ST. LOUIS, Feb. 25, 2009 (GLOBE NEWSWIRE) -- Express Scripts, Inc. (Nasdaq:ESRX) announced fourth quarter and full year net income from continuing operations of $206.4 million and $779.6 million, or $0.83 and $3.10 per diluted share, respectively. These results include $11.3 million ($7.3 million after tax) for charges related to a previously disclosed security incident. Fourth quarter and full year EPS grew 20% and 30%, respectively, over adjusted 2007 results.
The Company reported fourth quarter cash flow from continuing operations of $368.5 million, up from $342.3 million last year. For the year, the Company reported cash flow from continuing operations of $1,095.6 million, up from $848.1 million in 2007.
"We remain intensely focused on what matters to our plan sponsors -- lowering their pharmacy spend while enabling better health and value," stated George Paz, president, chief executive officer and chairman. "Now more than ever, our aligned business model is proving critical in driving waste out of the pharmacy benefit."
"As we look to 2009 and beyond, we believe as a result of our differentiated business model, we are best positioned to deliver superior value to our clients and superior growth for our stockholders."
Fourth Quarter 2008 Review (comparative data for 2007 is reflected in tables 2-4 below)
* The Company's industry-leading generic utilization rate increased to
67.3% from 63.7% last year.
* Specialty and Ancillary Services ("SAAS") operating income increased
to $19.9 million, up 84% from $10.8 million in 2007 and increased
32% sequentially from $15.1 million in the third quarter of 2008.
* EBITDA increased 13% to $363.2 million from $320.8 million last year
and EBITDA per adjusted claim increased 16% to $2.90 from $2.49 last
year.
Full-year 2008 Review (comparative data for 2007 is reflected in tables 2-4 below)
* Generic utilization for 2008 averaged 66.1%, up from 61.8% last year. * Operating income increased to $1,280.5 million, up 18% from $1,088.4 million last year. * EBITDA increased 16% to $1,378.2 million from $1,185.9 million last year, and on a per adjusted claim basis, was $2.72, a 16% increase over 2007. * ROIC increased to 26.8%, up from 23.7% last year.
2009 Guidance
The Company reaffirmed its 2009 earnings per share guidance in the 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.
The Express Scripts, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5700
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-K 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 Year Ended
December 31, December 31,
---------------------- ----------------------
(in millions, except
per share data) 2008 2007 2008 2007
---------- ---------- ---------- ----------
Revenues (1) $ 5,505.9 $ 5,553.4 $ 21,978.0 $ 21,824.0
Cost of revenues (1) 4,954.1 5,091.0 19,937.1 20,065.2
---------- ---------- ---------- ----------
Gross profit 551.8 462.4 2,040.9 1,758.8
Selling, general and
administrative 213.3 182.9 760.4 698.0
---------- ---------- ---------- ----------
Operating income 338.5 279.5 1,280.5 1,060.8
---------- ---------- ---------- ----------
Other (expense) income:
Non-operating charges,
net -- -- (2.0) (18.6)
Undistributed loss
from joint venture -- (0.2) (0.3) (1.3)
Interest income 2.3 4.1 13.0 12.2
Interest expense (21.6) (29.3) (77.6) (108.4)
---------- ---------- ---------- ----------
(19.3) (25.4) (66.9) (116.1)
---------- ---------- ---------- ----------
Income before income
taxes 319.2 254.1 1,213.6 944.7
Provision for income
taxes 112.8 88.0 434.0 344.2
---------- ---------- ---------- ----------
Net income from
continuing operations 206.4 166.1 779.6 600.5
Net income (loss) from
discontinued
operations, net of tax 0.4 (27.6) (3.5) (32.7)
---------- ---------- ---------- ----------
Net income $ 206.8 $ 138.5 $ 776.1 $ 567.8
========== ========== ========== ==========
Weighted average
number of common
shares outstanding
during the period:
Basic: 247.6 252.3 248.9 260.4
Diluted: 249.9 256.0 251.8 264.0
Basic earnings (loss)
per share:
Continuing operations $ 0.83 $ 0.66 $ 3.13 $ 2.31
Discontinued
operations 0.00 (0.11) (0.01) (0.13)
Net earnings 0.84 0.55 3.12 2.18
Diluted earnings (loss)
per share:
Continuing operations $ 0.83 $ 0.65 $ 3.10 $ 2.27
Discontinued
operations 0.00 (0.11) (0.01) (0.12)
Net earnings 0.83 0.54 3.08 2.15
(1) Includes retail pharmacy co-payments of $708.1 million and $860.5
million for the three months ended December 31, 2008 and 2007,
respectively, and $3,153.6 million and $3,554.5 million for the years
ended December 31, 2008 and 2007, respectively.
