Company Raises 2008 Earnings Per Share Guidance
Provides 2009 Earnings Per Share Guidance
ST. LOUIS, Oct. 30, 2008 (GLOBE NEWSWIRE) -- Express Scripts, Inc. (Nasdaq:ESRX) announced third quarter net income from continuing operations of $203.0 million, or $0.81 per diluted share, representing a 33% increase over $0.61 on an adjusted basis for the same quarter last year. The Company reported year to date cash flow from continuing operations of $727.1 million compared to $505.8 million for year to date 2007.
"In the current economic environment, plan sponsors need us more than ever to help lower their pharmacy spend," stated George Paz, president, chief executive officer and chairman. "As our consumer strategy initiative continues to gain traction in the marketplace, we are demonstrating success in driving to lowest net cost, increasing member engagement and enabling better health and value."
Q3 2008 Financial Highlights (comparative data for 2007 is reflected on an adjusted basis - see tables 2 and 3 below)
* To be consistent with industry practice, retail co-payments are now
included in revenues and cost of revenues. All prior periods have
been adjusted to reflect this change, which only affects revenues
and cost of revenues, and has no impact on gross profit or net
income.
* The Company's industry-leading generic utilization rate increased
to 66.2% from 62.2% last year.
* Gross profit increased 18% to $520.4 million from $440.1 million in
the third quarter of 2007.
* EBITDA increased 15% to $354.0 million from $307.0 million last
year and EBITDA per adjusted claim increased 16% to $2.87 from
$2.48 last year.
* Net income from continuing operations increased 28% to $203.0
million from $158.0 million in the third quarter of 2007.
-- Net income includes a $2.7 million non-recurring state tax
benefit.
2008 Guidance
The Company now believes its 2008 earnings per diluted share from continuing operations will be in a range of $3.07 to $3.10. Cash flow from continuing operations is expected to be in a range of $1.0 to $1.1 billion.
2009 Guidance
As a result of the expected growth in generic utilization, home delivery and specialty pharmacy management, as well as lower drug purchasing costs, the Company expects its 2009 diluted earnings per share will be in a range of $3.63 to $3.73.
About Express Scripts
Express Scripts, Inc. is one of the largest PBM companies in North America, providing PBM services to thousands of client groups, including managed-care organizations, insurance carriers, employers, third-party administrators, public sector, workers' compensation, and union-sponsored benefit plans.
Express Scripts provides integrated PBM services, including network-pharmacy claims processing, home delivery services, benefit-design consultation, drug-utilization review, formulary management, and medical- and drug-data analysis services. The Company also distributes a full range of biopharmaceutical products directly to patients or their physicians, and provides extensive cost-management and patient-care services.
Express Scripts is headquartered in St. Louis, Missouri. More information can be found at http://www.express-scripts.com, which includes expanded investor information and resources. More information on the Center for Cost-Effective Consumerism can be found at http://www.consumerology.org.
SAFE HARBOR STATEMENT
This press release contains forward-looking statements, including, but not limited to, statements related to the Company's plans, objectives, expectations (financial and otherwise) or intentions. Actual results may differ significantly from those projected or suggested in any forward-looking statements. Factors that may impact these forward-looking statements can be found in the Management's Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-Q on file with the SEC. A copy of this form can be found at the investor relations section of Express Scripts web site at http://www.express-scripts.com
We do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
EXPRESS SCRIPTS, INC.
