVS Caremark Corp. said in December it would gain business because of the dispute, but CEO Larry Merlo told analysts Wednesday the company is seeing more prescription transfers than it expected. He said CVS Caremark’s chances of retaining those customers improve the longer the impasse continues, especially once people refill their prescriptions a few times and get to know the pharmacist and store staff.
“As I have said in the past, we know that that pharmacy customer is the hardest person to lose, but once you lose them, it’s the hardest person to get back,” he said.
Walgreen stopped filling prescriptions for Express Scripts at the end of 2011, when a contract between the two companies ran out and they were unable to negotiate a new one. Pharmacy benefits managers, or PBMs, run prescription drug plans and use large purchasing power to negotiate lower drug prices. They make their money by reducing costs for health plan sponsors and members.
Walgreen said Friday that January revenue from stores open at least a year fell 4.6 percent, as the Express Scripts split and a weak flu season hurt business.
CVS Caremark, based in Woonsocket, R.I., runs the second-largest chain of drugstores in the U.S., after Walgreen, and its Caremark unit is one of the largest PBMs.
Overall, CVS Caremark’s earnings from the fourth quarter of 2011 climbed nearly 4 percent. The company earned $1.06 billion, or 81 cents per share, in the three months that ended Dec. 31. That compares with $1.03 billion, or 75 cents per share, in the final quarter of 2010.
Adjusted earnings were 89 cents per share, in line with the average analyst forecast, according to FactSet.
Revenue rose 15 percent to $28.32 billion, above the $28.09 billion analysts expected.
Revenue from the company’s PBM side jumped 32 percent to $15.9 billion in the quarter because of the addition of a long-term contract with health insurer Aetna Inc.