EXPRESS SCRIPTS, INC.
Unaudited Consolidated Balance Sheet
December 31, December 31,
(in millions, except share data) 2008 2007
--------- ---------
Assets
Current assets:
Cash and cash equivalents $ 530.7 $ 434.7
Restricted cash and investments 4.8 2.2
Receivables, net 1,155.9 1,184.6
Inventories 203.0 166.1
Deferred taxes 118.2 121.1
Prepaid expenses and other current assets 31.2 18.7
Current assets of discontinued operations -- 40.4
--------- ---------
Total current assets 2,043.8 1,967.8
Property and equipment, net 222.2 215.5
Goodwill 2,881.1 2,695.3
Other intangible assets, net 332.6 342.0
Other assets 29.5 30.2
Non-current assets of discontinued operations -- 5.6
--------- ---------
Total assets $ 5,509.2 $ 5,256.4
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Claims and rebates payable $ 1,380.7 $ 1,258.9
Accounts payable 496.4 517.3
Accrued expenses 420.5 432.5
Current maturities of long-term debt 420.0 260.1
Current liabilities of discontinued operations 4.1 6.2
--------- ---------
Total current liabilities 2,721.7 2,475.0
Long-term debt 1,340.3 1,760.3
Other liabilities 369.0 324.7
--------- ---------
Total liabilities 4,431.0 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: 318,958,000
and 318,886,000, respectively; shares
outstanding: 247,649,000 and 252,371,000,
respectively 3.2 3.2
Additional paid-in capital 640.8 564.5
Accumulated other comprehensive income 6.2 20.9
Retained earnings 3,361.0 2,584.9
--------- ---------
4,011.2 3,173.5
Common stock in treasury at cost, 71,309,000
and 66,515,000 shares, respectively (2,933.0) (2,477.1)
--------- ---------
Total stockholders' equity 1,078.2 696.4
--------- ---------
Total liabilities and stockholders' equity $ 5,509.2 $ 5,256.4
========= =========
EXPRESS SCRIPTS, INC.
Unaudited Condensed Consolidated Statement of Cash Flows
Year Ended
December 31,
-----------------
(in millions) 2008 2007
------- -------
Cash flows from operating activities:
Net income $ 776.1 $ 567.8
Net loss from discontinued operations, net of tax 3.5 32.7
------- -------
Net income from continuing operations 779.6 600.5
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 97.7 97.5
Deferred income taxes 33.8 4.1
Bad debt expense 30.1 36.7
Employee stock-based compensation expense 40.2 31.6
Other, net 20.7 0.5
Changes in operating assets and liabilities, net
of changes resulting from acquisitions:
Receivables 21.9 71.6
Inventories (38.0) 25.3
Other current and non-current assets 5.4 6.9
Claims and rebates payable 113.0 (16.8)
Other current and non-current liabilities (8.8) (9.8)
------- -------
Net cash provided by operating activities --
continuing operations 1,095.6 848.1
Net cash provided by (used in) operating activities
-- discontinued operations 7.4 (20.8)
------- -------
Net cash flows provided by operating activities 1,103.0 827.3
------- -------
Cash flows from investing activities:
Purchases of property and equipment (85.8) (75.0)
Acquisition, net of cash acquired, and investment
in joint venture (251.5) (14.3)
Sale of marketable securities -- 34.2
Short term investment transferred from cash (49.3) --
Cash received from short term investment 38.9 --
Proceeds from sale of businesses 27.7 --
Other (0.6) (0.7)
------- -------
Net cash used in investing activities -- continuing
operations (320.6) (55.8)
Net cash used in investing activities --
discontinued operations -- (2.5)
------- -------
