The Zacks Analyst Blog Highlights: AmerisourceBergen, Walgreen, Cardinal Health, McKesson and St. Jude Medical

   The Zacks Analyst Blog Highlights: AmerisourceBergen, Walgreen, Cardinal
                    Health, McKesson and St. Jude Medical

PR Newswire

CHICAGO, March 21, 2013

CHICAGO, March 21, 2013 /PRNewswire/ announces the list of stocks
featured in the Analyst Blog. Every day the Zacks Equity Research analysts
discuss the latest news and events impacting stocks and the financial markets.
Stocks recently featured in the blog include AmerisourceBergen (NYSE:ABC),
Walgreen Company (NYSE:WAG), Cardinal Health (NYSE:CAH), McKesson Corporation
(NYSE:MCK) and St. Jude Medical (NYSE:STJ).


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Here are highlights from Wednesday's Analyst Blog:

ABC Inks Deal with Walgreens

AmerisourceBergen (NYSE:ABC) recently announced that it has entered into a
strategic agreement with Walgreen Company (NYSE:WAG) and Alliance Boots GmbH.

The agreement includes a 10-year pharmaceutical distribution contract with
Walgreens and access to generic drugs and related pharmaceutical products
through the Walgreens Boots Alliance Development joint venture.

In return, both Walgreens and Alliance Boots have been granted rights to
jointly purchase a minority equity position in AmerisourceBergen.

Walgreens and Alliance Boots can purchase up to 7% stake in AmerisourceBergen.
Additionally, AmerisourceBergen has granted warrants to both the companies for
a 16% stake. AmerisourceBergen will allocate the warrants equally among
Walgreens and Alliance Boots.

The first tranche of warrants with a strike price of $51.50 represents an 8%
stake, which can be exercised in a six-month period beginning Mar 2016. The
second tranche of warrants represents the remaining 8% stake with a strike
price of $52.50 and will be exercisable for a six-month period beginning Mar

The agreement is intended to streamline the distribution of pharmaceuticals to
Walgreens' stores along with leveraging global supply chain efficiencies. The
broader goal is to maintain an efficient healthcare system by improving
patient access to affordable pharmaceuticals.

The agreement also allows Walgreens to appoint one director to
AmerisourceBergen's board as and when Walgreens and Alliance Boots together
acquire a 5% equity stake. Walgreens can also appoint a second director upon
exercising the first tranche of warrants.

Meanwhile, both Walgreens and Alliance Boots have agreed to customary transfer
restrictions on their equity stake. Under the terms of a standstill agreement,
both the companies will not try to acquire additional equity stake in

The agreement is effective Sep 1, 2013 and is expected to be accretive in
fiscal 2014 with an incremental contribution of $28 billion to the top line
and approximately 20 cents per share to the bottom line.

AmerisourceBergen expects incremental brand revenues of at least $2 billion in
Sep 2013. Consequently, AmerisourceBergen revised its guidance for fiscal
2013. The company now expects revenues to increase 8% – 11% in fiscal 2013, up
from the previous guidance of 6% – 9% increase.

We note that Walgreens existing pharmaceutical distribution contract with
Cardinal Health (NYSE:CAH) ends on Aug 2013 and the contract will not be
renewed further. Walgreens is one of Cardinal Health's two largest customers,
generating approximately 21% of revenue in fiscal 2012.

Hence, we believe the agreement will further augment ABC's strong distribution
network paving the way for incremental growth as Walgreens is well positioned
in retail pharmacy business. Competition in the pharmaceutical distribution
market remains tough with players like McKesson Corporation (NYSE:MCK).

Positive Data for St. Jude's Trifecta

Medical devices major – St. Jude Medical (NYSE:STJ) made an online release of
a new study about its Trifecta pericardial aortic stented tissue valve in The
Journal of Thoracic and Cardiovascular Surgery. The device is used as a
replacement for the damaged or malfunctioning aortic heart valve, which
controls blood flow from the heart through entire body.

The Trifecta valve, which has been constructed using a polyester and
tissue-covered titanium stent, is designed to offer improved hemodynamic
performance and durability. It offers a number of novel features that improve
the implant ability, thereby offering surgeons more flexibility in selecting
the appropriate replacement valve for each patient's heart.

The encouraging results published online re-emphasized the easy-to-implant and
safe Trifecta valve's efficiency in hemodynamic performance. St. Jude
conducted this large-scale study as a part of the U.S. Food and Drug
Administration (FDA) pre-market approval study. The study was held across 31
centers in the U.S., Europe and Canada and evaluated 1,041 patients between
2007 and 2009. The results helped the company obtain the European CE Mark
approval in 2010, FDA clearance in 2011 as well as a nod from the Japanese
regulatory body in 2012.

Dr. Bavaria, the lead author of the article, is impressed by the excellent
performance data collected over a span of 1-2 years and the minimal risk of
valve leakage evident from the strong clinical results. He has used the
product for 5 years and is extremely satisfied with the outstanding
hemodynamic support provided by the Trifecta.

The Trifecta valve further strengthens St. Jude's market-leading heart valve
franchise. The Trifecta product line led to a 3% increase in sales in St.
Jude's structural heart products business in 2012. The overall sales volume of
tissue heart valves grew 20% in 2012, which is encouraging.

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