EXHIBIT 99.1
Express Scripts Second Quarter Pro Forma Net Income Up 38 Percent;
Membership Exceeds 40 Million
ST. LOUIS, July 19, 2000--Express Scripts, Inc. (NASD: ESRX) announced
second quarter 2000 pro forma net income of $22.9 million, or 59 cents per
diluted share. The pro forma calculation excludes the previously announced $97.0
million non-cash, after-tax write-down of the company's 19.8 percent ownership
interest in PlanetRx.com, Inc. Pro forma net income and diluted earnings per
share for the second quarter increased 37.9 percent and 40.5 percent,
respectively, from the pro forma second quarter of 1999. Second quarter 2000 net
loss on a reported basis was $74.2 million or $1.93 per diluted share, compared
with net income of $421,000 or 1 cent per diluted share on a reported basis for
the same period last year.
Express Scripts generated $98.0 million in cash flow from operations in the
first six months of 2000, compared with $52.4 million in cash for the same
period in 1999. Since the beginning of 2000, the company has prepaid $75.1
million in debt and repurchased 790,000 shares of its Class A Common Stock for
$30.2 million. For the second quarter of 2000, the company generated $37.4
million of cash flow from operations.
Express Scripts serves approximately 40.5 million members as of July 1,
2000, compared with 38.5 million at January 1, 2000, and 36.0 million members at
July 1, 1999. These membership numbers exclude members served under the United
HealthCare (UHC) contract which expired in May 2000 and for which the company
has implemented a transition program. The company continues to serve 8.3 million
UHC members as of July 1, 2000.
"We continue to deliver strong earnings, cash flow and membership growth,"
stated Barrett Toan, president and chief executive officer. "We're particularly
pleased that our continued strong membership growth will allow us to replace a
significant portion of the UHC membership. Our performance demonstrates the
effectiveness of our strategy to build on our earlier acquisitions, which
provide the foundation for organic membership growth, cross-sales and continued
profitability. Our independence, size, highly skilled employees, innovative
clinical programs and strategic alliances allow us to successfully grow our
business in all segments."
Strong Operating Results
In the second quarter of 2000, revenues were $1.7 billion, a 65.9 percent
increase over $996.7 million in the same period of 1999. The year-to-year
increase is due primarily to increased membership, higher utilization and drug
costs, and the conversion of Diversified Pharmaceutical Services (DPS) clients
to use of Express Scripts' retail networks. Gross profit increased 8.4 percent
to $137.4 million in the second quarter of 2000 from $126.8 million for the
comparable period of 1999. Selling, general and administrative expenses (SG&A),
excluding depreciation and amortization, were $69.0 million, an 8.7 percent
increase over the $63.5 million reported for the comparable period of 1999.
For the first six months of 2000, Express Scripts reported pro forma net
income of $44.3 million, or $1.14 per diluted share. The pro forma calculation
excludes the $97.0 million non-cash, after-tax write-down of the company's 19.8
percent ownership interest in PlanetRx.com, Inc. This compares with $30.1
million, or 82 cents per diluted share on a pro forma basis for the same period
in 1999. The 1999 pro forma calculation excludes one-time charges and assumes
that the company's 1999 equity and debt offerings took place on April 1, 1999.
On a reported basis, the net loss for the first six months of 2000 was $52.7
million or $1.36 per diluted share, compared with net income of $14.0 million or
40 cents per diluted share on a reported basis in the first six months of 1999.
Revenues grew 65.1 percent to $3.1 billion reflecting increased membership,
higher utilization and drug costs, the April 1, 1999 acquisition of DPS, and the
conversion of DPS clients to use of Express Scripts' retail networks.
Membership and Claims Growth
Express Scripts' membership has grown to approximately 40.5 million
members, excluding UHC. In addition to the strong membership growth, an
additional 1.0 million of Express Scripts members began utilizing expanded
services, contributing to the growth in mail pharmacy utilization and network
claims. Mail pharmacy prescriptions filled, excluding UHC, increased to 3.7
million during the second quarter of 2000, a 60.6 percent increase compared with
the second quarter of 1999. Pharmacy network claims processed, excluding UHC,
increased to 58.2 million during the second quarter of 2000, a 4.1 percent
increase over the same period one year ago.
"Our growth reflects the effective integration of the ValueRx and DPS
organizations, supporting our successful new business development and high
retention rates," stated Toan. "Implementing best practices among the
organizations also helps us improve our product offerings and successfully
cross-sell additional services, such as more advanced formulary management, or
the addition of mail or network service to current clients where only one of
these services had been used previously."
