Walgreen and Express Scripts patch things up
After seven painful months of separation, Walgreen Co. and one of its largest customers, Express Scripts Holding Co., are back together.
The companies said Thursday that they reached a new multi-year pharmacy network agreement that will allow customers of Express Scripts to once again fill their prescriptions at Walgreens stores. The agreement goes into effect Sept. 15. Terms were not disclosed.
Shares of Walgreen jumped $3.65, or 11.8%, to $34.61 on Thursday, while Express Scripts shares rose $1.11, or 1.9%, to $58.80.
The two firms parted ways Jan. 1 after they were unable to come to terms on a new contract.
Express Scripts, a pharmacy benefit manager, administers prescription drug benefit programs for health insurers, employers and other groups by negotiating with pharmaceutical firms and pharmacies to lower prescription drug prices.
The St. Louis company accounted for about 88 million — more than 10% — of the 819 million prescriptions Walgreen filled in 2011.
For Walgreen, the split has been particularly rough. Since the company announced in mid-2011 that it and Express Scripts were far away on a new contract, shares of its stock lost more than 30% of their value. Each month in 2012, Walgreen has posted lower year-over-year sales since the deal with Express Scripts expired.
Analysts and investors have battered the company and its executives for walking away from a substantial hunk of business.
Adding to the pressure was federal regulators’ decision this spring to approve Express Scripts’ $29.1-billion acquisition of rival Medco Health Solutions Inc., creating the nation’s largest pharmacy benefits manager.
That move threw even more Walgreen business into jeopardy.
Although Walgreen retained its relationship with Medco, it was unclear what would happen when a contract between the two expired at the end of the year.
