SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FROM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: October 31, 1997
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)
<PAGE>
Item 5. Other Events
On October 23, 1997, 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 23, 1997, by Express
Scripts, Inc.
<PAGE>
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 31, 1997 By:/S/ BARRETT A. TOAN
-------------------
Barrett A. Toan
President
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
99.1 Press release, dated October 23, 1997, by Express Scripts, Inc.
EXHIBIT 99.1
EXPRESS SCRIPTS REPORTS STRONG GROWTH AND
RECORD INCOME FOR THIRD QUARTER OF 1997
ENROLLMENT GAINS PACE 64.6 PERCENT REVENUE GAIN;
22.8 PERCENT NET INCOME INCREASE
ST. LOUIS, Oct. 23, 1997--Express Scripts, Inc. (NASDAQ:ESRX) today
reported another record quarter of sales and revenue growth, producing net
income of $8.6 million in 1997's third quarter, up 22.8 percent compared with
the $7.0 million earned in the third quarter of 1996. Per share net income
increased 23.8 percent, rising to 52 cents from 42 cents the prior year.
Revenues reached a record $319.9 million for the third quarter of this year, an
increase of 64.6 percent from $194.3 million for the period in 1996.
Enrollment in Express Scripts' pharmacy benefit management (PBM) programs
grew by 600,000 members, reaching a total of approximately 12.2 million at
September 30, 1997 compared with 11.6 million at the end of the second quarter
of this year. Express Scripts has enrolled approximately 100,000 additional
members as of the beginning of the fourth quarter, pushing total enrollment as
of October 1 to more than 12.3 million.
"Continued rapid enrollment growth in our PBM programs and solid
contributions from Express Scripts other healthcare management businesses drove
another quarter of strong fundamental earnings gains," said Barrett A. Toan,
Express Scripts' president and chief executive officer. "Express Scripts'
success has come from increasing the market penetration of its PBM services,
while leveraging our independence and capacity to augment this core business
with a broad range of advanced, integrated healthcare management solutions."
Toan also announced that ESI Canada, the company's Canadian subsidiary,
will provide PBM services to First Canadian Health Management Corporation, Inc.,
a subsidiary of Aetna Life Insurance Company of Canada. The program for which
services will be provided covers 640,000 registered Indians and Inuit in Canada,
and will commence on July 1, 1998 and run through June 30, 2003.
"With the First Canadian Health Management contract and the Bell Canada
agreement with Manulife announced earlier this year, ESI Canada will service two
of the largest PBM contracts awarded in Canada during 1997," Toan noted. "Our
Canadian operations cover more than 900,000 lives as of the end of the third
quarter and growth prospects in Canada continue to be strong."
Also during the quarter, Express Scripts earned the highest ranking for
overall customer satisfaction for the second consecutive year in an independent
industry survey conducted by the Pharmacy Benefit Management Institute (PBMI).
The annual survey, which looked at nine different PBMs, placed Express Scripts
number one in nine of 21 categories and in the top two of 18 categories. The
company achieved particularly high marks for cost management, consultative
services, clinical and administrative capabilities, and pharmacy network.
"Our second consecutive top ranking in the PBMI survey illustrates that we
have been able to deliver quality service, while continuing to drive down
pharmacy benefit costs," Toan added.
Express Scripts noted several additional achievements during the quarter,
including:
* Its strategic partnership with Premier, a nationwide alliance of integrated
healthcare providers, continued to expand, with ESI providing PBM services to
more than 900,000 lives.
* Express Health LineSM, the company's informed decision counseling
service, is now serving approximately 700,000 members of NYLCare Health Plans,
Inc. The NYLCare agreement is expected to expand service to approximately one
million lives by the end of 1997.
* ESI Vision Care introduced the Universal Allowance Plan, a uniquely
designed vision benefit program with a simple, customer-friendly approach.
* Express TherapeuticsSM, the company's advanced drug utilization review,
drug therapy and clinical intervention product, now has seven contracts covering
175,000 lives, which it will implement by Jan. 1, 1998.
* Express PreferenceSM, a drug therapy management program, saw total
enrollment reach 4.2 million lives.