System Integration Efforts Proceeding on Schedule
Consolidating and streamlining computer systems is an important part of the
integration plan for the ValueRx and DPS acquisitions. The company eliminated
one of the claims processing platforms at the beginning of the second quarter,
and has transferred the first tier of clients from its remaining legacy systems
to the company's primary claims adjudication system.
Programs and Products Reinforce Industry Leadership
Express Scripts reinforces its industry leadership and value to clients by
continuing to enhance its full array of capabilities in the areas of benefit
design, information technology, data collection and analysis, and clinical
support.
Express Scripts' fourth annual Drug Trend Report, one of the most thorough
publicly available analyses of U.S. drug usage patterns and costs, was released
during the second quarter at the company's annual Outcomes Conference. The
conference was attended by approximately 1,000 people, including representatives
from Express Scripts' client organizations and other industry-related
professionals.
"We produce this comprehensive Drug Trend Report and host the conference as
one component of our overall business of helping health plan sponsors understand
the dynamics of the pharmacy benefit. This enables our clients to provide a
cost-effective pharmacy benefit that enhances health and encourages
cost-effective behavior by plan participants," Toan said. "Our key
differentiator is the full complement of our product offering, supported by both
our proprietary intellectual capital and the effective investment of our
economic capital."
The company is continuing to invest in research and development to fund
innovative programs such as the three-tier prescription co-pay plans, which help
clients manage their drug trend. These plans have been documented as
successfully lowering costs, while maintaining the overall quality of
healthcare.
Express Scripts also continues to expand its Internet initiatives. During
the second quarter, the company announced separate agreements with Allscripts,
Inc. and PocketScript, Inc. which will bring wireless handheld e-prescribing
systems to thousands of physicians, giving them real-time access to current
formulary and clinical information at the point of prescribing. The company has
also expanded its online information and transaction capabilities for plan
sponsors, medical professionals and members.
Express Scripts, Inc. is one of the nation's leading independent
full-service pharmacy benefit management (PBM) companies. 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 provides fully-integrated PBM services, including network
claims processing, mail-order pharmacy services, benefit design consultation,
drug utilization review, formulary management, disease management, medical and
drug data analysis services, medical information management services (which
include development of data warehouses to combine medical claims and
prescription drug claims, disease management support services and outcome
assessments through the company's Health Management Services division and
Practice Patterns Science, Inc. subsidiary), and informed decision counseling
services through its Express Health Line SM division. The company also provides
non-PBM services, including infusion therapy services through its Express
Scripts Infusion Services subsidiary and distribution services for specialty
pharmaceuticals through its Specialty Distribution subsidiary. Express Scripts
is headquartered in St. Louis, Missouri. More information can be found at
http://www.express-scripts.com, which includes expanded investor information and
resources.
SAFE HARBOR STATEMENT
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. Actual results may differ significantly
from those projected or suggested in any forward-looking statements. Factors
that may impact these forward-looking statements include but are not limited to:
(i) risks associated with the loss of the UHC account; (ii) risks associated
with successfully implementing its Internet strategy; (iii) risks associated
with acquisitions, including the ability to successfully integrate the
operations of acquired businesses with our existing operations, client retention
issues, and risks inherent in the acquired entities operations; (iv) risks
associated with obtaining financing and capital; (v) risks associated with our
ability to manage growth; (vi) competition, including price competition,
competition in the bidding and proposal process and our ability to consummate
contract negotiations with prospective clients; (vii) the possible termination
of contracts with certain key clients or providers; (viii) the possible
termination of contracts with certain pharmaceutical manufacturers, changes in
pricing, discount, rebate or other practices of pharmaceutical manufacturers;
(ix) adverse results in litigation; (x) adverse results in regulatory matters,
the adoption of adverse legislation or regulations, more aggressive enforcement
of existing legislation or regulations (including, without limitation, as a
result of an investigation of certain of the company's competitors currently
being conducted by the Department of Justice out of its Philadelphia office), or
a change in the interpretation of existing legislation or regulations; (xi)
developments in the healthcare industry generally, including the impact of
increases in healthcare costs, changes in drug utilization patterns,
introductions of new drugs and potential enactment of Medicare outpatient drug
benefits; (xii) dependence on key members of management; (xiii) our relationship
with New York Life Insurance company, which possesses voting control of the
company; (xiv) other risks described from time to time in our 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.
