Walgreen estimates that Express Scripts, as a pharmacy benefits manager, processes 90 million prescriptions that are not expected to be filled by Walgreen in fiscal 2011, representing approximately $5.3 billion in annual sales. Hence, we believe the decision not to renew the contract will affect the company’s future growth.
However, Walgreen is working toward establishing itself as a leading provider of pharmacy, and health and wellness solutions. The company has been taking steps over the last few years to align its assets These include the acquisition of Cardinal Health’s (CAH) Specialty Pharmacy business and agreement with Omnicare to divest its long-term care pharmacy business in exchange of the latter’s home infusion business.
Thereafter, during the third quarter of fiscal 2011, Walgreen sold its Pharmacy Benefit Management business to Catalyst Health (CHSI) for $525 million. By divesting its non-core assets, Walgreen will be able to better focus on its drug stores. On the other hand, the company acquired online retailer drugstore.com to gain a strong foothold in the online arena as it will be able to access more than 3 million online customers.
Catalyst Health (CHSI) broke out of a base on Friday rising 2.80 to 58.04
