4
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: February 18, 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 of (Commission File No.) (I.R.S. Employer
corporation) Idenification 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 February 13, 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 February 13, 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: February 18, 1997 By: /S/Barrett A. Toan
Barrett A. Toan, President
and Chief Executive Officer
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
99.1 Press release, dated February 13, 1997 by Express Scripts, Inc.
<PAGE>
4
EXHIBIT 99.1
EXPRESS SCRIPTS REPORTS 42.7 PERCENT INCREASE
IN NET INCOME FOR 1996
ST. LOUIS, Feb. 13, 1997 -- Express Scripts, Inc. (NASDAQ:ESRX), today reported
net income of $26.1 million for 1996, an increase of 42.7 percent over 1995 net
income of $18.3 million. Revenues increased to $773.6 million in 1996 up from
$554.5 million in 1995, representing a 42.1 percent rate of growth. On a per
share basis, net income increased 33.3 percent to $1.60 from $1.20 last year.
Fourth quarter 1996 revenue was $226.2 million, an increase of 48.1 percent over
the $152.8 million generated in the fourth quarter of 1995. Net income for the
three months ended December 31, 1996 was $7.2 million up 52.0 percent from
1995's fourth quarter net income of $4.7 million. Per share net income rose 38.7
percent to 43 cents for the fourth quarter of 1996 compared with 31 cents for
the comparable period in 1995.
The continuing strong results for the year were principally attributable to
membership growth, increases in utilization and expense controls. According to
Barrett Toan, Express Scripts' president and chief executive officer, the
Company had membership of approximately 9.9 million at the end of 1996, compared
with 8.1 million a year earlier. As of January 1, 1997 -- reflecting new
contracts taking effect that date -- the Company's pharmacy benefit management
programs had 10.1 million members enrolled, a 16.1 percent increase from the
beginning of 1996. Strong initial results from the Company's strategic
relationship with Premier, a nationwide alliance of integrated health care
providers, and Express Scripts' expansion into Canada contributed to this gain.
Toan noted that the Company's sales pipeline entering 1997 remains strong.
"Express Scripts recorded its seventh straight year of increasing revenue and
earnings, and the fourth consecutive year of growth and profitability since its
public offering in 1992," said Toan. "We have pursued a successful strategy
focused on building alliances with providers and payors, introducing new
products and developing complementary business ventures. As a result, Express
Scripts is positioned to take full advantage of the opportunities created by the
rapid pace of change in healthcare today."
"During 1997, we will expand on our offering of advanced health management
services by rolling out an informed decision counseling service," he added.
"Express Scripts is finalizing an agreement pursuant to which we will serve as
many as 1 million NYLCare members through this program by the end of the year
and we expect to expand the offering to our other clients. Express Scripts
expects to begin providing informed decision counseling in late March or early
April."
To support the decision counseling service, Express Scripts will establish a
telephone call center staffed by nurses and pharmacists at the Company's St.
Louis headquarters to provide members with the information and professional
advice they need to manage their health and pharmacy care. Heading the new
business venture will be Linda Logsdon, former chief operating officer of United
HealthCare's Midwest Companies (GenCare/PHP, a large St.
Louis-based HMO), who has been named a vice president of Express Scripts.
"Decision counseling has proven to be an effective tool in reducing the cost of
healthcare and contributing to better patient treatment," said Logsdon. "Express
Scripts can leverage its proprietary information and technological capabilities
to provide members with an important health management resource. In the future,
we also expect the call center to be a valuable resource as Express Scripts
expands its disease management programs."
Toan outlined several items that reflect Express Scripts' continuing development
of its business strategy, including:
A new three-year agreement between Practice Patterns Science (PPS), the
Company's medical information management subsidiary, and Avanti Corporate
Health Systems, NYLCare's physician practice management group for certain
of its HMO members to provide network profiling services for 120,000 clinic
members.
PPS begins 1997 with two agreements covering 300,000 HMO lives for
profiling and patient care services, and eight agreements to provide
pharmaceutical manufacturers with disease management support services.
An amendment to its pharmacy management agreement with NYLCare, which
calls for reduced rates consistent with current PBM pricing trends for
NYLCare's indemnity business. The amendment will fix rates for two years
(the contract was previously renegotiable on an annual basis) and provides
for the adoption of the Express Scripts' ExpressPreferenceSM drug therapy
management program as a condition to receiving certain of the price
concessions.
Toan noted that each of Express Scripts' business components played a role in
the Company's overall success in 1996. PPS was profitable during the fourth
quarter of the year. IVTx, the Company's home infusion service, saw revenues
grow by 46.2 percent and therapy days increase by 49.9 percent. Express Scripts
Vision Corporation's orders increased by 23.9 percent in 1996, and new
facilities near Express Scripts' St. Louis headquarters will allow the vision
unit to expand further in 1997.
For the year ended December 31, 1996, cost of revenue was up 43.2 percent and
SG&A expense increased 31.6 percent compared to the prior year. Net interest
income grew 355.8 percent compared with 1995, due principally to interest income
on the proceeds of the Company's successful April 1996 offering of 1,150,000
shares of Class A common stock.
