St. Louis, MO – Express Scripts Holding Company (Nasdaq: ESRX) recently announced 2016 third quarter net income of $722.9 million, or $1.15 per diluted share. 2016 third quarter adjusted earnings per diluted share was $1.74.1
“The healthcare industry demands that we stay ahead of future trends and deliver solutions to emerging issues facing today’s market,” said Tim Wentworth, CEO and President. “Doing so deepens the trusted relationships we have built with our clients, resulting in another strong year in terms of client retention and new sales.”
Third Quarter 2016 Review
The following compares third quarter 2016 and 2015 operating results:
- Adjusted claims of 312.2 million, down 5%, largely due to faster roll-off of the Coventry business
- Net income of $722.9 million, up 9%
- Diluted earnings per share of $1.15, up 19%
- EBITDA of $1,948.1 million, up 8% from 2015 adjusted EBITDA
- EBITDA per adjusted claim of $6.24, up 13% from 2015 adjusted EBITDA per adjusted claim
- Adjusted net income of $1,091.6 million, up 10%
- Adjusted diluted earnings per share of $1.74, up 20%
- Net cash flow provided by operating activities of $1,480.4 million, up 87%
In July 2016, the Company issued senior notes consisting of: $1,000.0 million aggregate principal amount of 3.000% senior notes due July 2023, $1,500.0 million aggregate principal amount of 3.400% senior notes due March 2027 and $1,500.0 million aggregate principal amount of 4.800% senior notes due July 2046. The Company used the net proceeds to repay a portion of its 2015 two-year term loan, to complete a tender offer for and follow-on redemption of its 2.650% senior notes due February 2017, to complete a tender offer for a portion of each of the 7.125% senior notes due March 2018 issued by Medco Health Solutions, Inc., the 7.250% senior notes due June 2019 issued by Express Scripts, Inc. and the Company’s 6.125% senior notes due November 2041 and for other general corporate purposes. Total cash payments related to the above, excluding accrued interest, were $3,919.6 million, which included approximately $136.0 million of repayment costs.
In August 2016, the Company settled the accelerated share repurchase (“ASR”) program announced in February 2016, and received 6.2 million additional shares, resulting in a total of 38.3 million shares repurchased under the program. Including the 6.2 million shares received under the 2016 ASR program, the Company repurchased a total of 14.1 million shares under our share repurchase program for $1,132.5 million during the quarter.
The Company narrowed its 2016 earnings per diluted share guidance from a range of $4.45 to $4.55 to a range of $4.47 to $4.53, which maintains the mid-point of $4.50 and represents growth of 26% to 27% over 2015. The Company narrowed its 2016 adjusted earnings per diluted share guidance from a range of $6.33 to $6.43 to a range of $6.36 to $6.42, which raises the mid-point to $6.39 and represents growth of 15% to 16% over 2015. Additional details on this guidance can be found in the full release including items excluded from the adjusted earnings per diluted share guidance range.
The Company expects total adjusted claims for the fourth quarter of 2016 to be in the range of 314 million to 329 million. Diluted earnings per share for the fourth quarter of 2016 is expected to be in the range of $1.38 to $1.44, which represents growth of 22% to 27% over the fourth quarter of 2015. Adjusted diluted earnings per share for the fourth quarter of 2016 is estimated to be in the range of $1.84 to $1.90, which represents growth of 18% to 22% over the fourth quarter of 2015. Additional details on this guidance can be found in the full release including items excluded from the adjusted earnings per diluted share guidance range.
2016 Business Outlook
The Company is increasing its expected 2017 retention rate for the 2016 selling season to a range of 97% – 98% from a range of 96% – 98%, excluding the impact of the remaining Coventry business rolling off in 2017, representing approximately 1% of claims.
The complete results release is available here: Express Scripts 2016 Third Quarter Results
Source: Express Scripts