WAG stock.. going down

Since: Apr 12

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#21 Apr 10, 2012
WAG slave wrote:
Stock is down about 10% from my original post date... I think there's more to come this year with the Medco deal approved. Stock could be down another 10 - 15% this year.
Great. More waiting to see if the merger goes ahead and Walgreens looses more business.
There is a way

United States

#22 Apr 11, 2012
We have less leverage than last contract with express scripts now. If a deal is reached, we are not going to get a good deal. Our pharmacy will be slammed because we will be running with the reduced budget. Due to the fact that we will be losing money for every script filled. There is NO way we will recover from this.

Since: Mar 12

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#23 Apr 11, 2012
I think FTC totally screwed up by allowing the ESI merger to go through. We can expect FTC commissioners to be under the payroll of ESI soon.

A company with 50% of PBM market share, 60% of mail order pharmacy and 45% specialty pharmacy!!

However if ESRX tries to cut walgreens out from medco network, I think they will lose a lot of medco customers in this selling season. So they may wait till the season to be over to get WAG out.

I am not sure why everyone is bullish on ESI. With a ton of debt and slow growth, I don't see how they will grow. At some point, govt will be forced to either step in and break them apart (or insurance companies may start their own PBMs and take market share away from ESI).

Since: Jun 10

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#24 Apr 11, 2012
http://wallstcheatsheet.com/stocks/healthcare...

Read the article, we can either stand our ground and make put the pressure on express scripts, or we can cut a deal and run.

What ever they do, if they make a deal it needs to be better than the last one.

March 2012 vs March 2011 my store saw a -$40,000 ins pharamcy sales but only a -$2000 drop. It worked out to a 4.4% gross profit for that express scripts business we do not have.

So if a deal means a return to those woeful low rates, than I want no part of that deal.

Since: Mar 12

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#25 Apr 11, 2012
Captain Prozac wrote:
http://wallstcheatsheet.com/st ocks/healthcare-business-recap -johnson-johnson-is-guilty-wal green-and-express-scripts-migh t-kiss.html/
Read the article, we can either stand our ground and make put the pressure on express scripts, or we can cut a deal and run.
What ever they do, if they make a deal it needs to be better than the last one.
March 2012 vs March 2011 my store saw a -$40,000 ins pharamcy sales but only a -$2000 drop. It worked out to a 4.4% gross profit for that express scripts business we do not have.
So if a deal means a return to those woeful low rates, than I want no part of that deal.
Analysts can speculate many things, but at the end of the day, they are all mere speculations (may be supported by some leaked information, who knows). UBS analyst speculates a deal while BOA analyst downgrades WAG because of no deal.

Also, today you don't want ESI deal and tomorrow you may not get the medco or CVS deal because of the same reason. Then what? Will WAG decide to lose 70% of business to protect the margins? Cost cutting can only go so far.

As I stated elsewhere, running WAG store is not rocket science, so don't expect profit margins of Google or Apple or even Pfizer. Those companies innovate and they have intellectual capital. Nor do WAG play a role similar to investment banks that are the lifeblood of capitalist system.

Expectation should be around profit margins of a grocery store because that is the kind of business that WAG is in. They were lucky to preserve the high profit margins for so long.

US healthcare costs are too high. Payers will feel the heat and they will inturn apply pressure on providers.

My guess is that at this stage agencies like FTC may care more about lowering the costs for consumer. They can always look into breaking ESI (may be take a few large govt contracts away from ESI) if the savings don't materialize because of mono/duopoly. Remember how the old AT&T was broken down.

Since: Jun 10

Location hidden

#26 Apr 12, 2012
angelo98 wrote:
<quoted text>
Analysts can speculate many things, but at the end of the day, they are all mere speculations (may be supported by some leaked information, who knows). UBS analyst speculates a deal while BOA analyst downgrades WAG because of no deal.
Also, today you don't want ESI deal and tomorrow you may not get the medco or CVS deal because of the same reason. Then what? Will WAG decide to lose 70% of business to protect the margins? Cost cutting can only go so far.
As I stated elsewhere, running WAG store is not rocket science, so don't expect profit margins of Google or Apple or even Pfizer. Those companies innovate and they have intellectual capital. Nor do WAG play a role similar to investment banks that are the lifeblood of capitalist system.
Expectation should be around profit margins of a grocery store because that is the kind of business that WAG is in. They were lucky to preserve the high profit margins for so long.
US healthcare costs are too high. Payers will feel the heat and they will inturn apply pressure on providers.
My guess is that at this stage agencies like FTC may care more about lowering the costs for consumer. They can always look into breaking ESI (may be take a few large govt contracts away from ESI) if the savings don't materialize because of mono/duopoly. Remember how the old AT&T was broken down.
last time I check walgreens was a pharmacy and they are expanding to other areas. You need a large storefront like Wal-Mart target, or aNother not to care about pharmacy gross.