FINANCIAL TABLES FOLLOW
<TABLE>
EXPRESS SCRIPTS, INC.
Unaudited Statement of Operations
(in thousands, except per share data)
<CAPTION>
Three Months Ended June 30,
-----------------------------------------------------------------------
Actual Pro Forma
-----------------------------------------------------------------------
2000 1999 2000 (4) 1999 (5)
<S> <C> <C> <C> <C>
--------------- --------------- ---------------- --------------
Revenues
Revenues $ 1,650,251 $ 996,749 $ 1,650,251 $ 996,749
Other revenues 3,116 --- 3,116 ---
--------------- --------------- --------------- --------------
1,653,367 996,749 1,653,367 996,749
--------------- --------------- --------------- --------------
Cost and expenses:
Cost of revenues(1) 1,515,964 869,989 1,515,964 869,989
Selling, general and administrative(2) 87,421 81,897 87,421 81,897
Corporate restructuring --- 9,400 --- ---
--------------- --------------- --------------- --------------
1,603,385 961,286 1,603,385 951,886
---------------- ---------------- --------------- --------------
Operating income 49,982 35,463 49,982 44,863
Other income (expense):
Write-down of marketable securities (155,500) --- --- ---
Interest income 2,046 1,444 2,046 1,444
Interest expense (13,183) (23,231) (13,183) (17,070)
---------------- ---------------- ---------------- --------------
(166,637) (21,787) (11,137) (15,626)
---------------- ---------------- --------------- --------------
(Loss) income before income taxes (116,655) 13,676 38,845 29,237
(Benefit) provision for income taxes (42,478) 6,658 15,990 12,639
---------------- ---------------- --------------- --------------
(Loss) income before extraordinary item (74,177) 7,018 22,885 16,598
Extraordinary loss on early retirement
of debt, net of taxes of $4,144 --- 6,597 --- ---
--------------- ---------------- --------------- --------------
Net (loss) income $ (74,177) $421 $ 22,885 $ 16,598
================ ================ =============== ==============
Basic (loss) earnings per share:
Before extraordinary item $ (1.96) $ 0.20 $ 0.60 $ 0.43
Extraordinary loss on early retirement
of debt --- 0.19 --- ---
--------------- --------------- --------------- --------------
Net (loss) income $ (1.96) $ 0.01 $ 0.60 0.43
================ =============== =============== ==============
Weighted average number of common shares
outstanding during the period - basic 37,812 34,055 37,812 38,436
================ ================ =============== ==============
Diluted (loss) earnings per share:
Before extraordinary item $ (1.93) $ 0.20 $ 0.59 $ 0.42
Extraordinary loss on early retirement
of debt --- 0.19 --- ---
--------------- --------------- --------------- --------------
Net (loss) income $ (1.93) $ 0.01 $ 0.59 0.42
================ ================ =============== ==============
Weighted average number of common shares
outstanding during the period - diluted 38,507 34,952 38,507 39,334
================ ================ =============== ==============
EBITDA(3) $ 70,890 $ 56,037 $ 70,890 $ 65,437
================ ================ =============== ==============
</TABLE>
SEE NOTES TO UNAUDITED STATEMENT OF OPERATIONS
<TABLE>
EXPRESS SCRIPTS, INC.
