DOW JONES NEWSWIRES
Medco Health Solutions Inc.'s (MHS) fourth-quarter earnings rose
12% as the pharmacy-benefits manager booked revenue well beyond
expectations thanks to new client wins and higher prices for
brand-name drugs.
A flood of popular drugs going generic have been a boon for
volumes at the pharmacy benefit manager, though the offerings carry
significantly lower price tags than their brand-name peers. Medco
on Tuesday said its generic dispensing rate increased 2.5
percentage points to 74.7% in the fourth quarter, a record
according to the company.
PBMs handle prescription-drug benefits and claims for employers
and health-insurer clients and also run mail-order pharmacies.
The company reported a profit of $424.4 million, or $1.08 a
share, up from a year-earlier profit of $378.5 million, or 88 cents
a share. Stripping out merger costs and other items, per-share
earnings rose to $1.25 from 99 cents a year ago.
Total net revenue rose 12% to $19 billion. Analysts expected
earnings of $1.17 a share on revenue of $17.45 billion, according
to Thomson Reuters.
Gross margin narrowed to 6.7% from 6.9%.
Medco last year agreed to sell itself to Express Scripts Inc.
(ESRX) in a cash and stock deal valued at roughly $29 billion. As
two of the largest players in the industry, the proposed tieup has
raised questions among regulators about potential competition
issues, people familiar with the matter told The Wall Street
Journal earlier this month.
Shares closed Friday at $64.01 and were inactive premarket. The
stock has risen 15% since the start of the year.
--By Mia Lamar, Dow Jones Newswires; 212-416-3207;
mia.lamar@dowjones.com