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 (Date of earliest event reported): April 1, 1999
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.)
incorporation)
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 2. Acquisition or Disposition of Assets.
On April 1, 1999, Express Scripts, Inc. ("Express Scripts" or the
"Company") completed its acquisition of Diversified Pharmaceutical Services,
Inc. and Diversified Pharmaceutical Services (Puerto Rico) Inc. (collectively,
"DPS"), from SmithKline Beecham Corporation and SmithKline Beecham InterCredit
BV, respectively (collectively, "SB"). The transaction was consummated pursuant
to the terms of a Stock Purchase Agreement (the "Stock Purchase Agreement")
between SB and Express Scripts dated as of February 9, 1999, pursuant to which
Express Scripts acquired all of the outstanding capital stock of DPS for $700
million in cash, said amount being subject to adjustment based upon the amount
of working capital of DPS at closing, as per the Stock Purchase Agreement. The
acquisition will be accounted for under the purchase method of accounting. The
Stock Purchase Agreement requires the Company to file an Internal Revenue Code
ss.338(h)(10) election, making amortization expense of certain intangible
assets, including goodwill, tax deductible.
The Company used approximately $48 million of its own cash and financed the
remainder of the purchase price and related acquisition costs through a $1.1
billion credit facility syndicated by Credit Suisse First Boston and Bankers
Trust Company, and a $150 million senior subordinated bridge credit facility
from Credit Suisse First Boston and Bankers Trust Company. On March 18, 1999,
the Company filed a registration statement, which has not been declared
effective, with the Securities and Exchange Commission (the "SEC") for a
proposed primary offering of approximately $350 million of Class A Common Stock.
The proceeds of this offering, which will be made only by means of a prospectus,
will be used to retire the bridge loan and repay a portion of the debt
outstanding under the credit facility. Again, the registration statement
relating to these securities has been filed with the SEC but has not yet become
effective. These securities may not be sold nor may offers to buy be accepted
prior to the time the registration statement becomes effective. This Report
shall not constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these securities in any state in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such state. Once the registration statement has
been declared effective, a prospectus meeting the requirements of Section 10 of
the Securities Act of 1933, as amended, may be obtained by contacting the
Company's Investor Relations Department, 14000 Riverport Drive, Maryland
Heights, Missouri 63043.
A copy of the Stock Purchase Agreement was filed with a Form 8-K dated
February 9, 1999, as Exhibit 2.1 thereto.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Businesses Acquired. The financial statements
required by this item will be filed by amendment on or before June 14, 1999.
(b) Pro Forma Financial Information. The pro forma financial information
required by this item will be filed by amendment on or before June 14, 1999.
(c) Exhibits. The following exhibits are filed as part of this report on
Form 8-K:
Exhibit 99.1 Press release, dated April 1, 1999, 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 8, 1999 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 1, 1999, by Express Scripts, Inc.
EXHIBIT 99.1
EXPRESS SCRIPTS COMPLETES ACQUISITION OF
DIVERSIFIED PHARMACEUTICAL SERVICES
ST. LOUIS, APRIL 1, 1999 -- Express Scripts, Inc. (NASDAQ: ESRX) announced
today that it has completed the acquisition of Diversified Pharmaceutical
Services (DPS) from SmithKline Beecham Corporation (NYSE: SBH).
"We're pleased to announce the completion of the DPS acquisition just seven
weeks after the agreement was announced, and exactly one year since we completed
the acquisition of ValueRx," stated Barrett Toan, president and chief executive
officer of Express Scripts. "These acquisitions have not only provided critical
mass, but also competitive strength in key markets and scope of capability that
translate into value for our customers.
"We are focused on leveraging the many opportunities that our organization
now has to achieve bottom line growth to benefit our shareholders as well," Toan
said. "The integration of ValueRx, which has proceeded according to plan,
provides a strong foundation for bringing DPS operations on board in an
effective and timely manner."
With the acquisition completed, Express Scripts is positioned as the third
largest pharmacy benefit manager (PBM) in the U.S., managing nearly $10 billion
in drug spending; the largest PBM independent of pharmaceutical manufacturer or
drug store chain ownership; and one of the largest providers of PBM services to
health maintenance organizations.
Express Scripts paid SmithKline $700 million in cash. The transaction will
be accounted for as a purchase, and is anticipated to be non-dilutive to Express
Scripts' earnings in 1999. The acquisition was financed with a $1.1 billion
senior credit facility led by Credit Suisse First Boston and Bankers Trust
Company, and a $150 million bridge loan. The company previously announced that
it has filed with the Securities and Exchange Commission to offer approximately
4.5 million shares of its Class A Common Stock, the proceeds of which will be
used to retire the bridge loan and a portion of the senior indebtedness.
A registration statement relating to these securities has been filed with
the Securities and Exchange Commission but has not yet become effective. These
securities may not be sold nor may offers to buy be accepted prior to the time
the registration statement becomes effective. This news release shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such State.
Express Scripts, Inc., is the nation's leading independent full-service
pharmacy benefit management and specialty managed care company. Through
facilities in seven states and Canada, the company serves thousands of clients
throughout North America, including managed care organizations, insurance
carriers, third-party administrators, employers and union-sponsored benefit
plans. Express Scripts currently manages more than $5 billion in annual drug
spending.
The company provides a full range of consultative PBM services, including
pharmacy network management, mail service, formulary management, disease
management and medical and drug data analysis services. The company also
provides medical information management services, which include provider
profiling and outcomes assessments, informed decision counseling services and
infusion therapy services. Express Scripts is headquartered in St. Louis,
Missouri, and has additional major sites in Minneapolis, Minnesota; Bensalem,
Pennsylvania; Albuquerque, New Mexico; Tempe, Arizona; Troy, New York; and
Farmington Hills, Michigan. More information can be found at
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
(financial and otherwise) or intentions. The company's actual results may differ
significantly from those projected or suggested in any forward-looking
statements. Certain factors relating to the announced acquisition that might
cause such a difference to occur include, but are not limited to, the loss of
major clients of DPS, including United Health Group, whose contract expires in
May, 2000 and which accounts for approximately 44% of DPS's total membership;
higher than expected costs in integrating and operating the combined company;
and risks inherent in refinancing the bridge loan facility.
Other general factors that may impact these forward-looking statements
include 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 and proposal
process; adverse results in certain litigation and regulatory matters; lower
than expected sales and revenue growth; the adoption of adverse legislation or a
change in the interpretation of existing legislation or regulations; risks
associated with the development of new products; risks associated with the "Year
2000" issue, including the ability of the company to successfully convert its
information systems and its non-information systems, and the ability of its
vendors/trading partners to successfully convert their systems to accommodate
dates beyond December 31, 1999; and other risks described from time to time in
the company's public filings with the Securities and Exchange Commission. The
company does not undertake any obligation to release publicly any revisions to
such forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.
