Drugstore chain Walgreen Co. (NYSE:WAG) said it expects loss of a contract with Express Scripts Inc. (NASDAQ: ESRX) to affect its revenue, profit, and cash flow during the remaining portion of fiscal 2012.
On June 21, 2011, Walgreens announced that contract renewal negotiations with pharmacy benefit manager Express Scripts had been unsuccessful, and that the company does not expect to be part of the Express Scripts pharmacy provider network as of January 1, 2012.
Express Scripts, in its capacity as a pharmacy benefits manager, processed around 88 million prescriptions filled by Walgreens in fiscal 2011, representing about $5.3 billion of Walgreens sales.
In the first four months of fiscal 2012 ending December 31, 2011, Walgreen estimates that Express Scripts will have processed around 26 million prescriptions filled by Walgreens.
If a contract renewal is not reached, beginning January 1, 2012, Express Scripts' network would no longer include Walgreens more than 7,800 pharmacies nationwide.
"This development is expected to adversely affect our net sales, net earnings and cash flows during the remaining portion of fiscal 2012 beginning January 1, 2012 when we are no longer part of the Express Scripts pharmacy network," Walgreen said in a regulatory filing.
WAG ended Wednesday's regular trading session at $33.28. The stock has been trading in the 52-week range between $30.34 and $47.11.