Walgreen is finally ready to launch a loyalty card

DEERFIELD, Ill., Fri Aug 24, 2012 –Walgreen Co. will join the loyalty card game next month as it tries to win back millions of pharmacy patrons, a daunting task as rivals CVS Caremark Corp.  and Rite Aid Corp.  already have well-established programs.

For years Walgreen, the largest U.S. drugstore chain, said it was just fine without a loyalty card that rewards holders for spending more. Now, after testing formats for a year and a half, and after losing shoppers who had to fill Express Scripts prescriptions elsewhere for most of 2012, the chain is embarking on one of the biggest marketing pushes in its 111-year history.

Heading the introduction of the Balance Rewards card is Graham Atkinson, who led United Airlines’ Mileage Plus program before he joined Walgreen as chief customer experience officer in January 2011.

Walgreen’s new program blends aspects of airlines’ frequent flyer plans and loyalty cards from drugstore rivals and Duane Reade, which the company acquired in 2010.

“This program is all about collecting points, saving up for a treat,” said Atkinson. “If we get a more engaged customer, and ultimately a more loyal customer, they will give us a larger share of their shopping wallet.”

Walgreen will bring out its loyalty card on September 16, although patrons can sign up starting early next month with a chance to win 10 million points.

“Today, it’s kind of table stakes in most retail to have some program for rewarding, incenting, personalizing communications to your shoppers,” said Ben Sprecher, co-founder of Incentive Targeting, a software company that helps retailers and brands understand and change shopper behavior. “It absolutely needs to be done, and better late than never.”

Walgreen to buy 45 percent of Alliance Boots for $6.7 billion

DEERFIELD, Ill., Tue Jun 19, 2012 – Walgreen Co. said it would buy a 45 percent stake in KKR & Co-backed Alliance Boots for $6.7 billion in a cash and stock deal that would bring together the two largest pharmacy chains in the United States and Europe.

Walgreen, which has the option to buy the rest of Alliance Boots in the next three years, said it would pay $4 billion in cash and 83.4 million shares for the stake.

The combined business would have more than 370 distribution centers delivering to more than 170,000 pharmacies, doctors, health centers and hospitals in 21 countries. It will also be the world’s largest buyer of prescription drugs and many other health products.

Private equity firm KKR, which invested $2.45 billion in Alliance Boots in 2007, will receive $2.0 billion in cash and stock and will gain a seat on Walgreen’s board.

Walgreen said the deal would add substantially to its earnings per share in the first year.

The company also reported third-quarter earnings of $537 million, or 62 cents per share, compared with $603 million, or 65 cents per share, a year earlier.

Excluding costs related to the Alliance Boots deal, Walgreen earned 63 cents per share.

CVS Caremark sales jump with former Walgreen customers, raises outlook

WOONSOCKET,  R.I., Wed May 2, 2012 – CVS Caremark Corp. posted a sharp rise in first-quarter sales as the drugstore operator and pharmacy benefits manager continued to win over former patrons of Walgreen Co. stores, and the company raised its profit forecast.

CVS, which operates the CVS drugstore chain and the CVS Caremark pharmacy benefits management business, said sales rose 19.9 percent to $30.8 billion in the quarter, helped by an 8.4 percent increase in sales at drugstores open at least a year and more business from Medicare recipients.

Walgreen, the largest U.S. drugstore chain, stopped filling prescriptions for patients of Express Scripts, a pharmacy benefits manager, at the end of 2011. CVS, with more than 7,300 U.S. stores, is among the retailers benefiting as Express Scripts patients go elsewhere.

CVS cited the Walgreen-Express Scripts rift in raising its full-year profit forecast by 5 cents per share at both ends of its prior forecast, to between $3.23 and $3.33 per share. In the current quarter, it expects the impasse to lift earnings by 3 to 4 cents per share.

The company’s shares were up 3.1 percent in premarket trading.

CVS had net income of $776 million, or 59 cents a share, in the first quarter, compared with a profit of $713 million, or 52 cents a share, a year earlier.

On an adjusted basis, CVS earned 65 cents per share, beating Wall Street estimated by 2 cents, according to Thomson Reuters I/B/E/S.

Pharmacy services revenue rose 32.3 percent to $18.3 billion. Revenue in the drugstore unit rose 9.9 percent to $16 billion.

Express Scripts says moving on without Walgreen

ST LOUIS – Express Scripts Inc. said on Thursday it was moving forward successfully without Walgreen Co. in its pharmacy network, citing wide support from clients.

Chief Executive Officer George Paz said the pharmacy benefits manager remained open to talking with Walgreen, “but it has got to be in the best interest of our shareholders and patients.”

Walgreen, the largest U.S. drugstore chain, stopped filling prescriptions for patients in the Express Scripts network as of Jan. 1 after the companies failed to come to terms on a new contract.

“Our clients are very supportive,” Paz told analysts on a conference call to discuss the company’s fourth-quarter results. “Our phones aren’t ringing, people aren’t concerned, our clients aren’t upset, so this truly has been a good move for us.”

Express Scripts shares rose 4 percent in morning trading on Thursday.

The company also said it still expects to close its $29 billion acquisition of rival Medco Health Solutions Inc. in the first half of the year. Medco shares were up 3.7 percent.

Paz said Walgreen has not shown why they should be paid more than other pharmacies.

