Drug store chain operator Walgreen Company ( WAG ) reported in a 10-Q filing on Thursday that the failure to come to terms with pharmacy benefits provider Express Scripts ( ESRX ) will negatively impact its 2012 earnings.
Walgreen management said it now expects full-year 2012 prescription volume to come in at around 97% to 99% of 2011 volumes.
The company will try and offset the impact of loss through cost-cutting initiatives, business expansion, and attempts to retain Express Scripts clients. WAG said it's aiming to shave around 50% of the negative impacts with those measures.
Back in June, Walgreen announced it was unable to come to terms on a contract extension with ESRX. The current contract will expire on Jan. 1, 2012, after which WAG will no longer be a part of Express' pharmacy benefits network.
Walgreen shares were inactive in premarket trading Thursday.
The Bottom Line
Shares of Walgreen Company ( WAG ) have a 2.70% dividend yield, based on last night's closing stock price of $33.28. The stock has technical support in the $27-$30 price area. If the shares can firm up, we see overhead resistance around the $35-$36 price levels.
Walgreen Company ( WAG ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.3 out of 5 stars.
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