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: April 25, 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)
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Item 5. Other Events
On April 24, 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 April 24, 1997,
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: April 25, 1997 By: /s/ Barrett A. Toan
Barrett A. Toan, President
and Chief Executive Officer
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
99.1 Press release, dated April 24, 1997 by Express Scripts, Inc.
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EXHIBIT 99.1
EXPRESS SCRIPTS' NET INCOME UP
36.9 PERCENT FOR FIRST QUARTER OF 1997
One Million New Members; 55.6 Percent Revenue Gain Pace Record Performance
ST. LOUIS, April 24, 1997--Express Scripts, Inc. (NASDAQ:ESRX) today
reported that net income for the first quarter of 1997 increased 36.9 percent to
$7.6 million, up from $5.6 million for the comparable period in 1996. Earnings
per share rose to 46 cents, up 27.8 percent from the 36 cents per share reported
for the first three months of 1996. Net revenues increased by 55.6 percent to
$262.0 million for the quarter, compared to $168.4 million reported for the
first quarter last year.
The Company added approximately one million new members during the first
quarter of 1997, increasing total enrollment in its pharmacy benefit management
(PBM) programs by 10.1 percent to 10.9 million at March 31, 1997 compared with
9.9 million at the end of 1996. Since March 31, 1996, membership has increased
21.1 percent.
"Express Scripts added a significant number of new members during the first
quarter of the year as we finalized several important contracts," said Barrett
A. Toan, the Company's president and chief executive officer. "This enrollment
growth, the trend toward increased utilization of prescription drugs for the
treatment of a variety of conditions plus a proportionately greater utilization
of the Company's pharmacy network drove strong revenue gains in our core PBM
programs."
"Solid revenue growth was also reported by Express Scripts' vision and
infusion therapy services, and our integrated medical and drug data analysis
services," he added. "The ongoing expansion of these higher margin businesses
demonstrates that we remain on track in the implementation of our progressive
healthcare management strategy."
The most significant contributor to Express Scripts' first quarter
membership gain was the signing of a contract with RightCHOICE Managed Care,
Inc., which was announced previously. The three-year agreement initially covers
approximately 500,000 members in the Blue Cross and Blue Shield of Missouri
subsidiary's health maintenance organization (HMO), preferred provider
organization (PPO) and point-of-service (POS) programs. Services could also be
provided to up to 1.4 million additional members enrolled in affiliated PPO and
third-party administration programs.
"In addition to bringing a significant number of new members to Express
Scripts, our relationship with RightCHOICE reflects our vision of helping
clients by finding new and better ways for them to manage their pharmacy
benefits," explained Toan. "We will work closely with RightCHOICE to provide
quality pharmacy benefit service for their members and increased control over
drug costs, and they will take advantage of some of our most advanced products
and services."
RightCHOICE is utilizing the information management and consulting services
available through Express Scripts' Practice Patterns Science (PPS) subsidiary to
help manage healthcare spending and develop disease management initiatives. The
contract also covers consultative PBM services, components of the
ExpressTherapeuticsSM advanced drug utilization review program, and the
ExpressPreferenceSM drug therapy management program, which is designed to manage
prescription drug costs by increasing the use of effective, but less costly,
drugs over more expensive therapeutic equivalents.
Toan pointed to other first quarter achievements, including:
- Express Health LineSM, the informed decision counseling service announced
in February, is fully staffed and has begun handling calls through its contract
with NYLCare Health Plans, Inc. This agreement is expected to eventually cover
up to one million NYLCare members, and Express Scripts is actively bidding on
additional Express Health LineSM business.
- PPS announced the development of PTE-RegistryTM, a national comparative
database that is an important resource for the pharmaceutical industry and
healthcare providers. PTE-RegistrySM allows manufacturers to develop new drugs
in a more targeted manner and gives providers data to establish more
effective treatment guidelines.
- ExpressPreferenceSM has crossed the three million lives mark.