Net cash used in investing activities (320.6) (58.3)
------- -------
Cash flows from financing activities:
Proceeds from long-term debt -- 800.0
Repayment of long-term debt (260.0) (180.1)
Repayments of revolving credit line, net -- (50.0)
Tax benefit relating to employee stock-based
compensation 42.1 49.4
Treasury stock acquired (494.4) (1,140.3)
Deferred financing fees -- (1.5)
Net proceeds from employee stock plans 31.9 52.8
------- -------
Net cash used in financing activities (680.4) (469.7)
------- -------
Effect of foreign currency translation adjustment (6.0) 4.4
------- -------
Net increase in cash and cash equivalents 96.0 303.7
Cash and cash equivalents at beginning of year 434.7 131.0
------- -------
Cash and cash equivalents at end of year $ 530.7 $ 434.7
======= =======
Table 1
Unaudited Operating Statistics
(in millions, except per claim data)
---------------------------------------------------------------------
3 Months 3 Months 3 Months 3 Months 3 Months
Ended Ended Ended Ended Ended
12/31/2008 9/30/2008 6/30/2008 3/31/2008 12/31/2007
------------------------------------------------------
Revenues
PBM 4,573.1 4,492.8 4,590.7 4,558.5 4,622.9
SAAS 932.8 957.7 940.1 932.3 930.5
-----------------------------------------------------
Total
consolidated
revenues 5,505.9 5,450.5 5,530.8 5,490.8 5,553.4
=====================================================
Claims Detail
Network (1) 93.8 91.5 96.1 98.2 96.9
Home Delivery 10.1 10.3 10.3 10.1 10.3
-----------------------------------------------------
Total PBM
claims 103.9 101.8 106.4 108.3 107.2
Adjusted PBM
claims (2) 124.2 122.4 126.9 128.5 127.8
=====================================================
SAAS claims (3) 1.0 1.1 1.1 1.1 1.2
-----------------------------------------------------
Total adjusted
claims (4) 125.2 123.5 128.0 129.6 129.0
=====================================================
Per Adjusted
Claim
Adjusted EBITDA
(5) $ 2.90 $ 2.87 $ 2.67 $ 2.46 $ 2.49
---------------------------------------------------------------------
Table 2
Calculation of Adjusted Operating Income from Continuing Operations
(in millions)
---------------------------------------------------------------------
Quarterly Results: 3 Months Ended 12/31/2007
PBM SAAS Consolidated
-------------------------------
Operating income, as reported $ 280.8 $ (1.3) $ 279.5
Non-recurring legal expenses 6.0 -- 6.0
Non-recurring inventory charges in
specialty distribution line of
business -- 9.1 9.1
Non-recurring bad debt charges in
specialty distribution line of
business -- 3.0 3.0
-------------------------------
Adjusted operating income $ 286.8 $ 10.8 $ 297.6
===============================
-------------------------------
Year-to-Date Results: Year Ended 12/31/2007
PBM SAAS Consolidated
-------------------------------
Operating income, as reported $ 1,037.5 $ 23.3 $ 1,060.8
Non-recurring legal expenses 6.0 -- 6.0
Non-recurring inventory charges in
specialty distribution line of
business -- 9.1 9.1
Settlement of contractual item with
supply chain vendor (9.0) -- (9.0)
Non-recurring bad debt charges in
specialty distribution line of
business -- 21.5 21.5
-------------------------------
Adjusted operating income $ 1,034.5 $ 53.9 $ 1,088.4
===============================
The Company is providing adjusted operating income excluding the
impact of non-recurring charges in order to compare the underlying
financial performance to prior periods.
