Walgreen Co. (WAG) has undertaken an initiative to help newly insured Americans as they start using their benefits under the Affordable Care Act. The news however, failed to shoot share price up, which declined marginally by 0.69%, ending the session at $57.44 as on Dec 31, 2013.
The initiative is expected to have negligible financial impact on the company. Further, the fall in the share price can be accounted to the negative sentiments of investors. The company failed to match the market expectation and registered an average negative surprise of 2.26% in the last four quarters.
The primary objective of the Affordable Care Act is to transform the U.S healthcare system by introducing certain reform measures. Under the protection of this Act, more Americans will be brought under insurance coverage through both private and public means. Such measures are being taken to cut down healthcare expenditure in the U.S and improve the quality of healthcare delivered.
As part of this benevolent initiative, Walgreens aims to provide medications to patients who are yet to get a plan identification number from their insurer. On production of the confirmation of their enrollment in the public health insurance plan to a Walgreens pharmacy, such patients will be provided a month of a traditional, brand and generic medication at no upfront cost by the pharmacy’s trained personnel.
Walgreens is seeking further assistance from the United States Department of Health and Human Services (HHS), Centers for Medicare & Medicaid Services (CMS) and National Association of Chain Drug Stores (NACDS) in this regard. Help from the White House has also been assured for Walgreens to accomplish this community-serving task without causing harassment to the patients.
On the other hand, Walgreens is obtaining nightly eligibility daily updates from insurance companies on health insurance marketplace plan enrollees. This is to ensure that all Walgreens pharmacy teams have the most up-to-date coverage information.
The retail giant is also encouraging patients who enrolled through the public marketplace to confirm their coverage with their respective insurance companies and intimate the pharmacy about their benefit information.
We believe that Walgreens with its extensive retail footprint is well poised to reach out to large masses of patients. Moreover, the company’s incredible presence in several underserved areas puts it in the forefront to adopt such a large-scale healthcare initiative.
Currently, the stock carries a Zacks Rank #3 (Hold). Investors interested in the industry can look at better-ranked stocks like InVivo Therapeutics Holdings Corp. (NVIV), Hill-Rom Holdings, Inc. (HRC) and Herbalife Ltd. (HLF), each carrying a Zacks Rank #2 (Buy).
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