Walgreen's Down Sharply

Walgreen Company WAG shares are down more than 4% today, after the company reported quarterly earnings this morning, and said that its deal with Express Scripts ESRX would stop. Walgreen's reported third quarter earnings of 65 cents per share on $18.37 billion in revenues. Wall Street had been expecting 62 cents per share on $18.38 billion in revenues. "We saw healthy increases across our consumables, cough/cold, pain/sleep, personal care and beauty categories, along with continued strength in our private brand products," said Walgreens Chief Executive Greg Wasson, in a statement. However, the company said today that it would stop filling prescriptions for customers covered by St. Louis-based Express Scripts on Jan. 1, 2012. This comes after the the two companies failed to reach an agreement in contract talks. "While we have sought to negotiate a contract renewal agreement over the past several months, those talks have been unsuccessful,” Walgreens President and CEO Greg Wasson said. “Under the terms proposed by Express Scripts, it would not make good business sense for the strategic direction of our company to continue our relationship with them. Walgreens is committed to providing quality, convenient and cost-effective pharmacy services to our patients, but we cannot continue to deliver these services under the terms and rates Express Scripts offered. As the largest retail provider in their pharmacy network, we were surprised by Express Scripts' ultimate stance during our talks, which made it clear to us that they no longer had an interest in continuing a meaningful relationship.” At last check, shares of Walgreen were off around 5% in early Tuesday trading. Express Scripts has since moved off the lows of the session, and is now trading higher after being down to start the trading day.