Bergen Brunswig Shares Fall After Medicare Changes
Shares of Bergen Brunswig Corp., the No. 3 U.S. drug wholesaler, fell 16% Wednesday amid concerns that a new Medicare-reimbursement program will hurt its PharMerica nursing-home pharmacy unit.
The stock fell $3.63 a share to $18.88 in trading of 2.4 million shares, more than triple the three-month daily average.
Bergen Brunswig bought PharMerica, the second-largest supplier of pharmacy services to nursing homes, for $1.1 billion in stock and debt in April. While analysts expected the purchase to add to earnings as early as next year, the Medicare changes are affecting revenue. Nursing homes are accepting fewer high-need patients, cutting drug usage.
“Given how difficult the environment is proving to be for its competitors, it’s going to be hard for this to be accretive,” said Leonard Yaffe, a Bank of America analyst with a “buy” rating on Bergen Brunswig.
Two of PharMerica’s rivals--Omnicare Inc. and NCS Healthcare Inc.--also have had problems because of Medicare funding changes.
Bergen Brunswig’s earnings per share may be reduced 4 cents to 8 cents for its fiscal year ending Sept. 30, and 8 cents to 17 cents for fiscal 2000, Yaffe said.
Orange-based Bergen Brunswig is expected to earn 33 cents a share in its third quarter ending June 30 and $1.27 a share for the fiscal year, the average estimates of analysts polled by First Call Corp. It’s expected to earn $1.58 a share in 2000.
