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.