How much Caremark business was WAG doing?
In the next 3 years as Caremark grows, how much lost revenue profit is Wag on hook, (how do they fill this whole?)
Watch TGT and WMT smoke both of these companies.
<<”Without Walgreens, Caremark could have diminished appeal to some current clients. Then, again, it might attract or reattract interest from the majority of economically stressed coverers like Calpers that are fighting to keep solvent”>>
CMX will never see the day where CalPERS is again a client of theirs. They yanked CalPERS chain BIG TIME and relentlessly impeded any type of auditing that it wanted to do. BOTH companies will get punished by this WAG move. Don’t get too hung up on the retail implications. The attack was at CMX. Going forward, any client that CMX loses as a result of this….any client that chooses ESRX or MHS instead of CMX is a win for WAG. Loose another billion dollar client b/c of it and the anchor on the neck of CVS called CMX gets that much heavier and CVS sinks that much lower. Think about how many retail rxs you have to sell to make up for the loss of a billion dollar client.
what I said yesterday, that business or at least some of it will find its way back to wag.
SunTrust Robinson Humphrey analyst David Magee said he thinks there is a good chance CVS and Walgreen will renegotiate their reimbursement rates to give Walgreen a better deal. He estimates Walgreen could lose 5 cents to 8 cents per share in profit in calendar 2011 if it does not reach a new deal with CVS.
But if they can't reach an agreement, Caremark could have trouble winning clients over to a network that does not include the biggest drugstore chain in the country. As a result, it could lose contracts to competitors, bringing that business back to Walgreen as the 2011 pharmacy benefit manager selling season is under way
lots of ways to look at this, first it sucks for the short term stock price and for all the employees that own stock, that aside there is a chance some of that business will land at other pbms and still come to wag, also there is plenty of time to kiss and make up. At some point wag becomes a target for exrs or another pbm that can see the benefits of a merger. I have always believed wag lost a great opportunity to buy a pbm and level the field with cvs. I am down on my wag position and it is a bummer.
two good points. I don't fully undertsand the dynamics of the CVS issue. There are many moving parts. To some people, it will be more important where they get the prescrip than who is PBM. Hence the run up in MHS.
the pbm becomes more important than where the rx is picked up.
read into the press release note, they mention pricing. caremark and walgreens have a relationship, i imagine the relationship or pricing between the two is not favorable to walgreens. all that occurs here is the caremark rx's filled at walgreens will now be filled at cvs increasing cvs revenue and profit since they control the PBM and retail profit. this is a big positive for CVS. someone said they have stones, but this is a desperate move.