NEW YORK (AP) -- Shares of pharmacy benefit manager MedcoHealth Solutions fell Monday as investors appeared concerned the company might lose its contract with managed care provider UnitedHealth Group Inc.

"Medco's shares are off today in response to a competitor's comments regarding Unitedhealth's discussion of the Medco contract in meetings with investors," said Cowen and Co. analyst Kemp Dolliver in a note to clients.

The contract represents about 22 percent of Medco's revenue and an estimated 2 percent to 3 percent of earnings per share, or about 4 to 6 cents per share, said Dolliver. The deal runs through 2009 with an option for a two-year extension.

Reportedly, Unitedhealth's management has indicated they plan to make a decision on the contract in the next 90 days.

Dolliver said it agrees with Medco that the contract has very low profitability for several reasons, including the fact that Unitedhealth already handles many prescription benefits managers in-house and therefore doesn't need to pay for all of Medco's services.

"We think today's price weakness embeds a significant portion (one-half) of the likely downside if United HealthCare were to announce a decision to go in-house in the next 90 days," said Dolliver. "Even though the consensus expects Medco to lose the contract, we think the market would react negatively initially."

He suggested, however, that going in-house might be something Unitedhealth may want to postpone until after 2011 in order to avoid service disruptions, given their current customer service challenges.

Medco's stock fell $1.59, or 3.2 percent, to $48.76. Over the past year, the stock has ranged between $28.96 and $54.62.