By Tess Stynes
Express Scripts Holding Co. (ESRX) opted to go with AmerisourceBergen Corp. (ABC) as its drug distributor over Cardinal Health Inc. (CAH), which had been the pharmaceutical benefit manager's supplier.
AmerisourceBergen had been the distributor for Express Scripts' recently acquired Medco Health Solutions business. The three-year accord, which takes effect Oct. 1, is valued at about $18.5 billion a year.
Cardinal Health, the second biggest drug-distributor in the U.S. by sales, confirmed that Express Scripts had informed the company that it wouldn't renew its distribution agreement when it expires at the end of September, in a filing with the Securities and Exchange Commission. The pact had provided about $9 billion in annual bulk sales revenue to Cardinal.
AmerisourceBergen said the agreement is expected to contribute approximately 23% of its revenue and about 3% of its per-share earnings. However, the company said the pact doesn't change its outlook for the current or the next fiscal year.
AmerisourceBergen received about 19% of sales and 5% of earnings from Medco in its last fiscal year.
Under this type of deal, drug distributors provide medication to home-delivery pharmacies run by Express Scripts and Medco.
Shares of AmerisourceBergen and Cardinal Health closed Monday at $38.53 and $43.31, respectively. Neither was active in recent premarket trading.
Write to Tess Stynes at [email protected]
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