Net income climbed to $185.8 million, or 62 cents a share, from $156.7 million, or 53 cents, a year earlier, Franklin Lakes-based Medco said. Revenue gained 12 percent to $10.5 billion, helped by a 2005 acquisition. Profit beat analysts' estimates.
Medco, a middleman between drugmakers and health insurance plans, capitalized on patent expirations for Pfizer Inc.'s Zoloft and Merck & Co.'s Zocor, allowing sales of less-expensive pills at higher markups.
"Generics played out very nicely for them in the quarter, and we continue to see generic introductions driving margin expansion for them over the next couple of years," said Constantine Davides, a Susquehanna Investment Group analyst in Boston, in a telephone interview Friday. He rates Medco shares "positive" and doesn't own any.
The stock (MHS) fell 23 cents, to $51.17, in New York Stock Exchange composite trading. The shares had climbed 6 percent in the 12 months through Thursday.