Express Scripts 4Q profit jumps 74 percent
Feb. 18, 2013
ST. LOUIS (AP) — Mail-order and online druggist Express Scripts said on Monday its earnings jumped almost 74 percent as more people used generic drugs and it continued to absorb Medco Health Solutions.
Express Scripts Holding Co. acquired Medco last April, making it the largest pharmacy benefits manager by far. It now manages more than a billion prescriptions every year.
The company's outlook for this year also topped Wall Street expectations.
Express Scripts earned $504.1 million, or 61 cents per share, in its fourth quarter, which ended Dec. 31. Its adjusted earnings were $1.05 per share, slightly better than the $1.02 per share expected by analysts polled by FactSet. Revenue more than doubled to $27.41 billion. Analysts predicted $27 billion.
In the fourth quarter a year ago, it earned $290.4 million, or 59 cents per share. Revenue was $12.1 billion.
The company's $29.1 billion acquisition of Medco made it big enough to handle the prescriptions of more than one in three Americans. Revenue and prescription counts have swelled. In the most recent quarter, the number of claims it handled more than doubled to almost 411 million.
Pharmacy benefits managers, or PBMs, run prescription drug plans for employers, insurers and other customers. They process mail-order prescriptions and handle bills for prescriptions filled at retail pharmacies. They also negotiate lower drug prices and make money by reducing costs for health plan sponsors and members.
More people used generic drugs, increasing Express Scripts' profitability. Generics boost pharmacy profits because there's a wider margin between the cost for the pharmacy to purchase the drugs and the reimbursement received.
Chairman and CEO George Paz called 2012 a "monumental year" for the company because of the Medco acquisition and its progress in integrating the two companies.
Moreover, Express Scripts and Walgreen Co., the nation's largest drugstore chain, resumed doing business last September after a split of nearly nine months. Walgreen fills prescriptions for Express Scripts, but the companies stopped doing business after they failed to agree on terms of a new contract.
Shares rose 21 percent to close the year at $54, while the Standard & Poor's 500 index rose about 13 percent.
For all of 2012, it earned $1.31 billion, or $1.76 per share. Revenue for the year doubled to $93.86 billion.
The St. Louis company projected adjusted earnings this year of $4.20 to $4.30 per share. However, it said it doesn't know yet how much it will spend on integrating Medco. Analysts were expecting a profit of $3.73 per share.