Drugstore operator Walgreen Co., operator of a Windsor regional distribution center and stores throughout Connecticut, said Tuesday its profit sank 11 percent in the third quarter because of higher costs related to the nation’s health care rules and its $623 million buyout of rival Duane Reade, The Associated Press reports.
Those costs, CEO Greg Wasson said, converged with a weak economy, lower reimbursement rates and fewer new low-cost generic drugs.
In addition, the latest results compare with a strong showing last year when drug stores got an added boost from the swine flu pandemic as treatments flew off shelves.
The Deerfield, Ill., company reported net income of $463 million, or 47 cents per share, in the three months ended May 31. That’s down from $522 million, or 53 cents per share, one year ago.
Excluding one-time items, Walgreen earned 54 cents per share, short of the 57 cents analysts were looking for, according to a poll by Thomson Reuters.
Walgreen shares slipped $1.78, or 5.9 percent, to $28.36 in morning trading.
The new federal health care law eliminated a Medicare Part D tax benefit for retiree health benefits. Walgreen said that reduced net income by 4 cents per share and the acquisition of Duane Reade ate up another 2 cents. The company spent another penny per share in restructuring costs.
Revenue, however, rose 6 percent to $17.2 billion, which just edged out analyst expectations of $17.14 billion.
