Walgreen Parts Ways with Express Scripts on Poor Rates

Pharmacy chain Walgreen’s (NYSE:WAG) dispute with prescription benefit managing company Express Scripts (NASDAQ:ESRX) resulted in the two ending their relationship effective December 31. At Walgreen’s annual meeting, Chief Executive Gregory Wasson defended the company’s stance on the matter, saying that it could not accept Express Scripts’ offer of “below-average rates.”

“We believe the long-term implications of accepting Express Scripts’ below-market proposal would have been much worse than the short-term impact on earnings,” Mr. Wasson said. “We are moving on. We are not going to remain in a world Express Scripts wants us to stay in.”

The loss of sales due to the end of the deal with Express could cost Walgreen its annual 9 percent growth, which might fall to just 1-3 percent. That’s good news for competitors CVS (NYSE:CVS) and Rite Aid (NYSE:RAD). The company has countered with a special discount offering on membership in its prescription savings club, and claims that a record 200,000 customers had taken advantage of the scheme.

Here’s how these stocks are trading now:

Walgreen Co. (NYSE:WAG): WAG shares recently traded at $33.20, down $0.81, or 2.38%. They have traded in a 52-week range of $30.34 to $47.11. Volume today was 2,080,056 shares versus a 3-month average volume of 8,655,990 shares. The company’s trailing P/E is 11.23, while trailing earnings are $2.96 per share.

Express Scripts Inc. (NASDAQ:ESRX): ESRX shares recently traded at $48.28, down $0.55, or 1.13%. They have traded in a 52-week range of $34.47 to $60.89. Volume today was 2,320,417 shares versus a 3-month average volume of 6,762,790 shares. The company’s trailing P/E is 19.01, while trailing earnings are $2.54 per share.

CVS Caremark Corporation (NYSE:CVS): CVS shares recently traded at $42.21, up $0.17, or 0.4%. They have traded in a 52-week range of $31.30 to $42.19. Volume today was 1,891,375 shares versus a 3-month average volume of 9,589,640 shares. The company’s trailing P/E is 16.83, while trailing earnings are $2.51 per share.

Rite Aid Corp. (NYSE:RAD): RAD shares recently traded at $1.33, down $0.01, or 0.75%. They have traded in a 52-week range of $0.85 to $1.47. Volume today was 1,039,318 shares versus a 3-month average volume of 7,610,060 shares. The company’s trailing earnings are $-0.48 per share.