SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: October 30, 1996
Express Scripts, Inc.
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(Exact Name of Registrant as specified in its Charter)
Delaware 0-20199 43-1420563
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(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of corporation) Identification No.)
14000 Riverport Drive, Maryland Heights, Missouri 63043
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (314) 770-1666
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(Former name or former address, if changed since last report)
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Item 5. Other Events
On October 25, 1996, Express Scripts, Inc. issued a press release, a copy
of which is attached hereto as Exhibit 99.1, and incorporated herein by
reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) The following exhibit is filed as part of this report on Form 8-K:
Exhibit 99.1 Press release, dated October 25, 1996, by Express
Scripts, Inc.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EXPRESS SCRIPTS, INC.
Date: October 30, 1996 By:________________________
Barrett A. Toan, President
and Chief Executive Officer
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
99.1 Press release, dated October 25, 1996 by Express Scripts, Inc.
EXHIBIT 99.1
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EXPRESS SCRIPTS REPORTS A 45.2% INCREASE IN EARNINGS;
ADOPTS STOCK REPURCHASE PROGRAM
STATEMENTS INCLUDED IN THIS PRESS RELEASE MAY CONTAIN FORWARD-LOOKING
STATEMENTS, INCLUDING BUT NOT LIMITED TO STATEMENTS OF THE COMPANY'S PLANS,
OBJECTIVES, EXPECTATIONS OR INTENTIONS, THAT INVOLVE RISKS AND UNCERTAINTIES.
THE COMPANY'S ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THOSE PROJECTED OR
SUGGESTED IN ANY FORWARD-LOOKING STATEMENT DUE TO A VARIETY OF FACTORS. KEY
FACTORS RELATING TO ANY FORWARD-LOOKING STATEMENT INCLUDE HEIGHTENED
COMPETITION; THE POSSIBLE TERMINATION OF THE COMPANY'S CONTRACTS WITH CERTAIN
CLIENTS; CHANGES IN PRICING, DISCOUNT OR REBATE PRACTICES OF PHARMACEUTICAL
MANUFACTURERS; ADVERSE RESULTS IN CERTAIN LITIGATION AND REGULATORY MATTERS;AND
THE ADOPTION OF ADVERSE LEGISLATION OR REGULATIONS OR A CHANGE IN THE
INTERPRETATION OF EXISTING LEGISLATION OR REGULATIONS;AND OTHER RISKS DESCRIBED
FROM TIME TO TIME IN THE COMPANY'S PUBLIC FILINGS. IN CONNECTION WITH ANY
FORWARD-LOOKING STATEMENT RELATING TO FUTURE MEMBERSHIP LEVELS, FACTORS THAT
COULD AFFECT ACTUAL RESULTS INCLUDE THE ABILITY OF THE COMPANY TO CONSUMMATE
CONTRACT NEGOTIATIONS WITH PROSPECTIVE CLIENTS; COMPETITION IN THE BIDDING AND
PROPOSAL PROCESS; AND RELATED MATTERS.
ST. LOUIS, October 25, 1996 -- Express Scripts, Inc. (NASDAQ:ESRX) today
reported 1996 third quarter record net income of $7.0 million, or 42 cents per
share, an increase of 45.2 percent over the net income of $4.8 million, or 31
cents per share, reported for the third quarter of 1995. These strong results
were primarily attributable to an increase in membership to 9.5 million members,
up from 8.1 million members served for the comparable period of 1995.
The increase in membership resulted in higher numbers of pharmacy claims
processed and mail pharmacy prescriptions dispensed, increasing net revenues by
40.3 percent, to $194.3 million, for the third quarter, up from $138.5 million
for the comparable period last year. Cost of revenues, as a percentage of net
revenues, increased by 0.6 percent, compared to the third quarter of 1995, due
primarily to lower pricing resulting from continued competitive pressures and an
increasing presence in the relatively low-margin managed care sector. This
produced a gross margin of 11.3 percent for the quarter, compared to 11.9
percent for the comparable period last year, which was offset by lower selling,
general and administrative expenses, resulting in a stable operating margin of
5.3 percent for the third quarter of both 1995 and 1996. Selling, general and
administrative expenses were lower as a percentage of net revenues this quarter
due to economies of scale in servicing a larger member base and expense control.
For the first nine months of 1996, net revenues increased $155.7 million,
or 39.8 percent, to $547.4 million, up from $391.7 million a year ago. Net
income increased 39.4 percent to $19.0 million, or $1.17 per share, compared to
$13.6 million, or 89 cents per share, for the same period last year.
Under the Company's alliance with Premier, Inc., a nationwide healthcare
alliance of integrated healthcare systems, the Company now provides pharmacy
benefit services to approximately 700,000 Premier members. Express Scripts has
achieved a net increase in its total membership during this third quarter
despite the loss of more than 340,000 members due to consolidation affecting
several of its customers in the health maintenance organization ("HMO")
industry. The Company's Canadian operations showed continued strength.
