U.S. Markets closed

CVS, Walmart reach agreement on pharmacy contract after impasse

(Reuters) - CVS Health Corp and Walmart Inc said on Friday the world's largest retailer would remain part of CVS's network for commercial and Medicaid pharmacy customers, breaking a contract impasse CVS disclosed earlier this week.

The companies did not provide financial terms of the new contract.

On Tuesday, CVS said the companies had failed to agree on pricing and that Walmart was leaving the pharmacy network for the prescription drug plans that CVS manages for companies and health insurers and for the Medicaid program for low income people.

The companies also said on Tuesday they were still in discussions.

CVS shares gained 1.6 percent to $64.76 in premarket trading, recouping some of its Tuesday losses.

"We view the agreement positively for CVS," Cantor Fitzgerald analyst Steven Halper said in a research note, explaining that the loss of Walmart pharmacies could have negatively impacted CVS' ability to sign customers for its 2020 prescription drug plans.

In addition to its retail pharmacies and stores, CVS is one of the country's biggest pharmacy benefit managers and, after buying Aetna, one of its top health insurance companies. Its prescription plans for the Medicare population were unaffected by the contract dispute as was its Sam's Club agreements.

Walmart senior vice president Sean Slovenski described the terms as "fair and equitable" in a press release.


(Reporting by Caroline Humer in New York and Ankur Banerjee in Bengaluru; Editing by Shounak Dasgupta and Chizu Nomiyama)