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: July 29, 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) 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 July 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 exhibits are filed as part of this report on Form 8-K:
Exhibit 99.1 Press release, dated July 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: July 29, 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 July 23, 1997, by Express Scripts, Inc.
<PAGE>
EXHIBIT 99.1
EXHIBIT 99.1
EXPRESS SCRIPTS TALLIES NET INCOME GAIN
OF 27.0 PERCENT FOR SECOND QUARTER OF 1997
Revenues Rise 62.7 Percent to Record Level on Strong Enrollment Growth
ST. LOUIS, July 23, 1997--Express Scripts, Inc. (NASDAQ:ESRX) today
reported the strongest quarter of sales and revenue growth in its history,
resulting in net income of $8.1 million, representing an increase of 27.0
percent compared with the $6.4 million achieved for the second quarter of 1996.
On a per share basis, net income rose 28.2 percent to 50 cents from 39 cents.
Net revenues increased 62.7 percent to a record $300.5 million for the quarter,
up from $184.7 million for the second quarter of 1996.
Enrollment in Express Scripts' pharmacy benefit management (PBM) programs
grew by 700,000 members, reaching a total of approximately 11.6 million at June
30, 1997 compared with 10.9 million at the end of 1997's first quarter. Since
the end of the second quarter, the company has added some 400,000 more members,
pushing total enrollment as of July 1 over the 12 million mark for the first
time.
"Express Scripts had another quarter of strong enrollment gains in its core
PBM programs and continued growth in our complementary healthcare management
businesses," said Barrett A. Toan, the company's president and chief executive
officer. "This reflects our success in effectively delivering value-added
services to customers, and seizing market opportunities created by the
increasingly complex pharmacy benefit management services needed to address the
trend toward higher drug costs."
According to Toan, an Express Scripts' Drug Trend Report, released at the
company's first annual Outcomes Conference in June, dissects pharmacy costs and
shows that a wide variety of factors contributed to cost trends. Among its key
findings, the Drug Trend Report revealed that the unmanaged retail price of
medication grew by 35 percent between 1993 and 1996, with approximately
one-third of that cost increase attributable to expenditures for medications
introduced into the market after 1993.
"As healthcare plan sponsors experience an increase in their pharmacy
benefit cost, their first reaction is to blame pharmaceutical manufacturers for
raising the price on their products," explained Toan. "Our research clearly
demonstrates that effectively controlling pharmacy costs requires managing a
complex set of interrelated factors, which Express Scripts is well positioned to
do by virtue of our size, scope of services and focused business approach."
Toan pointed to several achievements, including:
- - Enrollment in Express Scripts' programs through its strategic partnership
with Premier, a nationwide alliance of integrated healthcare providers,
grew to almost 900,000 lives.
- - The company's business in Canada expanded to more than 800,000 lives, due
to new contracts including PBM services for employees of Bell Canada.
- - Express Health LineSM, the company's new informed decision counseling
service, is now serving approximately 340,000 members of NYLCare Health
Plans, Inc. The NYLCare agreement provides for Express Scripts to service
one million lives by the end of 1997.
- - Express TherapeuticsSM, an advanced drug utilization review, drug therapy
and clinical intervention product, was completed during the second quarter.
Since July 1, the company has made its first full-scale installment of this
product for a customer.
- - Enrollment in the Express PreferenceSM drug therapy management program
reached 3.4 million lives.
Express Scripts' complementary healthcare business units all contributed to
the company's performance during the second quarter of 1997. Practice Patterns
Science added three new agreements with disease management program sponsors and
continues to develop its healthcare decision support offerings. Therapy days at
IVTx, the company's home infusion services division, and orders processed by its
vision subsidiary, ESI Vision Care, increased 33.1 percent for the second
quarter compared to the prior year. Combined revenues for IVTx, ESI Vision Care,
and integrated medical and drug data analysis services increased 38.2 percent
for the second quarter of 1997 compared with the same period in 1996.
Express Scripts also disclosed that a phase-out transition plan concerning
the transfer of FHP lives to PacifiCare has now been established. The company
expects to retain a majority of the FHP lives through the end of the current
year. Lives will be moved off the Express Scripts' membership rolls on a
scheduled basis through April 1998.
The cost of revenues for the second quarter of 1997 increased 68.9 percent
to $274.9 million, compared with $162.8 million for 1996' second quarter.
Selling, general and administrative (SG&A) expenses increased at a significantly
slower rate, rising 12.1 percent to $13.7 million this year from $12.3 million
in 1996. As a percentage of net revenue, SG&A expenses decreased to 4.6 percent
this year from 6.6 percent in 1996.
The company finished the second quarter with the strongest cash position in
its history, as cash generation accelerated as anticipated following the end of
the first quarter. Express Scripts' cash and cash equivalents totaled $27.1
million as of June 30, 1997, up 145.9 percent from the $11.0 million on the
balance sheet at the end of the first quarter and 185.8 percent compared with
$9.5 million on June 30, 1996.
