By Jon Kamp
Drug wholesaler AmerisourceBergen Corp. (ABC) has signed a new
deal extending its relationship with a top customer, the
nursing-home pharmacy PharMerica Corp. (PMC).
According to a regulatory filing from PharMerica Wednesday, the
company entered into an amended agreement with AmerisourceBergen on
Jan. 25 that runs through September 2016, with one-year automatic
renewals unless one of the companies decides to break off the
deal.
ISI Group analyst Ross Muken said PharMerica--the second-largest
nursing home pharmacy after Omnicare Inc. (OCR)--accounts for about
$2 billion in annual revenue at AmerisourceBergen. Analysts expect
the wholesaler to post total revenue of $85.12 billion in the
fiscal year running through March.
"We view this [contract renewal] as an incremental positive, as
it removes an overhang related to contract renewals for one of
ABC's larger customers," Mr. Muken said.
PharMerica didn't provide details about the new contract's
pricing in the company's filing with the Securities and Exchange
Commission. Still, "fact that ABC is no longer at risk of losing
PMC as a customer should be a positive for shares," Mr. Muken
said.
Contract competition among major customers tends to be a
hot-button issue for drug wholesalers. AmerisourceBergen--which
competes closely with Cardinal Health Inc. (CAH) and McKesson Corp.
(MCK)--secured a major deal last summer when it won business from
pharmacy-benefit manager Express Scripts Holding Co. (ESRX) away
from Cardinal.
AmerisourceBergen already served Medco Health Solutions, a
benefit manager that Express Scripts purchased last year. Express
Scripts sought a distribution deal for the combined company after
wrapping up the acquisition.
Analysts and investors are now closely watching Cardinal's
efforts to retain distribution deals with Walgreen Co. (WAG) and
CVS Caremark Corp. (CVS) that expire midyear. The drugstore chains
accounted for 43% of Cardinal's revenue in the past fiscal
year.
AmerisourceBergen shares were inactive in premarket hours
Wednesday. Shares are up more than 17% over the last 12 months.
Write to Jon Kamp at jon.kamp@dowjones.com
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