EXHIBIT 99.1
Express Scripts Restructures PlanetRx Relationship
Customers Continue to Receive Online Prescription Services
Noncash Charge to be Taken in Second Quarter
ST. LOUIS, June 19, 2000 - Express Scripts, Inc. (Nasdaq: ESRX), today
announced that it has restructured its relationship with PlanetRx.com, Inc.
Members of health plans using Express Scripts' online pharmacy service will
continue to be able to access PlanetRx.com for their prescription medications
through Express Scripts' and PlanetRx.com's websites.
Under the restructured agreement, which is scheduled to take effect on July
5, 2000, Express Scripts will retain its ownership of approximately 10.4 million
common shares, or 9.9 percent, of PlanetRx.com, and will receive a cash payment
of $8.0 million. Approximately $3.7 million of the fee represents the amount
earned through the second quarter of 2000, and the remainder represents a fee
for the termination of the existing contract. After this payment, no additional
cash payments will be paid under the restructured agreement. Express Scripts
will continue to utilize PlanetRx.com as its preferred online pharmacy.
Express Scripts will record a pretax, noncash asset impairment charge of
approximately $145 million and a separate related tax benefit of approximately
$55 million in the second quarter of 2000 based on the current market value of
PlanetRx.com. The effect of these two noncash items will be to reduce second
quarter net income by approximately $90 million. Express Scripts is in the
process of finalizing the actual impairment amount which will be reflected in
its second quarter financial statements.
Excluding the noncash items, Express Scripts does not expect the changes in
the terms of the agreement to materially impact net income for 2000 or 2001. The
company is taking steps to ensure that the elimination of PlanetRx.com cash
payments beyond the third quarter will not result in a reduction in reported
cash flow from operations or net income. This will be accomplished through the
early completion of numerous Internet initiatives in the first half of the year
and the elimination of co-marketing expenses with PlanetRx.com.
"Although we are restructuring our agreement with PlanetRx.com, much of the
intent of the original agreement is preserved in the restructured agreement. Our
first priority is to continue to serve our clients and their members who are
using the online pharmacy, and both companies are committed to provide members a
more convenient, more complete online pharmacy experience," stated George Paz,
senior vice president and chief financial officer of Express Scripts.
"Express Scripts continues to be committed to building our Internet
strategy. Our web-enabled operations are successfully delivering advanced
Internet capabilities that narrow the information gap between provider,
pharmaceutical company, and plan sponsor in ways that reduce errors and improve
service quality," Paz stated. "The restructured agreement with PlanetRx.com will
not have any material adverse effect on our Internet strategies. We're
continuing to implement and develop expanded Internet capabilities to benefit
our clients and their members."
Under the terms of the October 1999 agreement between PlanetRx.com and
Express Scripts, Express Scripts obtained a 19.9% ownership in PlanetRx.com.
PlanetRx.com became the exclusive Internet pharmacy serving Express Scripts'
plan members for five years, with a potential five-year extension. Under the
agreement, PlanetRx.com was to pay Express Scripts annually fees in excess of
$11.6 million for access to its membership and $3 million for the further
development of Express Scripts' other Internet capabilities for five years. The
company recorded a one-time noncash gain of approximately $183 million in the
fourth quarter of 1999.
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 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. Specific
factors that may impact these forward-looking statements include risks that the
steps the Company is taking to mitigate the elimination of cash payments from
PlanetRx.com will not be sufficient to fully offset the potential cash flow and
net income impact. General factors that may impact these forward-looking
statements include but are not limited to: (i) risks associated with
successfully completing its Internet strategy; (ii) risks associated with the
consummation and financing of 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; (iii) risks associated with obtaining financing and capital; (iv)
risks associated with our ability to manage growth; (v) competition, including
price competition, competition in the bidding and proposal process and our
ability to consummate contract negotiations with prospective clients; (vi) the
possible termination of contracts with certain key clients or providers; (vii)
the possible termination of contracts with certain pharmaceutical manufacturers,
changes in pricing, discount, rebate or other practices of pharmaceutical
manufacturers; (viii) adverse results in litigation; (ix) adverse results in
regulatory matters, the adoption of adverse legislation or regulations, more
aggressive enforcement of existing legislation or regulations, or a change in
the interpretation of existing legislation or regulations; (x) developments in
the healthcare industry, including the impact of increases in healthcare costs,
changes in drug utilization patterns and introductions of new drugs; (xi)
dependence on key members of management; (xii) our relationship with New York
Life Insurance Company, which possesses voting control of the company; (xiii)
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.
