Reuters: Regulatory News: UPDATE 1-Amerisource replaces Cardinal Health as Express Scripts supplier

Reuters: Regulatory News Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

UPDATE 1-Amerisource replaces Cardinal Health as Express Scripts supplier Jul 31st 2012, 13:54 Tue Jul 31, 2012 9:54am EDT By Esha Dey July 31 (Reuters) - U.S. drug wholesaler AmerisourceBergen Corp signed a three-year supply deal, worth $18.5 billion annually, with pharmacy benefit manager Express Scripts Holding Co, replacing rival Cardinal Health Inc . Amerisource already had a supply contract with Medco Health Solutions, which was acquired by Express Scripts for $29.1 billion earlier this year. The deal created a massive company with about a third of the pharmacy benefits market, and led industry analysts to wonder about the fate of Amerisource's Medco contract and who would now get the Express Scripts' contract. The new contract, effective Oct. 1, is expected to contribute about 23 percent to Amerisource's revenue and about 3 percent to its earnings per share. "We think it is feasible as it implies a 20 basis point operating margin on the business, which is within the range of what we have seen for this type of wholesaling contract," ISI Group analyst Ross Muken said. "Given the size of this (bulk) business, you will typically take home a lower margin," Muken added. However, Amerisource said the deal would have no impact on its fiscal 2012 forecast, or on its preliminary forecast for fiscal 2013. Analyst Muken said since Amerisource already had the Medco contract, the net add to revenue and earnings per share from the Express business will be less than if they had won the whole contract anew outright. In a regulatory filing, Cardinal Health said it was informed by Express Scripts that its distribution agreement, which contributed about $9 billion in annual revenue, will not be renewed. Cardinal Health's current agreement with Express Scripts will expire on Sept. 30. "For Cardinal, we estimate (the loss of the contract) to have an impact of about 2-4 cents in earnings per share," ISI's Muken said. Amerisource shares were up 3 percent at $39.73, while Cardinal shares were up slightly in morning trade on the New York Stock Exchange. Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions