Pharmacy benefits management company Medco Health Solutions Inc. is scheduled to report its first-quarter results before the stock market opens on Thursday.

WHAT TO WATCH FOR: Medco manages prescription drug benefits for health insurers and plan sponsors. It makes its money by reducing costs for its clients and for members. Wall Street will be watching how many prescriptions Medco is able to fill through the mail, the performance of its specialty drug business, and how many prescriptions are filled using low-cost generic drugs. Investors will also be monitoring Medco's success at gaining new clients. In February, Medco said it had booked $1.5 billion in new contracts that will start next year.

WHY IT MATTERS: Medco is the largest U.S. pharmacy benefits manager. The next few years are expected to be strong ones for the PBM industry as generic versions of billion-dollar drugs like Lipitor, Plavix and Viagra reach the market. Employers and health plan sponsors will also be looking for new ways to cut costs.

WHAT'S EXPECTED: Medco said in February that it would earn 88 cents to 89 cents per share in the first quarter. Analysts polled by FactSet expect Medco to report earnings of 88 cents per share on $17.06 billion in revenue.

For the full year, Medco currently expects an adjusted profit of $3.99 to $4.12 per share in 2011. Analysts are forecasting $4.07 per share on average.

LAST YEAR'S QUARTER: In the first quarter of 2010, the Franklin Lakes, N.J., company earned 73 cents per share excluding one-time costs. Its revenue totaled $16.31 billion.