Drug store chain operator Walgreen Company (WAG) reported in a 10-Q filing on Thursday that the failure to come to terms with pharmacy benefits provider Express Scripts (ESRX) will negatively impact its 2012 earnings.

Walgreen management said it now expects full-year 2012 prescription volume to come in at around 97% to 99% of 2011 volumes.

The company will try and offset the impact of loss through cost-cutting initiatives, business expansion, and attempts to retain Express Scripts clients. WAG said it’s aiming to shave around 50% of the negative impacts with those measures.

Back in June, Walgreen announced it was unable to come to terms on a contract extension with ESRX. The current contract will expire on Jan. 1, 2012, after which WAG will no longer be a part of Express’ pharmacy benefits network.

Walgreen shares were inactive in premarket trading Thursday.

The Bottom Line
Shares of Walgreen Company (WAG) have a 2.70% dividend yield, based on last night’s closing stock price of $33.28. The stock has technical support in the $27-$30 price area. If the shares can firm up, we see overhead resistance around the $35-$36 price levels.

Walgreen Company (WAG) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.3 out of 5 stars.

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