Express Scripts' complementary healthcare business units all contributed to
the company's performance during the third quarter of 1997. Practice Patterns
Science continues to enhance its healthcare decision support offerings. Therapy
days at IVTx, the company's home infusion services division, and orders
processed by ESI Vision Care increased 28.2 percent for the third quarter
compared to the prior year. Combined revenues for IVTx, ESI Vision Care, and
integrated medical and drug data analysis services increased 34.3 percent for
the third quarter of 1997 compared with the same period in 1996.
The cost of revenues for the third quarter of 1997 increased 69.2 percent
to $291.6 million, compared with $172.3 million for 1996's third quarter.
Selling, general and administrative (SG&A) expenses increased at a significantly
slower rate, rising 35.1 percent to $15.8 million this year from $11.7 million
in 1996. As a percentage of net revenue, SG&A expenses decreased to 4.9 percent
this year from 6.0 percent in 1996.
"Express Scripts continued to post solid improvements in baseline
profitability measures driven by revenue gains, a decline in our SG&A expense
ratios and additional economies of scale," added Toan. "As has been the case
throughout the year, our gross margins continue to be affected by competitive
factors in the market and the trend toward higher utilization by customers of
Express Scripts' own pharmacy network, which results in drug ingredient cost
being included in both revenues and cost of revenues."
The company finished the third quarter with the strongest cash position in
its history. Express Scripts' cash and cash equivalents totaled $45.7 million as
of September 30, 1997, up 81.4 percent from the $25.2 million on the balance
sheet at the end of the prior calendar year and 501.8 percent compared with $7.6
million on September 30, 1996.
Express Scripts' other income for the third quarter of 1997 increased 43.1
percent to $1.6 million from $1.1 million in the comparable period of 1996.
For the first nine months of 1997, Express Scripts reported net income of
$24.4 million, an increase of 28.4 percent compared with $19.0 million in the
first three quarters of last year. Per share net income for the nine months
ended September 30, 1997 was $1.48, up 26.5 percent from the $1.17 per share
reported for the period in 1996. Net revenues grew by 61.2 percent to $882.4
million in the period this year from $547.4 million in 1996.
Express Scripts, Inc. is a leader in progressive healthcare management,
delivering advanced capabilities in several complementary healthcare businesses.
Express Scripts' pharmacy benefit management business currently provides managed
prescription drug services to more than 12.3 million members in the United
States and Canada. Practice Patterns Science, Inc. offers healthcare information
management services, linking healthcare data from all points of care. ESI Vision
Care is the company's eyecare management business. IVTx applies managed care
principles to infusion therapy management. Health Management Services provides
comprehensive informed decision counseling and disease management services
through a 24-hour call center staffed by nurses and pharmacists. Express
Scripts' businesses serve HMOs, third-party administrators, insurance companies,
unions and self-insured employers. Express Scripts is headquartered in St.
Louis.
THIS PRESS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS, INCLUDING, BUT NOT
LIMITED TO, STATEMENTS RELATED TO THE COMPANY'S PLANS, OBJECTIVES, EXPECTATIONS
OR INTENTIONS. THESE STATEMENTS INVOLVE RISKS AND UNCERTAINTIES THAT MAY CAUSE
THE COMPANY'S ACTUAL RESULTS TO DIFFER SIGNIFICANTLY FROM THOSE PROJECTED OR
SUGGESTED. FACTORS WHICH MAY IMPACT ANY FORWARD-LOOKING STATEMENT INCLUDE
HEIGHTENED COMPETITION; THE POSSIBLE TERMINATION OF CONTRACTS WITH CERTAIN
CLIENTS; CHANGES IN PRICING OR DISCOUNT PRACTICES OF PHARMACEUTICAL
MANUFACTURERS; THE ABILITY OF THE COMPANY TO CONSUMMATE CONTRACT NEGOTIATIONS
WITH PROSPECTIVE CLIENTS; COMPETITION IN THE BIDDING AND PROPOSAL PROCESS;
ADVERSE RESULTS IN CERTAIN LITIGATION AND REGULATORY MATTERS; THE ADOPTION OF
ADVERSE LEGISLATION OR A CHANGE IN THE INTERPRETATION OF EXISTING LEGISLATION OR
REGULATIONS; RISKS ASSOCIATED WITH THE DEVELOPMENT OF NEW PRODUCTS; AND OTHER
RISKS DESCRIBED FROM TIME TO TIME IN THE COMPANY'S PUBLIC FILINGS WITH THE
SECURITIES AND EXCHANGE COMMISSION.
