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: February 23, 1998
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 February 10, 1998, 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 10, 1998, 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 23, 1998 By:________________________
Barrett A. Toan
President
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
99.1 Press release, dated February 10, 1998, by Express Scripts, Inc.
EXHIBIT 99.1
EXPRESS SCRIPTS REPORTS RECORD REVENUES AND INCOME
FOR FOURTH QUARTER AND FULL YEAR IN 1997
ANNUAL REVENUES GROW 59.1 PERCENT TO $1.2 BILLION;
NET INCOME RISES 27.9 PERCENT
ST. LOUIS, Feb. 10, 1998--Express Scripts, Inc. (NASDAQ:ESRX) today
reported that revenues for 1997 reached a record $1.2 billion, up 59.1 percent
from $773.6 million in 1996. Net income for the year increased 27.9 percent to
$33.4 million compared with $26.1 million the prior year. On a diluted earnings
per share basis, net income rose 26.3 percent to $2.02 from $1.60 in 1996.
Fourth quarter 1997 revenues were $348.2 million, an increase of 54.0
percent from $226.2 million for the final three months of 1996. Net income for
the final quarter of 1997 rose 26.5 percent to $9.0 million from $7.2 million
the prior year, while diluted net income per share increased 25.6 percent to 54
cents compared with 43 cents.
Express Scripts' pharmacy benefit management (PBM) programs reported total
enrollment of 12.3 million lives as of Jan. 1, 1998, a gain of 21.8 percent from
10.1 million a year earlier. The increase in lives was achieved in spite of the
loss of approximately 900,000 members of FHP Health Plans, Inc. during the
fourth quarter of 1997.
"Express Scripts effectively executed its strategy and achieved its key
goals for 1997, delivering another year of record growth and profitability,"
said Barrett Toan, president and chief executive officer. "During 1997 we
strengthened our core PBM business through new alliances with providers and
payors, expanded geographically with continued growth in Canada, introduced new
healthcare management products and services, and continued to develop our
complementary businesses.
"Express Scripts' size, independence, industry-leading customer service and
advanced capabilities allow us to offer a unique proposition to our clients," he
added. "The major new contracts we won in 1997 and the extension of our
successful alliances provide evidence that our clients recognize the value that
Express Scripts delivers."
During the fourth quarter of 1997, Express Scripts announced a new
agreement with Wal-Mart Stores to provide PBM services for prescriptions
processed through the retailer's managed pharmacy programs. The company also
announced that it has renewed its contract with Coventry Corporation for a
period of two years through 1999. These agreements capped a year that saw
Express Scripts win several other major contracts, including RightCHOICE Managed
Care, Bell Canada and First Canadian Health Management.
New products and services rolled out during 1997 were highlighted by the
introduction of Express Health LineSM, an informed decision counseling service
featuring a call center staffed by nurses and pharmacists. Express Scripts'
Practice Patterns Science (PPS) subsidiary debuted PTE-Registry(TM), a national
comparative database, as a resource for pharmaceutical manufacturers and
healthcare providers.
Express Scripts provided an update on several additional developments,
including:
* After approximately two years, the company's strategic alliance with
Premier, a nationwide alliance of integrated healthcare providers, has
grown to include more than 1 million covered lives.
* Lives covered by Express Scripts programs in Canada continued to increase
and included approximately 1 million covered lives as of Jan. 1, 1998.
Membership will get another boost on July 1, 1998 when approximately
640,000 registered Inuits and Indians are enrolled through the company's
agreement with First Canadian Health Management.
* Express Scripts' 1997 and fourth quarter performance reflected
contributions from all of its complementary healthcare businesses.
* Express Health LineSM met its enrollment targets for the year and now
provides its informed decision counseling services to more than
1.3 million members of NYLCare Health Plans, Inc.
* As of Jan. 1, 1998, the company's Express TherapeuticsSM advanced drug
utilization review, drug therapy and clinical intervention product covered
500,000 lives.
* Express PreferenceSM, a drug therapy management program, reached a total
enrollment of 4.7 million lives, an increase of 3.7 million lives from
January 1, 1997.
"Express Scripts posted extremely strong operating results in every quarter
of 1997, thanks to significant revenue growth, successful ongoing SG&A expense
controls and increasing economies of scale," added Toan. "For the fourth quarter
and full year, our gross margins reflected the impact of competitive factors in
the market and 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."
Express Scripts' cost of revenues for the twelve months ended Dec. 31, 1997
were $1.1 billion, up 63.4 percent from $684.9 million the prior year. Selling,
general and administrative (SG&A) expenses increased at a markedly slower rate
of 27.5 percent to $62.6 million in 1997 compared with $49.1 million in 1996. As
a percentage of total revenues, SG&A expenses decreased to 5.1 percent for 1997
from 6.3 percent the prior year.