Unaudited Consolidated Statement of Operations
Three months ended Nine months ended
September 30, September 30,
(in millions, except per -------------------- --------------------
share data) 2008 2007 2008 2007
--------- --------- --------- ---------
Revenues(1) $ 5,450.5 $ 5,358.2 $16,472.1 $16,270.7
Cost of revenues(1) 4,930.1 4,918.1 14,983.0 14,974.3
--------- --------- --------- ---------
Gross profit 520.4 440.1 1,489.1 1,296.4
Selling, general and
administrative 189.7 174.4 547.1 515.1
--------- --------- --------- ---------
Operating income 330.7 265.7 942.0 781.3
Other income (expense):
Non-operating (charges),
net (2.0) 0.2 (2.0) (18.6)
Undistributed loss from
joint venture -- (0.3) (0.3) (1.1)
Interest income 2.1 2.7 10.8 8.1
Interest expense (15.7) (31.3) (56.1) (79.1)
--------- --------- --------- ---------
(15.6) (28.7) (47.6) (90.7)
--------- --------- --------- ---------
Income before income taxes 315.1 237.0 894.4 690.6
Provision for income taxes 112.1 90.3 321.1 256.2
--------- --------- --------- ---------
Net income from continuing
operations 203.0 146.7 573.3 434.4
Net loss from discontinued
operations, net of tax (1.1) (3.8) (4.0) (5.1)
--------- --------- --------- ---------
Net income $ 201.9 $ 142.9 $ 569.3 $ 429.3
========= ========= ========= =========
Weighted average number of
common shares outstanding
during the period:
Basic: 247.1 254.2 249.3 263.1
Diluted: 250.3 257.3 252.7 266.3
Basic earnings per share:
Continuing operations $ 0.82 $ 0.57 $ 2.30 $ 1.65
Discontinued operations -- (0.01) (0.02) (0.02)
Net earnings $ 0.82 $ 0.56 $ 2.28 $ 1.63
Diluted earnings per share:
Continuing operations $ 0.81 $ 0.57 $ 2.27 $ 1.63
Discontinued operations -- (0.01) (0.02) (0.02)
Net earnings $ 0.81 $ 0.56 $ 2.25 $ 1.61
(1) Includes retail pharmacy co-payments of $733.7 million and $864.4
million for the three months ended September 30, 2008 and 2007,
respectively, and $2,445.5 million and $2,694.0 million for the
nine months ended September 30, 2008 and 2007, respectively.
EXPRESS SCRIPTS, INC.
Unaudited Consolidated Balance Sheet
Sept. 30, Dec. 31,
(in millions, except share data) 2008 2007
--------- ---------
Assets
Current assets:
Cash and cash equivalents $ 227.1 $ 434.7
Restricted cash and investments 3.5 2.2
Receivables, net 1,228.3 1,184.6
Inventories 158.6 166.1
Deferred taxes 113.3 121.1
Prepaid expenses and other current assets 64.2 18.7
Current assets of discontinued operations 2.0 40.4
--------- ---------
Total current assets 1,797.0 1,967.8
Property and equipment, net 216.9 215.5
Goodwill 2,905.8 2,695.3
Other intangible assets, net 342.8 342.0
Other assets 36.8 30.2
Non-current assets of discontinued operations -- 5.6
--------- ---------
Total assets $ 5,299.3 $ 5,256.4
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Claims and rebates payable $ 1,301.4 $ 1,258.9
Accounts payable 541.4 517.3
Accrued expenses 388.3 432.5
Current maturities of long-term debt 320.1 260.1
Current liabilities of discontinued operations 1.1 6.2
--------- ---------
Total current liabilities 2,552.3 2,475.0
Long-term debt 1,520.3 1,760.3
Other liabilities 361.2 324.7
--------- ---------
Total liabilities 4,433.8 4,560.0
--------- ---------
Stockholders' Equity:
Preferred stock, 5,000,000 shares authorized,
$0.01 par value per share; and no shares
issued and outstanding -- --
Common stock, 1,000,000,000 shares authorized,
$0.01 par value; shares issued: 318,940,000
and 318,886,000, respectively; shares
outstanding: 247,459,000 and 252,371,000,
respectively 3.2 3.2
Additional paid-in capital 627.2 564.5
Accumulated other comprehensive income 16.9 20.9
Retained earnings 3,154.2 2,584.9
--------- ---------
3,801.5 3,173.5
Common stock in treasury at cost, 71,481,000
and 66,515,000 shares, respectively (2,936.0) (2,477.1)
--------- ---------
Total stockholders' equity 865.5 696.4
--------- ---------
Total liabilities and stockholders' equity $ 5,299.3 $ 5,256.4
========= =========
EXPRESS SCRIPTS, INC.