Unaudited Statement of Operations
(in thousands, except per share data)
<CAPTION>
Six Months Ended June 30,
----------------------------------------------------------------------
Actual Pro Forma
--------------------------------- ---------------------------------
2000 1999 2000 (4) 1999 (5)
<S> <C> <C> <C> <C>
--------------- --------------- ---------------- --------------
Revenues
Revenues $ 3,122,791$ 1,895,836 $ 3,122,791$ 1,895,836
Other revenues 6,085 --- 6,085 ---
--------------- --------------- ---------------- --------------
3,128,876 1,895,836 3,128,876 1,895,836
--------------- --------------- --------------- --------------
Cost and expenses:
Cost of revenues(1) 2,859,027 1,693,636 2,859,027 1,693,636
Selling, general and administrative(2) 170,792 128,337 170,792 128,337
Corporate restructuring --- 9,400 --- ----
--------------- --------------- --------------- --------------
3,029,819 1,831,373 3,029,819 1,821,973
---------------- ---------------- --------------- --------------
Operating income 99,057 64,463 99,057 73,863
Other income (expense):
Write-down of marketable securities (155,500) --- --- ---
Interest income 3,427 2,837 3,427 2,837
Interest expense (27,384) (29,453) (27,384) (23,292)
---------------- ---------------- ---------------- ---------------
(179,457) (26,616) (23,957) (20,455)
---------------- ---------------- ---------------- ---------------
(Loss) income before income taxes (80,400) 37,847 75,100 53,408
(Benefit) provision for income taxes (27,655) 17,286 30,813 23,267
---------------- ---------------- ---------------- ---------------
(Loss) income before extraordinary item (52,745) 20,561 44,287 30,141
Extraordinary loss on early retirement
of debt, net of taxes of $4,144 --- 6,597 --- ---
---------------- ---------------- -------------- ---------------
Net (loss) income $ (52,745) $13,964 $ 44,287 $ 30,141
================ ================ ============== ===============
Basic (loss) earnings per share:
Before extraordinary item $ (1.39) $ 0.61 $ 1.16 $ 0.84
Extraordinary loss on early retirement
of debt --- 0.19 --- ---
--------------- --------------- --------------- ---------------
Net (loss) income $ (1.39) $ 0.42 $ 1.16 $ 0.84
=============== =============== =============== ===============
Weighted average number of common shares
outstanding during the period - basic 38,068 33,633 38,068 35,847
================ ================ =============== ==============
Diluted (loss) earnings per share:
Before extraordinary item $ (1.36) $ 0.59 $ 1.14 $ 0.82
Extraordinary loss on early retirement
of debt --- 0.19 --- ---
--------------- ---------------- --------------- --------------
Net (loss) income $ (1.36) $ 0.40 $ 1.14 $ 0.82
=============== ================ =============== ==============
Weighted average number of common shares
outstanding during the period - diluted 38,751 34,553 38,751 36,767
=============== ================ =============== ==============
EBITDA(3) $ 141,532 $ 93,524 $ 141,532 $ 102,924
================ ================ ================ ==============
</TABLE>
SEE NOTES TO UNAUDITED STATEMENT OF OPERATIONS
EXPRESS SCRIPTS, INC.
Unaudited Statement of Operations
(in thousands)
Notes
Three months ended June 30
(1) Includes depreciation and amortization expense of $2,502, $2,216,
$2,502, and $2,216, respectively.
(2) Includes depreciation and amortization expense of $18,406, $18,358,
$18,406, and $18,358, respectively.
(3) EBITDA is earnings before interest, taxes, depreciation and
amortization (operating income, excluding one-time items, plus depreciation and
amortization). EBITDA is presented because it is a widely accepted indicator of
a company's ability to incur and service indebtedness. EBITDA, however, should
not be considered as an alternative to net income as a measure of operating
performance or an alternative to cash flow as a measure of liquidity. In
addition, our definition of EBITDA may not be comparable to that reported by
other companies.
(4) Pro Forma excludes the write-down of the marketable securities and the
related tax benefit.
(5) Pro Forma excludes non-recurring charges for the corporate
restructuring and the extraordinary loss on early retirement of debt. Also, the
Pro Forma assumes the company's 5,175 common stock offering and $250,000 Senior
Notes offering occurred on April 1, 1999.
Six months ended June 30
(1) Includes depreciation and amortization expense of $5,079, $4,481,
$5,079, and $4,481, respectively.
(2) Includes depreciation and amortization expense of $37,396, $24,580,
$37,396, and $24,580, respectively.
(3) EBITDA is earnings before interest, taxes, depreciation and
amortization (operating income, excluding one-time items, plus depreciation and
amortization). EBITDA is presented because it is a widely accepted indicator of
a company's ability to incur and service indebtedness. EBITDA, however, should
not be considered as an alternative to net income as a measure of operating
performance or an alternative to cash flow as a measure of liquidity. In
addition, our definition of EBITDA may not be comparable to that reported by
other companies.
(4) Pro Forma excludes the write-down of the marketable securities and the
related tax benefit.
(5) Pro Forma excludes non-recurring charges for the corporate
restructuring and the extraordinary loss on early retirement of debt. Also, the
Pro Forma assumes the company's 5,175 common stock offering and $250,000 Senior
Notes offering occurred on April 1, 1999.
<TABLE>
EXPRESS SCRIPTS, INC.