The cost of revenues for the fourth quarter of 1997 increased 57.1 percent
to $315.4 million, compared with $200.8 million for the final quarter of 1996.
Fourth quarter SG&A expenses increased 34.0 percent to $19.8 million in 1997
from $14.8 million in 1996.
As of Dec. 31, 1997, Express Scripts had $122.1 million in cash, cash
equivalents and short-term investments, up 53.4 percent from $79.6 million at
the end of 1996. Express Scripts is currently carrying no debt and had total
shareholders equity at Dec. 31, 1997 of $203.7 million.
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)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31 December 31
---------------------------- ----------------------------
1997 1996 % Change 1997 1996 % Change
<S> <C> <C> <C> <C> <C> <C>
------------ ------------ ------------ ------------ ------------ -------------
Net revenues $348,192 $226,178 54.0% $1,230,634 $773,615 59.1%
------------ ------------ ------------ ------------
Cost and expenses:
Cost of revenues 315,373 200,784 57.1% 1,119,167 684,882 63.4%
Selling, general, & 19,828 14,793 34.0% 62,617 49,103 27.5%
administrative
---------- ------------ ------------ ------------
335,201 215,577 55.5% 1,181,784 733,985 61.0%
---------- ------------ ------------ ------------
Operating income 12,991 10,601 22.6% 48,850 39,630 23.3%
---------- ------------ ------------ ------------
Other income (expense):
Interest income 1,910 1,253 52.4% 6,081 3,509 73.3%
Interest expense (160) (21) 661.9% (225) (59) 281.4%
----------- ------------ ----------- ------------
1,750 1,232 42.1% 5,856 3,450 69.7%
----------- ------------ ----------- ------------
Income before income taxes 14,741 11,833 24.6% 54,706 43,080 27.0%
Provision for income taxes 5,697 4,682 21.7% 21,277 16,932 25.7%
----------- ------------ ----------- ------------
Net income $9,044 $7,151 26.5% $33,429 $26,148 27.9%
=========== ============ =========== ============
Basic earnings per share $0.55 $0.44 25.0% $2.04 $1.63 25.2%
============ =========== ============ ============
Weighted average number of
common shares outstanding
during the period - Basic EPS 16,489 16,356 0.8% 16,356 16,080 1.7%
----------- ----------- ----------- ------------
Diluted earnings per share $0.54 $0.43 25.6% $2.02 $1.60 26.3%
=========== =========== =========== ============
Weighted average number of
common shares outstanding
during the period - Diluted 16,706 16,611 0.6% 16,561 16,350 1.3%
EPS
============ ============ =========== ============
</TABLE>
<PAGE>
EXPRESS SCRIPTS, INC.
BALANCE SHEET
($ in thousands)
<TABLE>
<CAPTION>
December 31, December 31,
1997 1996
<S> <C> <C>
----------------- -----------------
Assets
Current assets
Cash and cash equivalents $ 64,155 $ 25,211
Short term investments 57,938 54,388
Receivables, net 210,291 163,805
Inventories 28,935 17,491
Deferred taxes and prepaid expenses 2,649 2,254
----------------- -----------------
Total current assets 363,968 263,149
----------------- -----------------
Property and equipment (net) 26,821 21,447
Other assets 11,719 15,829
================= =================
Total assets $402,508 $300,425
================= =================
Liabilities and Stockholders' Equity
Current liabilities
Claims payable $153,051 $ 98,865
Accounts payable 17,979 16,347
Accrued expenses 26,876 19,678
----------------- -----------------
Total current liabilities 197,906 134,890
----------------- -----------------
Deferred income taxes 901 1,445
Total stockholders' equity 203,701 164,090
================= =================
Total liabilities and stockholders' equity $402,508 $300,425
================= =================
</TABLE>
<PAGE>
EXPRESS SCRIPTS, INC.
NON-FINANCIAL DATA
(in thousands, except percentage data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31 December 31
--------------------------- -------------------------------
1997 1996 % Change 1997 1996 % Change
<S> <C> <C> <C> <C> <C> <C>
------------ ------------ ------------ -------------- ------------- -------------
Pharmacy network claims 20,206 15,992 26.4% 73,164 57,838 26.5%
processed
Mail pharmacy claims 1,034 750 37.9% 3,899 2,770 40.8%
filled
Number of pharmacies in 50.2 48.3 3.9%
network
Pharmacy benefit covered 12,600 9,900 27.3%
lives
Drug spend $727,890 $471,761 54.3% $2,486,380 $1,635,890 52.0%
</TABLE>