---------------------------------------------------------------------
Table 3
Calculation of Consolidated Adjusted EBITDA from Continuing Operations
(in millions)
----------------------------------------------------------------------
3 Months Ended Year Ended
EBITDA (5) 12/31/2007 12/31/2007
--------------------------
EBITDA from continuing operations, as reported $ 302.7 $ 1,158.3
Non-recurring legal expenses 6.0 6.0
Non-recurring inventory charges in specialty
distribution line of business 9.1 9.1
Settlement of contractual item with supply
chain vendor -- (9.0)
Non-recurring bad debt charges in specialty
distribution line of business 3.0 21.5
---------------------
EBITDA from continuing operations, adjusted $ 320.8 $ 1,185.9
=====================
The Company is providing adjusted EBITDA excluding the impact of
non-recurring charges in order to compare the underlying financial
performance to prior periods.
---------------------------------------------------------------------
Table 4
Unaudited Earnings Excluding Non-recurring Items
(in millions, except per share data)
---------------------------------------------------------------------
3 Months Ended Year Ended
12/31/2007 12/31/2007
----------------------------
Reported income from continuing operations
before taxes $ 254.1 $ 944.7
Non-recurring legal expenses 6.0 6.0
Non-recurring inventory charges in
specialty distribution line of business 9.1 9.1
Settlement of contractual item with supply
chain vendor -- (9.0)
Non-recurring bad debt charges in
specialty distribution line of business 3.0 21.5
Caremark transaction costs, net -- 18.6
--------------------------
Income before tax excluding non-recurring
items 272.2 990.9
Provision for income taxes 94.3 361.0
--------------------------
Adjusted net income from continuing
operations $ 177.9 $ 629.9
==========================
Weighted average number of shares
outstanding during the period - diluted 256.0 264.0
==========================
Diluted earnings per share excluding
non-recurring items $ 0.69 $ 2.38
Diluted earnings per share from continuing
operations as reported 0.65 2.27
Impact of non-recurring items $ 0.04 $ 0.11
--------------------------
The Company is providing diluted earnings per share excluding the
impact of non-recurring charges in order to compare the underlying
financial performance to prior periods.
---------------------------------------------------------------------
Table 5
Return on Invested Capital ("ROIC")
(in millions)
---------------------------------------------------------------------
2008 2007
Adjusted operating income $ 1,280.5 $ 1,088.4
Income tax 457.9 396.6
--------------------------
Net operating profit after tax ("NOPLAT") $ 822.6 $ 691.8
Stockholders' equity $ 1,078.2 $ 696.4
Interest bearing liabilities 1,760.3 2,020.4
Long-term deferred income taxes, net 313.8 278.6
--------------------------
Invested capital $ 3,152.3 $ 2,995.4
Average invested capital $ 3,073.9 $ 2,914.0
ROIC 26.8% 23.7%
---------------------------------------------------------------------
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 Year Ended
December 31, December 31,
------------------ ------------------
2008 2007 2008 2007
-------- -------- -------- --------
Net income from continuing
operations $ 206.4 $ 166.1 $ 779.6 $ 600.5
Income taxes 112.8 88.0 434.0 344.2
Depreciation and amortization* 24.7 23.2 97.7 97.5
Interest expense, net 19.3 25.2 64.6 96.2
Undistributed loss from joint
venture -- 0.2 0.3 1.3
Non-operating charges, net -- -- 2.0 18.6
-------- -------- -------- --------
EBITDA from continuing
operations 363.2 302.7 1,378.2 1,158.3
Current income taxes (110.9) (77.2) (400.2) (340.1)
Interest expense less
amortization (18.7) (24.6) (62.2) (94.0)
Undistributed loss from joint
venture -- (0.2) (0.3) (1.3)
Non-operating charges, net -- -- (2.0) (18.6)
Other adjustments to reconcile
net income to net cash
provided by operating
activities 134.9 141.6 182.1 143.8
-------- -------- -------- --------
Net cash provided by
operating activities from
continuing operations $ 368.5 $ 342.3 $1,095.6 $ 848.1
======== ======== ======== ========
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 6.3 6.9 26.3 31.3
Selling, general and
administrative 18.4 16.3 71.4 66.2
-------- -------- -------- --------
24.7 23.2 97.7 97.5
======== ======== ======== ========