Medco 4Q profit rises on clients, pricing increase

[February 24, 2009]  FRANKLIN LAKES, N.J. (AP) -- Pharmacy benefits manager Medco Health Solutions Inc. said Tuesday its fourth-quarter profit rose 32 percent as the deteriorating economy drove increased sales of generic and mail-order drugs.

Those lines of business, typically cheaper for customers, are also more profitable for Medco, which manages prescription benefits for about 1 in 5 Americans. The company's gross profit margin increased from 6.7 percent to 7.5 percent.

The company earned $274.4 million, or 54 cents per share, compared with $207.6 million, or 38 cents per share, a year earlier. Revenue rose 14 percent to $12.96 billion.

Excluding charges, Medco said it earned 59 cents per share. Analysts polled by Thomson Reuters expected profit of 58 cents per share on revenue of $12.73 billion.

During the quarter, the mail-order generic dispensing rate rose 5 percent while the retail generic dispensing rate rose 3.4 percent. Meanwhile, the company said client gains worth more than $15 billion in revenue in 2008 and 2009 combined have contributed to profit boosts.

Overall, total prescription volume for the year rose 6.4 percent, while mail-order alone rose 11.6 percent and retail rose 3.3 percent.

For the full year, the company earned $1.1 billion, or $2.13 per share, compared with profit of $912 million, or $1.63 per share, in 2007. Revenue rose to $51.26 billion from $44.51 billion.

Medco expects 2009 adjusted profit between $2.67 and $2.77 per share, while analysts expect $2.71.

[Associated Press]

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