GO
Loading...

On the Phone with Medco's David Snow

As Cramer's been saying, there are some good plays in the non-pharma sectors of healthcare if you know where to look. One such stock is Medco Health Solutions . Medco is one of the country's largest purchasers of generic drugs and has a mail-order business that made over $16 billion last year. Cramer dialed up Medco's CEO David Snow to find out more about his company.



Snow says Medco is "rewarded by our customers to manage their healthcare dollars." He explains that Medco will continue to be on the forefront of the generic drug-buying business, as $50 billion worth of generic drugs are going off-patent between now and 2011. "We are going to work very hard to appropriately move people from branded drugs to generic drugs, and we make money doing that," Snow says.

As for acquisitions, Snow isn't champing at the bit just yet. He says because Medco is such a large company, incremental acquisitions to drive additional scale are doable, but they aren't necessary as far as he is concerned. Instead, he says the company is focused on leveraging their technology to further innovate and bring more value to their customers.

Cramer wants to know where all that free cash flow is going. Snow says Medco is currently working on a $5.5 billion stock buyback program, but the company also has lots of working capital needs in managing their drug inventory. In addition, the cash gives them flexibility to "do something opportunistically on the acquisition front."

This one's a no-brainer for Cramer. Huge buyback, tremendous growth and continued visibility over the next few years due to the generics - Medco is a stock you need to buy in this market, he says.

Questions? Comments? madmoney@cnbc.com

Contact Mad Money

  • Showtimes

    U.S.
    Monday - Friday 6p ET
    Australia
    Saturday 8a, 1p, 7p SYD
    Sunday 12a, 1a, 8a, 7p SYD
    New Zealand
    Saturday 10a, 3p, 9p NZ
    Sunday 2a, 3a, 10a, 9p NZ
  • Jim Cramer is host of CNBC's "Mad Money" and co-anchor of the 9 a.m. ET hour of CNBC's "Squawk on the Street."

Mad Money Features

  • Grab the latest CNBC gear from the NBCUniversal Store!

  • Get a behind-the-scenes look at how Cramer formulates his investment advice. "Inside the Madness" is a column, which features e-mails and more with Cramer and his researcher Nicole Urken.

  • You’ve always wanted to hit the “Hallelujah!” button. Here’s your chance.

Mad Money Moments

Cramer's New Book