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 Tess.Stynes@dowjones.com
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