Unaudited Balance Sheet
(in thousands)
<CAPTION>
June 30, December 31,
2000 1999
<S> <C> <C>
--------------- ------------------------
ASSETS
Current assets
Cash and cash equivalents $ 99,835 $ 132,630
Receivables, net 845,699 783,086
Inventories 75,984 113,248
Deferred taxes 28,466 32,248
Prepaid expenses 5,758 5,143
--------------- ---------------
Total current assets 1,055,742 1,066,355
Property and equipment, net 112,319 97,573
Investment in marketable securities 10,270 150,365
Goodwill, net 984,785 982,496
Other intangible assets, net 163,538 183,420
Other assets 10,226 7,102
--------------- ---------------
Total assets $ 2,336,880 $ 2,487,311
============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Claims and rebate payable $ 855,839 $ 850,630
Current portion of long-term debt 42,750 -
Accounts payable 89,704 112,731
Accrued expenses 168,592 136,997
--------------- ---------------
Total current liabilities 1,156,885 1,100,358
Long-term debt 517,908 635,873
Other long-term liabilities 32,823 51,598
--------------- ---------------
Total liabilities 1,707,616 1,787,829
Total stockholders' equity 629,264 699,482
--------------- ---------------
Total liabilities and stockholders' equity $ 2,336,880 $ 2,487,311
=============== ===============
</TABLE>
<TABLE>
EXPRESS SCRIPTS, INC.
Unaudited Statement of Cash Flows
(in thousands)
<CAPTION>
Six Months Ended
June 30,
2000 1999
<S> <C> <C>
--------------- ---------------
Cash flow from operating activities:
net (loss) income $ (52,745) $13,964
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 43,865 30,081
Loss on write-down of marketable
securities, net of taxes of $58,468 97,032 ---
Other 9,875 8,371
--------------- --------------
Net cash provided by operating
activities 98,027 52,416
--------------- --------------
Cash flows from investing and financing activities:
Purchase of property and equipment (26,514) (16,178)
Acquisition --- (717,886)
Net proceeds from long-term debt --- 1,288,815
Repayment of long-term debt (75,069) (924,770)
Issuance of Class A Common Stock --- 299,312
Repurchase of Class A Common Stock (30,247) ---
Other 1,008 (22,015)
--------------- --------------
Net cash (used in) investing and
financing activities (130,822) (92,722)
--------------- --------------
Net (decrease) in cash and cash equivalents (32,795) (40,306)
Cash and cash equivalents at beginning
of period 132,630 122,589
--------------- ---------------
Cash and cash equivalents at end
of period $ 99,835 $ 82,283
=============== ===============
</TABLE>
<TABLE>
EXPRESS SCRIPTS, INC.
Unaudited Non-Financial Data
(in thousands, except percentage data)
<CAPTION>
Three Months Ended
June 30,
-----------------------------------------------------
2000(1) 1999 (2) % Change
<S> <C> <C> <C>
--------------- --------------- ----------------
Drug spending $ 2,880,271 $ 2,302,757 25.1%
Pharmacy network claims processed 58,176 55,909 4.1%
Mail pharmacy prescriptions filled 3,701 2,304 60.6%
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------------------------------------
2000(1) 1999 (2) % Change
<S> <C> <C> <C>
--------------- --------------- ----------------
Drug spending $ 5,463,172 $ 3,753,239 45.6%
Pharmacy network claims processed 117,590 91,936 27.9%
Mail pharmacy prescriptions filled 7,216 4,583 57.5%
</TABLE>
<TABLE>
Selected Ratio Analysis
As of June 30, 2000
<CAPTION>
Actual Pro Forma(6)
<S> <C> <C>
Net debt to EBITDA ratio(3) 1.8x 1.7x
Interest coverage ratio (3) 4.4x 4.7x
Debt to enterprise value 19.3% 19.3%
Net debt to net capitalization 42.3% 42.3%
Cash value per share(4) $2.64 $2.64
Book value per share (5) $16.64 $16.64
<FN>
(1) Drug spending and pharmacy network claims processed exclude UHC. Drug
spending and pharmacy network claims processed for UHC were $1,092,030 and
21,030, respectively for the three months ended June 30 and $2,000,938 and
41,634, respectively for the six months ended June 30.
(2) Drug spending and pharmacy network claims processed exclude UHC. Drug
spending and pharmacy network claims processed for UHC were $778,768 and 20,578,
respectively
(3) Uses financial information for the twelve months ended June 30, 2000.
(4) Represents cash divided by 37,821 shares outstanding at June 30, 2000.
(5) Represents stockholders' equity divided by 37,821 shares outstanding at
June 30, 2000.
(6) Pro Forma excludes non-recurring charges, the write-down of marketable
securities, the gain and loss on the sale of assets and the extraordinary loss
on early retirement of debt.
</FN>
</TABLE>
