Key revenue figure drops 6.4 pct for Walgreen

Key revenue metric drops 6.4 percent for drugstore operator Walgreen in April

Associated Press

DEERFIELD, Ill. (AP) -- Drugstore operator Walgreen Co. said Thursday monthly revenue from stores open at least a year slipped again in April largely due to its split with pharmacy benefits manager Express Scripts Inc.

The Deerfield, Ill., company saw the revenue metric fall 6.4 percent, a slightly smaller decrease than the 6.8 percent decline it recorded in March. For April, pharmacy revenue from stores open at least a year fell 8.9 percent. Revenue from the front end, or rest of the store, declined 2.2 percent.

The performance missed Wall Street expectations. Analysts forecast, on average, that revenue from stores open at least a year would fall 5.1 percent in the quarter, with flat sales in the front end and an 8.6 percent decline in pharmacy, according to Thomson Reuters.

Revenue at stores open at least a year is a key indicator of a retailer's health because it excludes the impact of recently opened or closed stores.

Walgreen, the largest U.S. drugstore chain, has said its sales would fall this year after the company and Express Scripts let a contract between them expire at the end of last year. Prescriptions processed by Express Scripts made up 12.6 percent of the drugstore chain's total in April 2011.

The drugstore operator has reported falling sales for several months now, but it also has said it would rather give up the revenue it got from Express Scripts than continue filling unprofitable prescriptions.

Express Scripts, based in St. Louis, has said it ended the Walgreen contract because the drugstore chain wanted a premium compared to what Express Scripts paid other pharmacies. Pharmacy benefits managers, or PBMs, run prescription drug plans for employers, insurers and other customers.

Prescriptions filled at Walgreen locations open at least a year dropped 7.8 percent in April, mostly due to Express Scripts. A mild flu season and generic drug introductions over the past year also affected business.

Generic competitors for the cholesterol fighter Lipitor and the antipsychotic Zyprexa entered the market at the end of last year. Generic drugs are cheaper than brand-name alternatives and tend to depress pharmacy revenue but improve profitability.

Walgreen's sales totaled $5.78 billion in the month, a 3.7 percent decrease from last year. The company opened seven stores last month and acquired two. It operated 7,855 drugstores at the end of the month.

Company shares fell 25 cents to $33.90 in morning trading Thursday, while the Standard and Poor's 500 index also dropped slightly.

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