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 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 (Commission File No.) (I.R.S. Employer
jurisdiction of Identification No.)
corporation)
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 23, 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 April 23, 1998, 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: May 4, 1998 By:________________________
Barrett A. Toan
President and
Chief Executive Officer
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EXHIBIT INDEX
Exhibit No. Description
99.1 Press release, dated April 23, 1998, by Express Scripts, Inc.
EXHIBIT 99.1
EXPRESS SCRIPTS REPORTS STRONG GAINS IN
REVENUE AND INCOME FOR FIRST QUARTER
NET INCOME UP 29.3 PERCENT ON REVENUE GROWTH OF 41.8 PERCENT
ST. LOUIS, April 23, 1998--Express Scripts, Inc. (NASDAQ:ESRX) today
announced that revenues for first quarter 1998 increased 41.8 percent to a
record $371.4 million from $262.0 million for the period in 1997. Net income for
the first quarter of 1998 rose 29.3 percent to $9.9 million from $7.6 million
the prior year and gained 28.3 percent on a diluted per share basis, rising to
59 cents from 46 cents.
On April 1, Express Scripts completed the purchase of ValueRx, the pharmacy
benefit management (PBM) business of Columbia/HCA Healthcare Corporation,
creating the largest PBM independent of drug manufacturer ownership. Completing
this acquisition expeditiously has put Express Scripts on track to achieve the
benefits anticipated from the combination. A new organizational structure, which
includes many of ValueRx's key managers, was in place upon the completion of the
transaction. Express Scripts/ValueRx membership on a combined basis is estimated
at 22.0 million lives as of April 1, 1998.
"With the acquisition completed and an organizational structure in place,
we will focus on client retention and sales, while integrating our contracting
processes and computer systems," said Barrett Toan, Express Scripts' president
and chief executive officer.
Toan outlined Express Scripts' integration goals for each of the final
three quarters of 1998, as follows:
Second quarter--Consolidation of executive, legal and other administrative
functions; coordination of the two companies' sales, marketing and customer
service strategies; completion of the computer systems integration plan for
finance, billing and remittances, receivables and all clinical functions
Third quarter--Combining existing contracts and contracting procedures
related to both suppliers and providers; implementation of finance systems, and
the completion of the systems integration plan for all other systems, including
knowledge systems, claims adjudication and mail service systems; consolidation
of financial operations
Fourth quarter--Introduction of a new sales and marketing proposition for
enhanced PBM services; reduction of redundant computer platforms and systems
According to Toan, the acquisition should begin to add to operating profit
during the second quarter of this year, however, it is anticipated that this
profit will be offset by integration costs that will be incurred during 1998. It
is expected that the acquisition will not be dilutive to earnings in 1998.
During the quarter, Express Scripts also signed the first agreement,
covering 40,000 lives, to provide a sophisticated new health management product.
Express Scripts integrates comprehensive medical claims information from its
Practice Patterns Science (PPS) subsidiary to identify patients at high risk for
diseases where drug therapy is a significant component, then implements
intervention strategies to improve drug therapy through an outbound calling
program by the company's Express Health LineSM unit.
"Express Scripts' new program provides not only state-of-the-art disease
management services to help improve patient care, but is the first to give plan
sponsors powerful tools to help them evaluate and manage disease patterns unique
to their populations," Toan explained.
Express Scripts' other complementary healthcare business units and
strategic alliances contributed to its performance during the first quarter of
1998. IVTx, the company's home infusion services division, posted record sales
and saw therapy days increase by 32.0 percent. Enrollment in Express Scripts'
programs in Canada grew to 1.1 million lives. Finally, the company's advanced
pharmacy benefit management services continued to add lives, with Express
TherapeuticsSM covering 1.1 million lives and Express PreferenceSM reaching
total enrollment of 5.2 million as of April 1.
The cost of revenues for the first quarter of 1998 increased 42.6 percent
to $338.5 million, compared with $237.3 million for the first three months of
1997. First quarter SG&A expenses increased 41.6 percent to $18.8 million in
1998 from $13.3 million in 1997, but remained flat at 5.1 percent of revenues.
As of March 31, 1998, Express Scripts had $143.8 million in cash, cash
equivalents and short-term investments, up 17.8 percent from $122.1 million at
the end of 1997 and 118.3 percent from March 31, 1997. Shareholders equity at
March 31, 1998 was $214.9 million, an increase of 26.3 percent compared with
$171.1 million as of March 31, 1997. The ValueRx acquisition, which closed on
the first day of the second quarter of this year, was funded in part by
approximately $100.0 million in cash and the remainder, plus acquisition costs,
was financed through a five-year bank facility. The impact of the acquisition
will be initially reflected in Express Scripts' financial results in the second
quarter of 1998 and accounted for on a purchase basis.