“Many of the things that they are offering in the pharmacy are being offered by many others out there,” he said. “So I don’t see them as differentiated, and I just can’t with a good conscience pay them a significant premium for something that everyone else is doing and doing it just as well.”

Walgreen sales hit by exit from Express Scripts

DEERFIELD, Ill. – Walgreen Co. is being hit by its withdrawal from the Express Scripts Inc. pharmacy network and by a much-weaker-than-expected flu season, leading it to temper its expectations for the number of prescriptions it will fill this year.

Walgreen said on Friday that it now expects prescriptions filled in fiscal 2012 to be around the low end of its previous forecast of 97 percent to 99 percent of the prescriptions it filled last year.

Walgreen said January sales at stores open at least a year, or same-store sales, fell 4.6 percent as it lost business following its decision to walk away from Express Scripts after failing to come to terms on a new contract with the pharmacy benefits manager.

Analysts, on average, anticipated that sales would fall only 2.7 percent, according to Thomson Reuters data.

Walgreen, the largest U.S. drugstore chain, stopped filling prescriptions for patients in the Express Scripts network on Dec. 31, 2011. Chains such as CVS Caremark Corp. and Rite Aid Corp. have been advertising to woo customers who used to fill their prescriptions at Walgreen.

CVS, in particular, appears to be “the clear winner” due to the fallout between Walgreen and Express Scripts, said Jefferies & Company analyst Scott Mushkin, who has a “buy” rating on CVS and a “hold” rating on Walgreen.

CVS stands to benefit both in its stores and in its Caremark pharmacy benefits management business, analysts say.

BioScrip to sell a few pharmacy businesses to Walgreen

EDEN PRAIRIE, Minn. – BioScrip Inc. said it will sell certain assets of its community specialty pharmacies and centralized specialty and mail service pharmacy businesses to Walgreen Co, the largest U.S. drugstore chain, for about $225 million.

The news sent the specialty pharmaceutical healthcare company’s shares up as much as 19 percent to $6.96, their highest in more than three months, on Thursday morning on the Nasdaq.

The deal includes about $170 million in cash at closing and retention by BioScrip of associated accounts receivable and working capital liabilities of about $55 million.

BioScrip said it could receive up to an additional $60 million based on events related directly or indirectly to Walgreen’s retention of the businesses.

BioScrip had said early last year that it was looking at strategic options to reduce rising costs, and went through a series of management changes.

The company said it will use proceeds from the deal – which is expected to close by April – to expand its infusion pharmacy footprint and pay down debt.

Infusion/home health pharmacy – which provides injectable medications and related services in a home setting – added 25 percent to BioScrip’s third-quarter revenue.According to the National Home Infusion Association, the alternate-site infusion therapy sector in the United States is currently estimated to be about $9 billion to $11 billion per year, BioScrip said.

Arbitrator denies request from Walgreen, Express Scripts for injunctive relief

DEERFIELD, Ill. ― An arbitrator denied a request from Walgreen Co and Express Scripts Inc seeking injunctive relief in their dispute, Walgreen said on Wednesday.

In June, Walgreen said it would stop filling prescriptions covered by Express Scripts at the end of the year after failing to agree on contract terms.

Express Scripts accused Walgreen of publishing false marketing materials designed to encourage Medicare recipients to leave health plans with coverage through Express Scripts.

The ruling was issued on Sunday evening, Walgreen said. The arbitrator will consider underlying merits of both parties’ claims at a future date, the largest U.S. drugstore chain said.

Express Scripts, which manages prescription drug benefits for employers and other clients, said it would not comment on the ruling.

Separately, an Oct. 18 entry in the court’s online system showed that an initial status hearing in the case is set before Magistrate Judge Maria Valdez on Nov. 3.

Walgreen drugstore chain profit up on higher traffic and sales

DEERFIELD, Ill. ― Walgreen Co., the largest U.S. drugstore chain, posted a higher quarterly profit on Tuesday, helped by rising sales of general merchandise and prescriptions.

The company also said there had been “no substantive progress” in its contract renewal talks with drug benefits manager Express Scripts Inc.

Walgreen said more people visited its stores and spent more per visit. The company is working on expanding its health and wellness services, such as clinics it operates in its stores and at work sites, as it tries to differentiate itself from archrival CVS Caremark Corp.

CVS operates a large pharmacy benefits management business, while Walgreen sold its own PBM unit in June.

Shares of Walgreen, which runs more than 7,7O0 drugstores, were up 2 percent at $36.75 in premarket trading.

The company said it had earned $792 million, or 87 cents per share, in the fourth quarter ended on August 31, compared with $470 million, or 49 cents per share, a year earlier.

Excluding the benefit from the PBM sale, the profit was 57 cents per share.

Meanwhile, Walgreen is publicly fighting with large PBM Express Scripts. The drugstore chain plans to stop filling prescriptions for people covered by Express Scripts at the end of the year after failing to agree on new contract terms, walking away from what could have been more than $5 billion in annual sales.

Sales in quarter rose 6.5 percent to $18.0 billion, slightly above the $17.92 billion Wall Street analysts were expecting, according to Thomson Reuters I/B/E/S.

Sales at stores open at least a year rose 4.4 percent, outpacing the gains of CVS and Rite Aid Corp. in their latest quarters.

Same-store prescriptions rose 3.4 percent at Walgreen, which claimed to have a 20 percent market share for fiscal 2011.

The number of visitors to drugstores open at least a year rose 1.6 percent, and customers spent 3 percent more per visit.