By Dana Blankenhorn:
The last time I wrote about Walgreens (WAG), I was long Medco (MHS), which ExpressScripts (ESRX) was preparing to acquire. The news then was that Walgreens would lose any pharmacy benefit tied to the ExpressScripts Pharmacy Benefit Management (PBM) plans in January, and likely all of Medco’s business soon afterward.
I have since closed out my MHS position at a profit, but it may be time to consider an outright short on WAG.
The business is rapidly losing its “moat,” according to Morningstar. Sales were down 2.6% for January, same-store sales down 4.6%, as the pain of the ESRX cancellation started to kick in.
These losses are keeping Walgreens from executing on its other plans, like expanding its network of Take Care Clinics, which are becoming a first-line of care for more-and-more people. (Getting deals with foreign nationals doesn’t make the pain go away.)
Walgreens is now pitching its pharmacies