CVS Caremark Corp. (CVS) recently announced that despite best efforts to retain Walgreen Co. (WAG) as a member of its Pharmacy Benefit Management (PBM) network, it has decided to terminate Walgreen’s participation in its retail pharmacy networks after providing the latter with a 30-day notice period, or as required by legal or contractual provisions. CVS will also end its relationship with Walgreen in Medicare Part D retail pharmacy networks, with effect from Jan 1, 2011.
As the nation’s largest provider of prescriptions, CVS Caremark manages over 1 billion prescriptions on an annual basis. The company provides access to a network of more than 64,000 pharmacies, including over 7,000 CVS pharmacy stores. Its revenues increased 1.6% year over year to $23.8 billion in the first quarter of 2010. Earnings came in at 60 cents per share, a couple of cents above the Zacks Consensus Estimate.
Walgreen is the largest national retail pharmacy chain in terms of revenue and profitability. It operates a network of 7,522 drug stores in 50 states, the District of Columbia, and Puerto Rico. The company had net sales of $17 billion, up 3.1% year over year, in the second-quarter fiscal 2010 (ending February 2010). Walgreen reported quarterly earnings of 68 cents per share, which missed the Zacks Consensus Estimate of 71 cents per share.
We currently have Neutral ratings on both CVS Caremark and Walgreen.
Read the full analyst report on “CVS”
Read the full analyst report on “WAG”
Zacks Investment Research
