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St. Louis, MO-based pharmacy benefit manager Express Scripts Holding Company (ESRX - Free Report) recently announced results from a new diabetes study, Diabetes Dilemma: U.S. Trends in Diabetes Medication Use. Per the study, people following their oral diabetes medications experienced significantly fewer emergency room visits and inpatient hospitalizations. Further, the report revealed that they spent nearly $500 less on total healthcare costs compared to nonadherent patients.

With strong criticism being voiced against high prices of specialty drugs, the focus is on better management of healthcare costs as consumers are becoming increasingly proactive about healthcare decisions. Through the study, Express Scripts emphasizes on the need for necessary patient spending for medications. This we feel would lead to experiencing an average increase in diabetes drug spend in 2017.

In this regard, we remind investors that the company’s SafeGuard suite of pharmacy solutions was designed to better manage specialty spending, thereby establishing a higher standard for patient outcome. The portfolio also includes the Hepatitis Cure Value Program, the Cholesterol Care Value Program, the Oncology Care Value Program and the Express Scripts Inflation Protection Program.

Over the past three months, the company has underperformed the broader industry. The stock has gained only 1.7%, compared with 2.9% rise of the industry it belongs to.

Going forward, we are highly upbeat about the company’s core pharmacy-benefits management and long-term outlook. This includes the ongoing volatile healthcare market trends, inflation, patent expiration, lower industry utilization growth and other headwinds.

Furthermore, we expect Express Scripts to continue to benefit from increased generic utilization, shift toward mail orders, strong specialty growth and an aging population. Branded drugs are becoming increasingly expensive due to double-digit brand inflation, constant rise in the price of specialty drugs and an overwhelming regulatory burden that is actually paving the way for manifold prospects for generics.

However, Express Scripts recently announced that its biggest customer, the leading health insurer, Anthem Inc. (ANTM - Free Report) , is not likely to extend its pharmacy-benefits management agreement, which is slated for expiration by the end of 2019. In 2016, Anthem sued Express Scripts for overcharging its drugs and operational failures. Per management, Anthem refused to participate in further discussions on pricing concessions and probable adjustments for the agreement. Meanwhile, in the second quarter of 2017, Anthem generated revenues worth $52.6 million compared with $106.6 million in the second quarter of 2016.

Zacks Rank & Key Picks

Notably, Express Scripts currently has a Zacks Rank #3 (Hold). A few better-ranked medical stocks are IDEXX Laboratories, Inc. (IDXX - Free Report) and Lantheus Holdings, Inc. (LNTH - Free Report) . Lantheus Holdings and IDEXX Laboratories carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Lantheus Holdings has a long-term expected earnings growth rate of 12.5%. The stock has gained 34.9% over the last six months.

IDEXX Laboratories has a long-term expected earnings growth rate of 19.8%. The stock has rallied around 6.2% over the last six months.

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