Amazon's new pharmacy deal ruined a perfectly good earnings report for Walgreens

Amazon's new pharmacy deal ruined a perfectly good earnings report for Walgreens

"You see, the pharmacy world is much more complex than just delivering certain pills or certain packages", CEO Stefano Pessina said on a post-earnings call that was dominated by discussions around Amazon's foray.

Inc said on Thursday it would buy online pharmacy PillPack, a small but significant step into the USA health care sector, sending shares of drug distributors and retailers lower.

"We are not particularly anxious", Pessina said, but added that the company was not complacent either.

"Together with Amazon, we are eager to continue working with partners across the healthcare industry to help people throughout the U.S. who can benefit from a better pharmacy experience", PillPack co-founder and CEO TJ Parker said in a statement.

CVS shares tumbled nine percent in opening trading on the news, while Walgreens Boots Alliance slumped 10.5 percent. It had raised $123 million in financing, most recently $5 million in debt from TriplePoint Venture Growth in August 2017, according to data from industry research firm PitchBook.

Here's how PillPack works: Users receive a monthly roll of pre-sorted medications with labels that include photos and instructions.

MarketWatchPillPack is geared towards patients who take multiple daily prescriptions.

"Together with Amazon, we are eager to continue working with partners across the health care industry to help people throughout the USA who can benefit from a better pharmacy experience", PillPack chief executive TJ Parker said in a statement.

With its user-friendly packaging and design, PillPack has shaken up the pharmacy business, generating more than $100 million in revenue past year. In February, the grocery chain Albertsons Cos. said it would buy Rite Aid in an effort to hold off Amazon.

The deal is expected to close during the second half of 2018. And CVS is acquiring insurer Aetna in a bid to strengthen its business managing pharmacy benefits in the face of new competition.

The company said earlier this year it will bring about 2,000 new employees to a new Seaport building, on top of an additional 900 in a new Fort Point office.

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