Earnings Preview: Medco Health Solutions

NEW YORK (AP) — Medco Health Solutions Inc., the largest U.S. pharmacy benefits manager, is scheduled to report its third-quarter results Tuesday morning. The following is a summary of key developments and analyst commentary for the period.

OVERVIEW: Medco, of Franklin Lakes, N.J., makes money by designing benefits packages for plan sponsors and members. Profits have improved despite the recession because companies are looking for ways to cut their health care costs. Demand for low-cost generic drugs and mail order prescriptions, which are strongly profitable for Medco, has increased.

Strong sales of pricey specialty drugs has also helped Medco in recent quarters. The recession has affected demand for brand-name drugs, but pharmaceutical companies have gotten more aggressive in raising their prices of late, because many top-selling drugs will lose patent protection starting in 2011.

A year ago, the company earned 58 cents per share on revenue of $12.56 billion.

BY THE NUMBERS: Analysts polled by Thomson Reuters expect a profit of 72 cents per share and $14.68 billion in revenue.

ANALYST TAKE: Deutsche Bank analyst Ross Muken said he expects continued growth in generic sales, mail order prescription filling and specialty drug revenue.