December 5, 2017

Express Scripts Announces 2017 Third Quarter Results

St. Louis, MO – Express Scripts Holding Company (Nasdaq: ESRX) recently announced 2017 third quarter net income of $841.7 million or $1.46 per diluted share. 2017 third quarter adjusted earnings per diluted share was $1.90.*

“We have taken significant steps forward this year to build upon our heritage of industry leadership, client alignment and quality patient care, all of which positions us for growth,” said Tim Wentworth, President and CEO of Express Scripts. “We are transforming Express Scripts to win for the long term through significant investments in technology, launches of novel solutions that address the country’s biggest healthcare challenges, and expanding our role and reach in the broader healthcare market with our agreement to acquire eviCore. Payers and patients want affordable, quality care and access to medicine. No one is better positioned than Express Scripts to put medicine within reach.”

Third Quarter 2017 Results
The following compares third quarter 2017 and 2016 operating results:

  • Adjusted claims of 343.6 million, down 1% – See Table 1
  • GAAP net income of $841.7 million, up 16%
  • GAAP earnings per diluted share of $1.46, up 27%
  • Adjusted EBITDA of $1,947.4 million, flat from 2016 EBITDA – See Table 3
  • Adjusted EBITDA per adjusted claim of $5.67, up 1% from 2016 EBITDA per adjusted claim – See Table 3
  • Adjusted net income of $1,093.6 million, flat from 2016 adjusted net income – See Tables 5 and 5A
  • Adjusted earnings per diluted share of $1.90, up 9% – See Table 4
  • Net cash flow provided by operating activities of $1,899.9 million, up 28%

2017 Guidance
The Company increased its guidance for its full year 2017 adjusted earnings per diluted share from a range of $6.95 to $7.05 to a range of $6.97 to $7.05, which represents growth of 10% over 2016 adjusted earnings per diluted share results at the mid-point of the range.

The Company expects total adjusted claims for the fourth quarter of 2017 to be in the range of 347 million to 363 million. Adjusted earnings per diluted share for the fourth quarter of 2017 is estimated to be in the range of $2.03 to $2.11, which represents growth of 8% to 12% over the fourth quarter of 2016.

Additional details on this guidance can be found in Table 6. For a discussion of the financial measures presented herein which are not calculated or presented in accordance with U.S. generally accepted accounting principles (“GAAP”), see “Supplemental Information Regarding Non-GAAP Financial Measures” below.

Contribution of Anthem, Coventry and Catamaran
The table below provides the portion of our estimated 2017 third quarter financial results attributable to Anthem, Coventry and Catamaran, to which we refer together as the “Transitioning Clients” (also see Tables 7 and 8 for further details of 2017 third quarter and 2016 full year financial results attributable to the Transitioning Clients). Based on an announcement by Anthem on October 18, 2017, Anthem will not renew its contract with the Company that expires on December 31, 2019. In addition to disclosing the impact of the estimated Anthem contribution, the tables below include the estimated contribution of the Company’s remaining business with Coventry and Catamaran, both of which were acquired and are rolling off the Company’s book of business. The Company is providing this information to assist in an analysis of the underlying performance of the Company’s Core business, which excludes the contributions from the Transitioning Clients.

Business Outlook
The Company is increasing its expected 2018 retention rate for the 2017 selling season, excluding the impact of the remaining Coventry business rolling off in 2017, to be above 95%.

The Company’s enterprise value initiative is currently estimated to cost approximately $600 million to $650 million and to deliver cumulative savings of nearly $1.2 billion by 2021. This initiative is expected to help the Company achieve its targeted compounded annual EBITDA growth rate for the Core business from 2017-2020 of 2% to 4% and drive significant value to all of its patients and clients beginning in 2018. The Company expects to formalize the plan for its enterprise value initiative by the end of 2017.

The complete results release and associated tables are available here: Express Scripts Announces 2017 Third Quarter Results

*All net income, adjusted net income, earnings per diluted share, adjusted earnings per diluted share, EBITDA, adjusted EBITDA, EBITDA per adjusted claim and adjusted EBITDA per adjusted claim amounts are presented as attributable to Express Scripts, excluding non-controlling interest representing the share allocated to members of our consolidated affiliates.

Source: Express Scipts

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