(RTTNews) - Pharmacy benefit manager Medco Health Solutions, Inc. (MHS: News ) on Tuesday reported over 13% increase in third-quarter profit, helped by new client wins and price inflation on brand-name drugs that led to an 18% increase in revenues. Adjusted earnings topped Wall Street view. Looking ahead, the company raised its earnings forecast for 2009 and issued guidance for 2010 within analysts' expectations.

The Franklin Lakes, New Jersey-based company said its third-quarter net income improved to $335.6 million or $0.69 per share from $295.7 million or $0.58 per share in the same quarter last year. For the second quarter, Medco reported net income of $312.1 million or $0.64 per share.

Adjusting for the amortization of intangible assets that existed when Medco became a publicly traded company in 2003, third-quarter 2009 earnings per share was $0.75. Twenty-three analysts polled by Thomson Reuters expected the company to report earnings of $0.72 per share. Analysts' estimates typically exclude special items.

Total net revenues for the quarter increased to $14.795 billion from $12.559 billion in the prior year, reflecting contributions from new client wins and price inflation on brand-name drugs, partially offset by higher volumes of lower-priced generic drugs. Analysts estimated revenues of $14.68 billion for the quarter. Total net revenues for the second quarter were $14.93 billion.

Third-quarter revenues for Accredo Health Group grew 19.2% to $2.401 billion, reflecting the contribution from new client wins and continued growth across the specialty business. Service revenues advanced to $204.0 million from $168.8 million in the previous year.
Medco's generic dispensing rate increased 3.3 percentage points from third-quarter 2008 to a record 67.7%. The mail-order generic dispensing rate increased 2.3 percentage points to 58.1% and the retail generic dispensing rate increased 3.0 percentage points to 69.4%. Higher volumes of lower-priced generic drugs reduced net revenues for third-quarter 2009 by about $560 million.

Total prescription volume, adjusting for the difference in days supply between mail-order and retail, increased 14.1% to 220.2 million. Mail-order prescription volume was 25.5 million, down 2.3% from the third-quarter 2008. The company noted that Mail volume reflects a decline in brand-name drugs of 7%, partially offset by a 1.4% increase in generic drugs. Retail volumes reached 144.3 million, a 25.4% increase from last year, on new business wins. The adjusted mail-order penetration rate decreased 5.9 percentage points to 34.5%

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