NEW YORK (AP) - Pharmacy benefits manager Express Scripts said it expects to keep more than 95 percent of its prescription volume in 2012 even though it plans to stop doing business with Walgreen Co., the largest drugstore chain in the U.S.
Express Scripts and Walgreen have been unable to come to terms on a new contract to replace a deal that expires Dec. 31. Express Scripts pays Walgreen to fill prescriptions, but after the contract ends, Walgreen won't fill prescriptions for most Express Scripts members. The dispute became public in June, after Walgreen said it would stop handling Express Scripts claims. Walgreen has said Express Scripts would not pay it enough money, while Express Scripts says Walgreen wants to be paid more than other drugstores.
Walgreen runs close to 7,800 stores, and it fills about 20 percent of all prescriptions in the U.S. Walgreen has said it would lose $5.3 billion in annual revenue by parting with Express Scripts.
Express Scripts said Tuesday that its third-quarter profit rose 8 percent as revenue increased and selling, general and administrative costs fell. The St. Louis company's net income grew to $324.7 million, or 66 cents per share, from $301.5 million, or 56 cents per share.
It earned 79 cents per share excluding one-time costs, most of which were connected to its planned acquisition of competitor Medco Health Solutions Inc. Revenue grew 3 percent $11.57 billion from $11.25 billion.
Analysts expected Express Scripts Inc. to report adjusted profit of 76 cents per share and $11.28 billion in revenue, according to FactSet.
After the company reported its results, after hours, shares of Express Scripts rose $1.28, or 3.3 percent, to $39.75. The shares had ended regular trading down $1.98, or 4.9 percent, to $38.47.
The company handled 184.8 million adjusted prescription claims during the quarter, down 1 percent from a year ago. Medication use has declined because of high unemployment and because some consumers are skipping trips to the doctor to save money. The company handled 556.6 million adjusted prescriptions in the first three quarters of 2011, also down 1 percent from the same period last year. Adjusted prescriptions count 90-day mail order prescriptions as three one-month prescriptions.
Earlier this month the company cut its annual profit guidance because of those trends and said it was not filling as many prescriptions as it had expected. Express Scripts said Tuesday it still expects to earn $2.95 to $3.05 per share for fiscal 2011. Analysts expect $3.01 per share, on average.
The company currently expects to fill less than 750 million adjusted prescriptions in 2011, down from 753.9 million in 2010. Express Scripts expects medication use in 2012 to be about equal to current levels. It said total adjusted prescriptions could be unchanged from 2011, or they could grow as much as 2 percent. It did not provide a profit forecast, citing its planned $29.1 billion acquisition of Medco.
The companies announced the deal in July, and Express Scripts hopes to complete the purchase in the first half of 2011. Antitrust regulators and Congress are scrutinizing the transaction. The companies have said the larger Express Scripts would be able to use its size to save money for consumers and health plans, but critics have said the deal will reduce health care choices and may not deliver the savings.
If the cash-and-stock deal goes through, the new Express Scripts Holding will be the biggest pharmacy benefits manager in the U.S. by far, with about a 30-percent share of the market. Combined, Express Scripts and Medco handled about 1.7 billion prescriptions in 2010.
Express Scripts said its results in the third quarter included 8 cents per share in professional fees and financing costs related to the Medco deal. The remaining charges including 4 cents per share in expenses related to its purchase of NextRx in April 2009, and a penny per share in other amortization costs.