Express Scripts Holding Company (ESRX), Rite Aid Corporation (RAD): Can Walgreen Company (WAG)’s Stock Rise 200%?

Page 1 of 2

Shares of Walgreen Company (NYSE:WAG) were all over the map last year. The company’s fallout with pharmacy benefits manager Express Scripts Holding Company (NASDAQ:ESRX), as well as increased competition from CVS Caremark Corporation (NYSE:CVS) and Rite Aid Corporation (NYSE:RAD), left Walgreen Company (NYSE:WAG) in poor shape in 2012.

However, 2013 is shaping up to be a moneymaking year for the country’s largest drugstore chain. Let’s take a closer look at what Walgreen Company (NYSE:WAG) has planned for the year ahead, and what catalysts are needed to push the stock into two-bagger territory.

Rite Aid Corporation (NYSE:RAD)A brief flashback
There’s no denying that the past few years have been challenging for the drugstore chain. The company’s messy breakup with PBM Express Scripts Holding Company (NASDAQ:ESRX) resulted in billions of lost revenue for Walgreen Company (NYSE:WAG). In fact, before the dispute, Express Scripts Holding Company (NASDAQ:ESRX) accounted for about $5 billion in annual sales for the pharmacy retailer.

Express Scripts Holding Company (NASDAQ:ESRX) provides a variety of pharmacy services to its clients, including patient care and benefit management care. However, when Walgreen Company (NYSE:WAG) dropped its contract with Express Scripts Holding Company (NASDAQ:ESRX), it subsequently slammed the door on tens of thousands of customers in the Express Scripts Holding Company (NASDAQ:ESRX) network. That’s not all.

Rivals including CVS and Rite Aid Corporation (NYSE:RAD) jumped at the opportunity to steal customers away from Walgreen Company (NYSE:WAG). As millions of customers left Walgreen Company (NYSE:WAG) for CVS and Rite Aid Corporation (NYSE:RAD), so, too, did investors. However, to its credit, Walgreen ultimately settled the contract dispute with Express Scripts Holding Company (NASDAQ:ESRX). In July, the two companies agreed on a new multiyear deal.

Just what the doctor ordered
Once Express Scripts welcomed Walgreen back into the family, the company began working every angle to win back lost pharmacy customers. However, it wasn’t until January of this year that Walgreen’s prescription volumes finally showed signs of a turnaround. “January prescription volume increased in the low double digits, which was above analyst expectations and followed months of declining prescription sales comparisons,” Barron’s reported.

This is particularly encouraging because prescription sales make up about two-thirds of Walgreen’s total revenue, although Walgreen is hoping its acquisition of Alliance Boots will help boost future sales at the company. Walgreen coughed up $6.7 billion for a 45% stake in the European drugstore chain last year and will take on billions in debt to fund the cash-and-stock deal. Nevertheless, this decision carries both risks and opportunities for the company.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!