Each of Express Scripts' non-PBM business units contributed to the
Company's strong overall performance for the period. PPS added two new contracts
with health plans covering an additional 550,000 lives and one new agreement
with a drug manufacturer. Therapy days at IVTx, the company's home infusion
services division, and orders processed by the company's vision subsidiary, ESI
Vision Care, increased by 28.9 percent for the first quarter compared to the
prior year. Combined revenues for IVTx, ESI Vision Care, and integrated medical
and drug data analysis services increased 40.7 percent for the first three
months of 1997 compared with 1996's first quarter.
The cost of revenues for the first quarter of 1997 increased 59.3 percent
to $237.3 million, compared with $149.0 million for the first three months of
1996. Selling, general and administrative (SG&A) expenses increased by just 28.0
percent to $13.3 million from $10.4 million, and as a percentage of net revenue
decreased to 5.1 percent this year from 6.2 percent in 1996.
"We have seen a movement to higher utilization by our customers of Express
Scripts' own pharmacy network. This gives us greater leverage to negotiate more
favorable pricing on behalf of our clients," explained Toan. "This shift does
result in some reduction in gross margin, because we include the drug ingredient
cost in both revenues and cost of revenues when our network is used. When the
client's network is used, we record only our administrative fee in revenues. In
addition, this increase in cost of revenues is being offset by a decline in our
SG&A expense ratios, as we recognize additional economies of scale and continue
to manage costs effectively."
Other income for the first three months of 1997 increased 459.0 percent to
$1.2 million from $222,000 in the opening quarter of 1996. This increase is due
primarily to income generated through the investment of proceeds from the
Company's April 1996 offering of 1,150,000 shares of Class A common stock.
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 10.9 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:
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Express Scripts, Inc.
Statement of Operations
($ in thousands, except per share and percentage data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
-------------------------------
1997 1996 %
Change
<S> <C> <C> <C>
------------ ------------ ------------
Net Revenues $ 261,990 $ 168,389 55.59%
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Cost and expenses:
Cost of revenues 237,298 148,985 59.28%
Selling, general, & administrative 13,298 10,387 28.03%
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250,596 159,372 57.24%
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Operating Income 11,394 9,017 26.36%
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Other income (expense):
Interest income 1,259 235 435.74%
Interest expense (18) (13) 38.46%
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1,241 222 459.01%
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Income before income taxes 12,635 9,239 36.76%
Provision for income taxes 4,994 3,659 36.49%
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Net income $ 7,641 $ 5,580 36.94%
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Primary earnings per share $ 0.46 $ 0.36 27.78%
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Weighted average number of common shares
outstanding during the period 16,436 15,483
</TABLE>
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Express Scripts, Inc.
Balance Sheet
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31, March 31
1997 1996 1996
<S> <C> <C> <C>
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Assets
Current assets
Cash and cash equivalents $ 11,034 $ 25,211 $ 6,903
Short term investments 54,837 54,388
Receivables, net 187,892 163,805 138,032
Inventories 27,658 17,491 18,120
Deferred taxes and prepaid expenses 2,994 2,254 1,727
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Total current assets 284,415 263,149 164,782
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Property and equipment (net) 25,777 21,447 18,553
Other assets 12,916 15,829 3,526
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Total assets $ 323,108 $ 300,425 $ 186,861
=============== ============== ==============
Liabilities and Stockholders' Equity
Current liabilities
Claims payable $ 114,264 $ 98,865 $ 74,971
Accounts payable 16,841 16,347 12,105
Accrued expenses 20,347 19,678 15,528
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Total current liabilities 151,452 134,890 102,604
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Deferred income taxes 1,575 1,445 1,084
Total stockholders' equity 170,081 164,090 83,173
=============== ============== ==============
Total liabilities and stockholders' equity $ 323,108 $ 300,425 $ 186,861
=============== ============== ==============
</TABLE>
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