Express Scripts, Inc. is a leading specialty managed care company and the
largest independent pharmacy benefit management (PBM) company in North America.
Following its recent acquisition of ValueRx, the company serves thousands of
clients including managed care organizations, insurance carriers, third-party
administrators, employers and union-sponsored benefit plans. Together, Express
Scripts and ValueRx manage over $4.0 billion in annual drug spend. The company
provides a full range of consultative PBM services, including pharmacy network
management, mail service and formulary management. The company also offers
disease management programs, informed decision counseling services, medical and
drug data analysis services, and infusion therapy services. Express Scripts is
headquartered in St. Louis, and has additional sites in Minneapolis;
Philadelphia; Albuquerque, N.M.; Tempe, Ariz.; Troy, N.Y. and Farmington Hills,
Mich. More information can be found at HTTP://WWW.EXPRESS-SCRIPTS.COM and
HTTP://WWW.VALUERX.COM.
THIS PRESS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS, INCLUDING, BUT NOT
LIMITED TO, STATEMENTS RELATED TO THE COMPANY'S PLANS, OBJECTIVES, EXPECTATIONS
(FINANCIAL AND OTHERWISE), 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 THAT MAY IMPACT THESE
FORWARD-LOOKING STATEMENTS INCLUDE: RISKS ASSOCIATED WITH THE CONSUMMATION OF
ACQUISITIONS, INCLUDING THE ABILITY TO SUCCESSFULLY INTEGRATE THE OPERATIONS OF
ACQUIRED BUSINESSES WITH THE EXISTING OPERATIONS OF THE COMPANY, LOSS OF CLIENTS
IN THE TRANSITION PROCESS AND RISKS INHERENT IN THE ACQUIRED ENTITIES'
OPERATIONS; LOWER THAN EXPECTED SALES AND REVENUE GROWTH; HEIGHTENED
COMPETITION; 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 OF 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:
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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
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1998 1997 % Change
<S> <C> <C> <C>
------------- -------------- -------------
Net revenues $371,362 $261,990 41.75%
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Cost and expenses:
Cost of revenues 338,492 237,298 42.64%
Selling, general, & administrative 18,826 13,298 41.57%
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357,318 250,596 42.59%
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Operating income 14,044 11,394 23.26%
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Other income (expense):
Interest income 2,138 1,259 69.82%
Interest expense (14) (18) -22.22%
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2,124 1,241 71.15%
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Income before income taxes 16,168 12,635 27.96%
Provision for income taxes 6,290 4,994 25.95%
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Net income $9,878 $7,641 29.28%
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Basic earnings per share $0.60 $0.47 27.66%
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Weighted average number of common
shares outstanding during the period
- Basic EPS 16,527 16,267 1.60%
============= ==============
Diluted earnings per share $0.59 $0.46 28.26%
============= ==============
Weighted average number of common
shares outstanding during the period
- Diluted EPS 16,790 16,436 2.15%
============= ==============
</TABLE>
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<TABLE>
EXPRESS SCRIPTS, INC.
BALANCE SHEET
($ in thousands)
(unaudited)
<CAPTION>
March 31, December 31, March 31,
1998 1997 1977
<S> <C> <C> <C>
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Assets
Current assets
Cash and cash equivalents $84,556 $64,155 $11,034
Short term investments 59,272 57,938 54,837
Receivables, net 199,959 210,291 187,892
Inventories 26,721 28,935 27,658
Deferred taxes and prepaid expenses 3,848 2,649 2,994
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Total current assets 374,356 363,968 284,415
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Property and equipment (net) 27,850 26,821 25,777
Other assets 12,538 11,719 12,916
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Total assets $414,744 $402,508 $323,108
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Liabilities and Stockholders' Equity
Current liabilities
Claims payable $139,948 $153,051 $114,264
Accounts payable 23,849 17,979 16,841
Accrued expenses 35,327 26,876 20,347
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Total current liabilities 199,124 197,906 151,452
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Deferred income taxes 690 901 1,575
Total stockholders' equity 214,930 203,701 170,081
================= ============= ============
Total liabilities and stockholders'
equity $414,744 $402,508 $323,108
================= ============= ============
</TABLE>
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<TABLE>
EXPRESS SCRIPTS, INC.
NON-FINANCIAL DATA
(in thousands, except percentage data)
(unaudited)
<CAPTION>
Three Months Ended
March 31
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1998 1997 % Change
<S> <C> <C> <C>
---------------- ---------------- ------------
Pharmacy network claims processed 19,028 17,021 11.79%
Mail pharmacy claims filled 1,069 886 20.65%
Number of pharmacies in network 50.1 48.5 3.30%
Drug spend $678,263 $534,868 26.81%
</TABLE>