Express Scripts' other income for the second quarter of 1997 increased 44.1
percent to $1.3 million from $892,000 in the comparable period of 1996. This
increase was due primarily to the fact that proceeds from the company's April
1996 offering of 1,150,000 shares of Class A common stock were invested for the
entire quarter in 1997.
For the first half of 1997, Express Scripts reported net income of $15.8
million, an increase of 31.6 percent compared with $12.0 million in the first
six months of last year. Per share net income for the six months ended June 30,
1997 was 96 cents, up 28.0 percent from the 75 cents per share reported for the
period in 1996. Net revenues grew by 59.3 percent to $562.5 million in the
period this year from $353.1 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 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 and PhyNet, Inc. form the company's eyecare management business. IVTx
applies managed care principles to infusion therapy management. Express Health
LineSM 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
(http://www.express-scripts.com) 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; 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 Six Months Ended
June 30 June 30
----------------------------- -----------------------------
1997 1996 % Change 1997 1996 % Change
<S> <C> <C> <C> <C> <C> <C>
------------ ------------- ------------ ------------ ------------- ---------
Net Revenues $300,515 $184,724 62.7% $562,505 $353,113 59.3%
------------ ------------- ------------ -------------
Cost and expenses:
Cost of revenues 274,906 162,797 68.9 512,204 311,782 64.3
Selling, general, & 13,733 12,255 12.1 27,031 22,642 19.4
administrative ------------ ------------- ------------ ------------
288,639 175,052 64.9 539,235 334,424 61.2
------------ ------------- ------------ ------------
Operating Income 11,876 9,672 22.8 23,270 18,689 24.5
------------ ------------- ------------ ------------
Other income (expense):
Interest income 1,303 905 44.0 2,562 1,140 124.7
Interest expense (18) (13) 38.5 (36) (26) 38.5
------------ ------------- ------------ ------------
1,285 892 44.1 2,526 1,114 126.8
------------ ------------- ------------ ------------
Income before income taxes 13,161 10,564 24.6 25,796 19,803 30.3
Provision for income taxes 5,030 4,161 20.9 10,024 7,820 28.2
------------ ------------ ------------- ------------
Net income $ 8,131 $ 6,403 27.0 $ 15,772 $ 11,983 31.6
============ ============= ============ ============
Primary earnings per share $0.50 $0.39 28.2 $0.96 $0.75 28.0
============ ============= ============ ============
Weighted average number of 16,476 16,569 16,456 16,026
common shares outstanding
during the period
</TABLE>
<PAGE>
Non-Financial Data
(in thousands, except percentage data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
--------------------------- ------------------------------
1997 1996 % Change 1997 1996 % Change
<S> <C> <C> <C> <C> <C> <C>
----------- ----------- ------------ ------------- ------------ ------------
Pharmacy network claims 17,777 13,978 27.2% 34,798 27,875 24.8%
processed
Mail pharmacy claims 958 669 43.2 1,844 1,324 39.3
filled
Number of pharmacies in 49.6 47.1 5.3
network
Pharmacy benefit covered 11,600 9,500 22.1
lives
Drug spend $595,000 $395,000 50.6 $1,130,000 $750,000 50.7
</TABLE>
<PAGE>
Express Scripts, Inc.
Balance Sheet
($ in thousands)
(unaudited)
<TABLE>
<CAPTION>
June 30, December 31, June 30,
1997 1996 1996
<S> <C> <C> <C>
----------------- ---------------- ----------------
Assets
Current assets
Cash and cash equivalents $ 27,128 $ 25,211 $ 9,490
Short term investments 56,581 54,388 53,441
Receivables, net 184,565 163,805 141,630
Inventories 26,332 17,491 19,481
Deferred taxes and prepaid expenses 3,499 2,254 1,911
----------------- ---------------- ----------------
Total current assets 298,105 263,149 225,953
----------------- ---------------- ----------------
Property and equipment (net) 26,717 21,447 19,630
Other assets 12,560 15,829 14,123
================= ================ ================
Total assets $ 337,382 $ 300,425 $ 259,706
================= ================ ================
Liabilities and Stockholders' Equity
Current liabilities
Claims payable $ 120,669 $ 98,865 $ 75,331
Accounts payable 18,137 16,347 11,984
Accrued expenses 18,161 19,678 16,477
----------------- ---------------- ----------------
Total current liabilities 156,967 134,890 103,792
----------------- ---------------- ----------------
Deferred income taxes 1,572 1,445 1,114
Total stockholders' equity 178,843 164,090 154,800
================= ================ ================
Total liabilities and stockholders' equity $ 337,382 $ 300,425 $ 259,706
================= ================ ================
</TABLE>
