Medco generated year-to-date cash flows from operations of $797.2 million, compared to $816.4 million for the same period in 2007. The company closed the third quarter of 2008 with $440.8 million of cash on its balance sheet.
Specialty Pharmacy Segment
Revenues for Medco's specialty pharmacy segment, Accredo Health Group, grew a record 34.3 percent to over $2.0 billion, compared to $1.5 billion in the third quarter of 2007. This is primarily the result of the contribution from significant new clients commencing in January 2008 and the acquisition of Critical Care Systems in fourth-quarter 2007.
Gross margin increased to 8.1 percent in the third quarter of 2008 compared to 7.8 percent for the same period in 2007. Operating income rose 48.6 percent to $78.0 million from $52.5 million in the third quarter of 2007, driven by the increased volume from new business.
Share Repurchase Programs
During the third quarter, Medco repurchased 8.3 million shares for $391.7 million with an average per-share cost of $47.23. In October 2008, Medco completed its previously authorized $5.5 billion share repurchase program by repurchasing approximately 0.6 million shares for $29.7 million with an average per-share cost of $45.81. From the inception of the $5.5 billion share repurchase program in 2005 through completion, Medco acquired 153.8 million shares at an average per-share cost of $35.75.
The Medco Board of Directors approved a new share repurchase program, authorizing the purchase of up to $3 billion of the company's common stock in the open market through November 2010. The company expects to use free cash flow to fund these repurchases.
Medco reaffirmed its full-year guidance for 2008. That guidance
includes GAAP diluted EPS of $2.10 to $2.13, reflecting growth of 29 to 31
percent over 2007 and diluted EPS guidance, excluding the effect of
|SOURCE Medco Health Solutions, Inc.|
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