PharMerica says a Kindred contract will expire

PharMerica says Kindred contract worth more than $200M in revenue won't be renewed after 2013

Associated Press

NEW YORK (AP) -- Shares of PharMerica Corp. sank Friday after the company said it received notice that Kindred Healthcare Inc. won't renew a skilled nursing pharmacy services contract.

The company disclosed that the contract will expire Dec. 31. PharMerica also provides hospital pharmacy management services to Kindred under a separate contract, and it said that contract runs through 2014.

PharMerica sells drugs to nursing homes, hospitals and other long-term care providers. In a filing with the Securities and Exchange Commission, PharMerica said it got 11.5 percent of its annual revenue from Kindred's nursing facilities. The company reported $1.83 billion in revenue in 2012, which implies it got about $211 million in revenue from Kindred.

Kindred operates more than 200 nursing and rehabilitation centers, more than 100 long-term acute care hospitals, hospice locations, home health locations, and inpatient rehabilitation units. Revenue from the hospital pharmacy management contract brought in 3.4 percent of PharMerica's 2012 revenue, or about $62 million.

PharMerica stock lost $2.61, or 16.5 percent, to $13.20 in afternoon trading, after dropping as low as $12.86 earlier in the session. The stock has traded between $9.82 and $16.45 in the past 52 weeks.

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