Financial tables follow:
<PAGE>
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
--------------------------- ---------------------------
1997 1996 % Change 1997 1996 % Change
<S> <C> <C> <C> <C> <C> <C>
------------ ------------ ------------ ------------ ------------
Net Revenues $319,937 $194,324 64.64% $882,442 $547,437 61.20%
------------ ------------ ------------ ------------
Cost and expenses:
Cost of revenues 291,590 172,316 69.22% 803,794 484,098 66.04%
Selling, general, & 15,758 11,668 35.05% 42,789 34,310 24.71%
administrative ------------ ------------ ------------ ------------
307,348 183,984 67.05% 846,583 518,408 63.30%
------------ ------------ ------------ ------------
Operating Income 12,589 10,340 21.75% 35,859 29,029 23.53%
------------ ------------ ------------ ------------
Other income (expense):
Interest income 1,609 1,117 44.05% 4,171 2,256 84.88%
Interest expense (29) (13) 123.08% (65) (38) 71.05%
------------ ------------ ------------ ------------
1,580 1,104 43.12% 4,106 2,218 85.12%
------------ ------------ ------------ ------------
Income before income taxes 14,169 11,444 23.81% 39,965 31,247 27.90%
Provision for income taxes 5,556 4,430 25.42% 15,580 12,250 27.18%
------------ ------------ ------------ ------------
Net income $ 8,613 $ 7,014 22.80% 24,385 $ 18,997 28.36%
============ ============ ============ ============
Primary earnings per share $0.52 $0.42 23.81% $1.48 $1.17 26.50%
============ ============ ============ ============
Weighted average number of
common shares outstanding 16,593 16,739 16,503 16,263
during the period
</TABLE>
NON-FINANCIAL DATA
(in thousands, except percentage data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
--------------------------- ----------------------------
1997 1996 % Change 1997 1996 % Change
<S> <C> <C> <C> <C> <C> <C>
------------ ------------ ------------ -------------- ------------- ---------
Pharmacy network claims 18,160 13,971 29.98% 52,958 41,846 26.55%
processed
Mail pharmacy claims 1,021 696 46.70% 2,865 2,020 41.83%
filled
Number of pharmacies in 50.3 47.1 6.79%
network
Pharmacy benefit covered 12,200 9,500 28.42%
lives
Drug spend $630,162 $414,759 51.93% 1,758,490 $1,164,129 51.06%
</TABLE>
<PAGE>
EXPRESS SCRIPTS, INC.
BALANCE SHEET
($ in thousands)
(unaudited)
<TABLE>
<CAPTION>
September 30, December 31, September 30,
1997 1996 1996
<S> <C> <C> <C>
----------------- ----------------- -----------------
Assets
Current assets
Cash and cash equivalents $ 45,742 $ 25,211 $ 7,601
Short term investments 57,172 54,388 53,831
Receivables, net 202,624 163,805 158,366
Inventories 20,758 17,491 21,951
Deferred taxes and prepaid expenses 3,066 2,254 2,102
----------------- ----------------- -----------------
Total current assets 329,362 263,149 243,851
----------------- ----------------- -----------------
Property and equipment (net) 26,797 21,447 20,817
Other assets 12,275 15,829 13,894
================= ================= =================
Total assets $368,434 $300,425 $278,562
================= ================= =================
Liabilities and Stockholders' Equity
Current liabilities
Claims payable $132,492 $ 98,865 $ 83,558
Accounts payable 20,267 16,347 12,714
Accrued expenses 21,554 19,678 18,962
----------------- ----------------- -----------------
Total current liabilities 174,313 134,890 115,234
----------------- ----------------- -----------------
Deferred income taxes 1,180 1,445 1,459
Total stockholders' equity 192,941 164,090 161,869
================= ================= =================
Total liabilities and stockholders' equity $368,434 $300,425 $278,562
================= ================= =================
</TABLE>
