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Express Scripts Profit Lower than Expected

Wednesday, 22 February 2012 05:02 PM

Express Scripts Inc., which is buying rival pharmacy benefit manager Medco Health Solutions Inc. for $29 billion, reported lower-than-expected fourth-quarter earnings on Wednesday on higher costs, including an unexpected tax expense.

Express said it would not provide a detailed forecast for 2012 until after completion of the Medco deal, which both companies still expect will close in the first half of the year.

It did reiterate that it expects client retention to be greater than 97 percent, which should give comfort to investors concerned about the impact of Walgreen Co's withdrawal from the Express pharmacy network.

The company said it still expects 2012 claims growth to be flat to 2 percent.

Excluding items, Express earned 82 cents per share for the quarter, which was 3 cents shy of analysts' average expectations, according to Thomson Reuters I/B/E/S.

The company posted a net profit of $290.4 million, or 59 per share, compared with a profit of $329.6 million or 62 cents per share a year ago.

Revenue rose about 7 percent to $12.1 billion, topping Wall Street Estimates of $11.6 billion.

Selling, general and administrative costs for the quarter rose to $269.6 million from $215.5 million, including an unexpected $11 million charge for tax items.

Pharmacy benefit managers, or PBMs, administer drug benefits for employers and health plans and run large mail order pharmacies.

Client use of generic drugs, which carry a higher profit margin than more expensive branded medicines, rose to 74.8 percent from 72.7 percent a year ago.

Express Scripts shares fell 1 percent to $51.06 in extended trading from a Nasdaq close at $51.63. They are up about 10 percent so far this year.

© 2018 Thomson/Reuters. All rights reserved.

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Wednesday, 22 February 2012 05:02 PM
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