Express Scripts' cost of revenues for the fourth quarter of 1996 increased at
the same 48.1 percent rate as revenues. Selling, general and administrative
(SG&A) expenses grew at a rate of 52.0 percent, reflecting increased investments
in client services, marketing, information systems, and additional clinical
programs to enhance pharmacy benefit management capabilities.
Express Script's stockholders' equity at year end was $164.1 million, an
increase of $86.7 million, or 112.1 percent, from December 31, 1995. Cash and
short-term investments rose to $79.6 million at the end of 1996 compared with
$11.5 million the prior year as a result of the stock offering and better cash
management. The Company's balance sheet reflected no debt.
As of December 31, 1996, Express Scripts had repurchased 182,500 shares of its
Class A common stock under the terms of a repurchase program announced in
October 1996. The program authorizes the Company to repurchase a total of up to
850,000 shares of the Class A common stock in open market or privately
negotiated transactions. At the end of 1996, Express Scripts had approximately
8,974,000 Class A common shares and 7,510,000 Class B common shares outstanding.
All Class B shares are owned by NYLife Healthcare Management, Inc., a subsidiary
of New York Life Insurance Company.
Express Scripts, based in St. Louis, is a leader in healthcare management
services, delivering advanced capabilities in four complementary healthcare
businesses. The pharmacy benefit management business currently provides
prescription drug services to approximately 10.1 million members nationally.
Practice Patterns Science, Inc., a subsidiary, offers provider profiling and
disease state management support services linking healthcare data from all
points of care. Express Scripts Vision Corporation and PhyNet, Inc. provide
eyecare management services, while IVTx applies managed care principles to
infusion therapy management. Express Scripts' businesses serve managed care
organizations, third party administrators, insurance companies, unions and
self-insured employers. Additional information is available on the Company's Web
site (http://www.express-scripts.com).
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 STATEMENTS INCLUDE
HEIGHTENED COMPETITION; THE POSSIBLE TERMINATION OF 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 A CHANGE IN THE INTERPRETATION OF
EXISTING LEGISLATION OR REGULATIONS; AND OTHER RISKS DESCRIBED FROM TIME TO TIME
IN THE COMPANY'S PUBLIC FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. IN
CONNECTION WITH ANY FORWARD-LOOKING STATEMENTS RELATING TO FUTURE MEMBERSHIP
LEVELS, ADDITIONAL 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.
<PAGE>
EXPRESS SCRIPTS, INC.
Statement of Operations
(in thousands, except per share and percentage data)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31 December 31
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<S> <C> <C> <C> <C> <C> <C>
1996 1995 % change 1996 1995 % change
------------ ----------- ----------- ------------ ----------- -------------
Revenues
Net revenues $226,178 $152,758 48.06% 773,615 $544,460 42.09%
------------ ----------- ------------ -----------
Cost and expenses:
Cost of revenues 200,784 135,568 48.11% 684,882 478,283 43.20%
Selling, general & 14,793 9,732 52.00% 49,103 37,300 31.64%
administrative ------------ ----------- ------------ -----------
215,577 145,300 48.37% 733,985 515,583 42.36%
------------ ----------- ------------ -----------
Operating income 10,601 7,458 42.14% 39,630 28,877 37.24%
------------ ----------- ------------ -----------
Other income (expense):
Interest income 1,253 248 405.24% 3,509 843 316.25%
Interest expense (21) (11) 90.91% (59) (86) -31.40%
------------ ----------- ------------ -----------
1,232 237 419.83% 3,450 757 355.75%
------------ ----------- ------------ -----------
Income before income taxes 11,833 7,695 53.78% 43,080 29,634 45.37%
Provision for income taxes 4,682 2,991 56.54% 16,932 11,307 49.75%
------------ ----------- ============ ===========
Net income $7,151 $4,704 52.02% $26,148 $18,327 42.67%
============ =========== ============ ===========
Primary earnings per share $0.43 $0.31 38.71% $1.60 $1.20 33.33%
============ =========== ============ ===========
Weighted average number of
common
shares outstanding during 16,611 15,411 16,350 15,293
the period ============ =========== ============ ===========
</TABLE>
<PAGE>
EXPRESS SCRIPTS, INC.
Balance Sheet
($ in thousands)
<TABLE>
<CAPTION>
December 31 December 31
<S> <C> <C>
1996 1995
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Assets
Current assets:
Cash and cash equivalents $ 25,211 $ 11,506
Short term investments 54,388 ----
Receivables, net 163,805 116,972
Inventories 17,491 13,853
Deferred taxes and prepaid expenses 2,254 2,084
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Total current assets 263,149 144,415
Property and equipment (net) 21,447 16,912
Other assets 15,829 2,761
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Total assets $ 300,425 $ 164,088
================== =================
Liabilities and Stockholders' Equity
Current liabilities:
Claims payable $ 98,865 $ 60,915
Accounts payable 16,347 12,963
Accrued expenses 19,678 11,884
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Total current liabilities 134,890 85,762
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Deferred income taxes 1,445 947
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Stockholders' equity 164,090 77,379
================== =================
Total liabilities and stockholders' equity $ 300,425 $ 164,088
================== =================
</TABLE>