4.4% is nothing. Circuit city went bankrupt with a 20%. If the deal we broke even and covered your salaried, it may be doable with the front sales, but the last deal with did sucked.

Since: Mar 12

Location hidden

#27 Apr 12, 2012
Captain Prozac wrote:
<quoted text>
last time I check walgreens was a pharmacy and they are expanding to other areas. You need a large storefront like Wal-Mart target, or aNother not to care about pharmacy gross.
4.4% is nothing. Circuit city went bankrupt with a 20%. If the deal we broke even and covered your salaried, it may be doable with the front sales, but the last deal with did sucked.
First of all, electronics is a much lower margin business than drugs, I doubt if CC ever had 20% net margin. WAG gross margin is more than 4.4% based on income statement - 4.4% may be net profit

I can only go by public information that WAG released, not anecdotal evidence from one store.

Looks like ESI accounted for 12% of prescription volume based on march data (y-o-y comparison) and WAG lost 85% of that. So that would amount to 10%(85% of 12%)loss of revenue (by WAG estimate, it was < 10%, more like 7%, if you go by $5.3 billion annualized revenue loss that was originally projected)

Now this 7% of revenue loss (or take 10% prescription loss if you want to) contributed to a loss of $0.07 EPS (out of $0.80 EPS for prior year quarter) which means it contributed to almost 10% of profits also.

So how can you say WAG had a very bad contract with ESI? If WAG already had a losing contract with ESI, I would have expected revenue to go down and profits to go up or at least hold steady, as WAG was able to shed unprofitable business. But obviously based on quarterly results, that is not what happened. Revenue was flat (may be due to organic growth compensating for ESI loss), but profits went down. So obviously market has lost faith in the amatuer management from WAG executives and it is reflected in the stock price - i.e. nobody seems to believe WAG unless they can make up with ESI.

If you go by original WAG estimates, 7% of revenue appears to contribute to 10% of profit, which means WAG had a decent contract with ESI. May be that is why ESI tried to negotiate harder this time and walgreens balked. ESI decided to call WAG on their bluff and probably ESI knew they were negotiating from a position of strength because of impending medco deal (and I bet Walgreens didn't know that when they took the dispute public just like they did with CVS).

I agree that WAG is a pharmacy and profits come from there. But from a customer's perspective, why should they pay more to shop at WAG? What is walgreens offering that is not offered by anyone else that commands a premium? WAG should be getting the drugs at a lower price point than other retailers because of volume.

In the era of mobile technology, information on the drugs or disease or wellness can be freely available at your fingertips. You don't need to stop inside walgreens to access this information. So I am skeptical on how successful the new pitch on wellnes is going to be or who will be willing to pay for that. As I stated before, volume purchasers of healthcare want lower prices from providers and if any provider can not offer that, they stand to lose market share.

Since: Jun 10

Location hidden

#28 Apr 13, 2012
When Circuit City went under, it was 20% gross profit and not net profit.

What I am basing my opinion is off what I see from my operating statement and what the district KPI ranks. January my district was down 1/3 less Gross percentage than pharmacy sales. More inner city stores loose a disproportional number of gross dollars with ESI. The stores in more affluent areas had more matching % loss between gross and sales. Where are most of Walgreens revenue based? inner city stores.

Why is this important? Everyone forgets that Medicare and Medicaid are the lowest payers of any insurance deal. They automatically get the best deal on any drug from any insurance contract we have. This explains why the stores in my district in urban areas made the same gross profit dollars or even more with out Express Scripts than the more suburban stores.

Check out your districts numbers. My opinion comes from the PNL since I have been a manager.
bong

San Jose, CA

#29 Apr 14, 2012
i bought 5k worth of stock when it really hit bottom like 2-3 years ago. i don't really remember exactly when it was, but it was when the market crashed. this thread made me decide to go look at what it's worth, current value $7,500, 30% growth. wish i would have sold it when it topped out at like $45

Since: Feb 12

Location hidden

#30 Apr 15, 2012
bong wrote:
i bought 5k worth of stock when it really hit bottom like 2-3 years ago. i don't really remember exactly when it was, but it was when the market crashed. this thread made me decide to go look at what it's worth, current value $7,500, 30% growth. wish i would have sold it when it topped out at like $45
Unfortunately I do not see us returning to those levels anytime soon unless we have a drastic change in direction of this company. I also wish I would have sold mine in June before the express announcement.

