Medco Health Solutions, Inc. (MHS) said Thursday that its board of directors has unanimously approved a new $3 billion share repurchase program as the company nears completion of the ongoing $3 billion share repurchase program authorized by the board in October 2008.
While reporting its financial results for the first quarter in late April, the pharmacy-benefits manager had said it expects to complete the then-remaining $292 million in authorized share repurchases under the ongoing program prior to the plan's expiration in November 2010.
Richard Rubino, chief financial officer of Medco, said, "Share repurchases have always been a component of Medco's capital allocation strategy. While we intend to repurchase shares opportunistically, our core priorities for the use of our cash on hand will continue to be investing in our core business, investing in future growth initiatives and in making Medco an even more agile enterprise."
Since the inception of its first share repurchase program in 2005 after spinning off from Merck & Co. (MRK), Franklin Lakes, New Jersey-based Medco has repurchased more than 208 million shares to date.
Medco, which has a market capitalization of $26.87 billion, noted that the share repurchase program does not obligate it to acquire any particular amount of shares and the share repurchase program may be suspended or discontinued at any time at the company's discretion.
In late April, Medco posted an increase in first-quarter profit, thanks to the significant new client wins and higher prices on brand-name drugs. The company's net income for the first quarter increased to $320.5 million or $0.67 per share from $291.0 million or $0.58 per share a year ago. Net revenues for the quarter totaled $16.3 billion, up 10% than $14.8 billion in the same period last year.
At that time, the company said that the majority of its expected share repurchases in 2010 are weighted to the early part of the year.
MHS closed Thursday's regular trading session at $58.82, up $0.71 on a volume of 3.06 million shares.
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