Two of the Company's HMO clients, representing a total of more than
500,000 members have informed the Company that they will not be renewing their
contracts with the Company on January 1, 1997. The Company expects this loss to
be more than offset by new members anticipated to be receiving services by
January 1, 1997.
Vision and infusion therapy services continued to contribute to the
Company's revenues and income for the third quarter. "We have continued to
foster the growth potential of our vision operations by creating a new
subsidiary, Express Scripts Vision Corporation," said Barrett A. Toan, President
and Chief Executive Officer of Express Scripts. "This will position ESVC to
market eyecare networks and managed care vision services more effectively."
Express Scripts' healthcare information subsidiary, Practice Patterns
Science, Inc., has reported recent sales successes, announcing the signing of an
agreement with Bristol-Myers Squibb earlier this month to provide disease
management support services in the areas of certain cardiovascular diseases and
mental health.
Express Scripts also announced that its Board of Directors has authorized
the repurchase of up to 850,000 shares of the Company's Class A common stock.
The Company currently has approximately 8.6 million Class A common shares
outstanding, and 7,510,000 Class B common shares outstanding. The Class B shares
are held by NYLife Healthcare Management, Inc., a subsidiary of New York Life
Insurance Company.
Repurchases of the Company's Class A Common Stock may be made from time to
time by transactions in the open market or in privately negotiated transactions,
in accordance with applicable securities laws. No time limit has been placed on
the duration of the repurchase program. The purchases will be at such times and
in such amounts as the Company deems appropriate based upon prevailing market
and business conditions.
"We believe that the stock market has recently undervalued Express Scripts'
stock," said Barrett Toan. "This stock repurchase program offers us an
opportunity to enhance shareholder value."
Express Scripts is a leader in progressive healthcare management,
delivering advanced capabilities in four complementary healthcare businesses.
Express Scripts' pharmacy benefit management business currently provides managed
prescription drug services to approximately 9.5 million members nationally.
Practice Patterns Science, Inc., a subsidiary of Express Scripts, offers
provider profiling and disease state management support services linking
healthcare data from all points of care. Express Scripts Vision Corporation and
PhyNet, Inc. form the Company's eyecare management business. Express Scripts'
IVTx applies managed care principles to infusion therapy management. Express
Scripts' businesses serve HMOs, third-party administrators, insurance companies,
unions and self-insured employers. Express Scripts is headquartered in St.
Louis, Missouri.(http://www.express-scripts.com)
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EXPRESS SCRIPTS, INC.
Statement of Operations
(in thousands, except per share and percentage data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
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1996 1995 % change 1996 1995 % change
------------ ----------- ----------- ------------ ----------- ------------
Revenues
<S> <C> <C> <C> <C>
Net revenues $194,324 $138,518 40.3% $547,437 $391,702 39.8%
------------ ----------- ------------ -----------
Cost and expenses:
Cost of revenues 172,316 121,955 41.3 484,098 342,715 41.3
Selling, general & 11,668 9,199 26.8 34,310 27,568 24.5
administrative
------------ -----------
------------ -----------
183,984 131,154 40.0 518,408 370,283 40.0
------------ -----------
------------ -----------
Operating income 10,340 7,364 40.4 29,029 21,419 35.5
------------ ----------- ------------ -----------
Other income (expense):
Interest income 1,117 230 385.7 2,256 595 279.2
Interest expense (13) (6) 116.7 (38) (75) -49.3
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1,104 224 392.9 2,218 520 326.5
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Income before income taxes 11,444 7,588 50.8 31,247 21,939 42.4
Provision for income taxes 4,430 2,756 60.7 12,250 8,316 47.3
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Net income $7,014 $4,832 45.2 $18,997 $13,623 39.4
============ =========== ============ ===========
Primary earnings per share $0.42 $0.31 35.5 $1.17 $0.89 31.5
============ =========== ============ ===========
Weighted average number of
common shares outstanding
during the period 16,739 15,291 16,263 15,254
============ =========== ============ ===========
</TABLE>
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EXPRESS SCRIPTS, INC.
Balance Sheet
($ in thousands)
(Unaudited)
[CAPTION]
<TABLE>
September 30 December 31 September 30
1996 1995 1995
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<S> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $7,601 $11,506 $4,695
Short term investments 53,831 ---- ----
Receivables, net 158,366 116,972 108,429
Inventories 21,951 13,853 14,749
Deferred taxes and prepaid expenses 2,102 2,084 1,205
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Total current assets 243,851 144,415 129,078
Property and equipment (net) 20,817 16,912 16,185
Other assets 13,894 2,761 2,926
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Total assets $278,562 $164,088 $148,189
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Liabilities and Stockholders' Equity
Current liabilities:
Claims payable $83,558 $60,915 $61,080
Accounts payable 12,714 12,963 6,243
Accrued expenses 18,962 11,884 8,381
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Total current liabilities 115,234 85,762 75,704
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Deferred income taxes 1,459 947 847
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Stockholders' equity 161,869 77,379 71,638
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Total liabilities and stockholders' equity $278,562 $164,088 $148,189
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</TABLE>