Unaudited Condensed Consolidated Statement of Cash Flows
Nine months ended
September 30,
--------------------
(in millions) 2008 2007
--------- ---------
Cash flows from operating activities:
Net income $ 569.3 $ 429.3
Net loss from discontinued operations, net of tax 4.0 5.1
--------- ---------
Net income from continuing operations 573.3 434.4
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 72.9 74.3
Non-cash adjustments to net income 100.6 45.2
Changes in operating assets and liabilities:
Claims and rebates payable 33.7 (72.0)
Other net changes in operating assets and
liabilities (53.4) 23.9
--------- ---------
Net cash provided by operating activities --
continuing operations 727.1 505.8
Net cash provided by (used in) operating
activities -- discontinued operations 1.9 (7.5)
--------- ---------
Net cash flows provided by operating activities 729.0 498.3
--------- ---------
Cash flows from investing activities:
Purchases of property and equipment (59.9) (47.5)
Acquisition, net of cash (246.5) --
Short-term investments transferred from cash (49.3) --
Proceeds from sale of businesses 27.7 --
Sale of marketable securities -- 34.2
Other (0.9) (0.6)
--------- ---------
Net cash used in investing activities --
continuing operations (328.9) (13.9)
Net cash used in investing activities --
discontinued operations -- (2.0)
--------- ---------
Net cash used in investing activities (328.9) (15.9)
--------- ---------
Cash flows from financing activities:
Proceeds from long-term debt -- 700.0
Repayment of long-term debt (180.1) (120.1)
Repayments of revolving credit line, net -- (50.0)
Tax benefit relating to employee stock
compensation 39.2 43.7
Treasury stock acquired (494.4) (1,140.3)
Net proceeds from employee stock plans 29.2 47.1
Deferred financing fees -- (1.3)
--------- ---------
Net cash used in financing activities (606.1) (520.9)
--------- ---------
Effect of foreign currency translation adjustment (1.6) 3.5
--------- ---------
Net decrease in cash and cash equivalents (207.6) (35.0)
Cash and cash equivalents at beginning of period 434.7 131.0
--------- ---------
Cash and cash equivalents at end of period $ 227.1 $ 96.0
========= =========
EXPRESS SCRIPTS, INC.
(In millions, except per claim and per share data)
Table 1
Unaudited Operating Statistics
---------------------------------------------------------------------
3 Months 3 Months 3 Months 3 Months 3 Months
Ended Ended Ended Ended Ended
9/30/2008 6/30/2008 3/31/2008 12/31/2007 9/30/2007
--------- --------- --------- ---------- ---------
Revenues
--------
PBM 4,492.8 4,590.7 4,558.5 4,622.9 4,476.8
SAAS 957.7 940.1 932.3 930.5 881.4
-----------------------------------------------------
Total
consolidated
revenues 5,450.5 5,530.8 5,490.8 5,553.4 5,358.2
=====================================================
Claims Detail
-------------
Network(1) 91.5 96.1 98.2 96.9 92.1
Home delivery 10.3 10.3 10.1 10.3 10.2
--------- --------- --------- --------- ---------
Total PBM
claims 101.8 106.4 108.3 107.2 102.3
--------- --------- --------- --------- ---------
Adjusted PBM
claims(2) 122.4 126.9 128.5 127.8 122.7
========= ========= ========= ========= =========
SAAS claims(3) 1.1 1.1 1.1 1.2 1.2
--------- --------- --------- --------- ---------
Total adjusted
claims(4) 123.5 128.0 129.6 129.0 123.9
========= ========= ========= ========= =========
Per Adjusted
Claim
------------
Adjusted
EBITDA(5) $ 2.87 $ 2.67 $ 2.46 $ 2.49 $ 2.48
---------------------------------------------------------------------
Table 2
Calculation of 2007 Adjusted Operating Income and EBITDA
---------------------------------------------------------------------
3 Months Ended September 30, 2007
---------------------------------
PBM SAAS Total
---------------------------------
Operating Income, as reported $ 269.9 $ (4.2) $ 265.7
---------------------------------
Non-recurring items, majority of
which relates to bad debt charge
in specialty distribution line of
business -- 18.5 18.5
---------------------------------
Adjusted Operating Income $ 269.9 $ 14.3 $ 284.2
=================================
EBITDA, as reported(5) $ 288.5
Non-recurring items, majority of
which relates to bad debt charge
in specialty distribution line of
business 18.5
---------
Adjusted EBITDA $ 307.0
=========
The Company is providing adjusted operating income and EBITDA
excluding the impact of non-recurring charges in order to compare the
underlying financial performance to prior periods.