Since: Mar 12

Location hidden

#31 Apr 15, 2012
Captain Prozac wrote:
What I am basing my opinion is off what I see from my operating statement and what the district KPI ranks. January my district was down 1/3 less Gross percentage than pharmacy sales. More inner city stores loose a disproportional number of gross dollars with ESI. The stores in more affluent areas had more matching % loss between gross and sales. Where are most of Walgreens revenue based? inner city stores.

Check out your districts numbers. My opinion comes from the PNL since I have been a manager.
I am talking about the qtrly results numbers for WAG. Looking at one store or district doesn't tell the whole story.

Most of medicaid is not handled by ESI, may be in your area some may be. Medicare patients aren't necessarily in inner cities. This need to be analyzed across geographies as WAG customers from ESI could vary widely.

Bottomline is, WAG revenue was flat and profit dropped which means ESI contract can not be that bad overall(everything else being equal).

On stock price, without a contract, I don't see it going anywhere but down in the short term. Board is trying gimmicks like dividend increase (wrong move IMO) to placate the investors. But I don't think wallstreet is buying that.

Since: Mar 11

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#32 Apr 16, 2012
dividends are a way to mask things, in this case lost revenue which has a very slim chance of every coming back.
the stock is fighting to reach 35-36 where it was 45 at one point not too long ago.
as stated, if it falls below 30 watch out.

Since: Aug 07

Location hidden

#33 Apr 17, 2012
Stock up 4%+ today on no real news other than trending with the market. As long as they keep paying and increasing dividends off the back of hourly employees, the stock will be stable.

Since: Jan 12

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#34 Apr 17, 2012
wagexa wrote:
Stock up 4%+ today on no real news other than trending with the market. As long as they keep paying and increasing dividends off the back of hourly employees, the stock will be stable.
Their has to be some insider news or leak to cause this 1.865 5.60%. Stocks don't do that without major changes.

Since: Feb 12

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#35 Apr 17, 2012
A
AnonymousWAG wrote:
<quoted text>Their has to be some insider news or leak to cause this 1.865 5.60%. Stocks don't do that without major changes.
As started earlier, looks more like trending with the market overall. UBS analysts had some positive things to say about us, but no real news. I took this as another selling opportunity to slowly start dumping stock whenever it jumps for the near term. I keep holding on to some shares just in case there is a deal with express, but IMO I just don't see how we would get a good agreement at this point.

Since: Apr 12

Location hidden

#36 Apr 17, 2012
Captain Prozac wrote:
When Circuit City went under, it was 20% gross profit and not net profit.
What I am basing my opinion is off what I see from my operating statement and what the district KPI ranks. January my district was down 1/3 less Gross percentage than pharmacy sales. More inner city stores loose a disproportional number of gross dollars with ESI. The stores in more affluent areas had more matching % loss between gross and sales. Where are most of Walgreens revenue based? inner city stores.
Why is this important? Everyone forgets that Medicare and Medicaid are the lowest payers of any insurance deal. They automatically get the best deal on any drug from any insurance contract we have. This explains why the stores in my district in urban areas made the same gross profit dollars or even more with out Express Scripts than the more suburban stores.
Check out your districts numbers. My opinion comes from the PNL since I have been a manager.
You both should do well on the circut because of how well you spread crap around.

Since: Jun 10

Location hidden

#37 Apr 17, 2012
angelo98 wrote:
<quoted text>
Most of medicaid is not handled by ESI, may be in your area some may be. Medicare patients aren't necessarily in inner cities. This need to be analyzed across geographies as WAG customers from ESI could vary widely.
you are correct about esi not handling Medicaid claims, but they do not have too. Medicaid automatically gets the lowest price from any insurance walgreens accepts.

anyways, there is no changing minds in this forum.

Since: Feb 12

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#38 May 3, 2012
After a slight rise, the stock is sliding downward...
Geraldo

United States

#39 Jun 1, 2012
WAG's stock price has now hit a 52 week low.

Since: Jan 12

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#40 Jun 1, 2012
Geraldo wrote:
WAG's stock price has now hit a 52 week low.
Stock under 30 with still pending May & Q3 earning coming up in the near future which I assume won't be pretty

Getting nervous about more budget cuts or them speeding up the transformation. Hopefully it leads to the end of Wasson instead

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