---------------------------------------------------------------------
Table 3
2007 Unaudited Earnings From Continuing Operations Excluding
Non-recurring Items
---------------------------------------------------------------------
3 Months
Ended
9/30/2007
---------
Reported income before taxes $ 237.0
Non-recurring items, majority of which relates to bad debt
charge in specialty distribution line of business 18.5
Transaction costs for terminated proposal to acquire
Caremark, less special dividend received on Caremark and
gain on the sale of Caremark stock (0.2)
---------
Income before tax excluding non-recurring items 255.3
Provision for income taxes 97.3
---------
Adjusted net income from continuing operations $ 158.0
=========
Weighted average number of share outstanding during the
period - diluted 257.3
=========
Diluted earnings per share excluding non-recurring items $ 0.61
Diluted earnings per share from continuing operations as
reported 0.57
---------
Impact of non-recurring items $ (0.04)
=========
The Company is providing diluted earnings per share excluding the
impact of certain charges in order to compare the underlying
financial performance to prior periods.
---------------------------------------------------------------------
EXPRESS SCRIPTS, INC.
Notes to Unaudited Operating Statistics
(in millions)
(1) Network claims exclude drug formulary only claims where we only
administer the clients formulary and approximately 0.5 million manual
claims per quarter.
(2) PBM adjusted claims represent network claims plus mail claims,
which are multiplied by 3, as mail claims are typically 90 day claims
and network claims are generally 30 day claims. Adjusted claims
calculated from the table may differ due to rounding.
(3) Specialty and Ancillary Services (SAAS) claims represent the
distribution of pharmaceuticals through Patient Assistance Programs
and the distribution of pharmaceuticals where we have been selected
by the pharmaceutical manufacturer as part of a limited distribution
network. They also represent the distribution of specialty drugs
through our CuraScript subsidiary.
(4) Total adjusted claims includes PBM adjusted claims plus SAAS
claims.
(5) The following is a reconciliation of EBITDA from continuing
operations to net income from continuing operations and to net cash
provided by operating activities from continuing operations as the
Company believes they are the most directly comparable measures
calculated under Generally Accepted Accounting Principles:
3 months ended 9 months ended
September 30, September 30,
------------------ ------------------
2008 2007 2008 2007
-------- -------- -------- --------
Net income from continuing
operations $ 203.0 $ 146.7 $ 573.3 $ 434.4
Income taxes 112.1 90.3 321.1 256.2
Depreciation and
amortization* 23.3 22.8 72.9 74.3
Interest expense, net 13.6 28.6 45.3 71.0
Undistributed loss from joint
venture -- 0.3 0.3 1.1
Non-operating charges, net 2.0 (0.2) 2.0 18.6
-------- -------- -------- --------
EBITDA from continuing
operations 354.0 288.5 1,014.9 855.6
Current income taxes (94.3) (90.7) (289.2) (262.9)
Interest expense less
amortization (13.1) (28.0) (43.5) (69.4)
Undistributed loss from joint
venture -- (0.3) (0.3) (1.1)
Non-operating charges, net (2.0) 0.2 (2.0) (18.6)
Other adjustments to reconcile
net income to net cash
provided by operating
activities (0.3) 80.8 47.2 2.2
-------- -------- -------- --------
Net cash provided by operating
activities from continuing
operations $ 244.3 $ 250.5 $ 727.1 $ 505.8
======== ======== ======== ========
EBITDA is earnings before other income (expense), interest, taxes,
depreciation and amortization, or operating income plus depreciation
and amortization. EBITDA is presented because it is a widely accepted
indicator of a company's ability to service indebtedness and is
frequently used to evaluate a company's performance. EBITDA, however,
should not be considered as an alternative to net income, as a measure
of operating performance, as an alternative to cash flow, as a measure
of liquidity or as a substitute for any other measure computed in
accordance with accounting principles generally accepted in the United
States. In addition, our definition and calculation of EBITDA may not
be comparable to that used by other companies.
* Includes depreciation and
amortization expense of:
Gross profit 5.7 6.6 20.0 24.4
Selling, general and
administrative 17.6 16.2 52.9 49.9
-------- -------- -------- --------
23.3 22.8 72.9 74.3
======== ======== ======== ========