ST. LOUIS, Feb. 22, 2012 /PRNewswire/ -- Express Scripts,
Inc. (Nasdaq: ESRX) announced 2011 fourth quarter and full year net
income from continuing operations of $290.4
million and $1,275.8 million,
or $0.59 and $2.53 per diluted share, respectively.
Adjusted earnings per share, as detailed in Table 4 were
$0.82 and $2.97 per diluted share for the fourth quarter
and full year, respectively.
"Through our unwavering focus on innovation, service and
alignment, we achieved a historically high level of client
retention," stated George Paz,
chairman and chief executive officer. "The pending merger with
Medco will allow us to combine our complementary strengths and
accelerate our clinical offerings designed to improve health
outcomes while lowering healthcare costs for our clients and
patients."
Fourth Quarter 2011 Review (Data reflected on an adjusted
basis. See Tables 2 and 3)
- Adjusted claims of 194.9 million, up 2% from fourth quarter
2010 driven by increases in Canada
and Medicaid business
- Gross profit of $0.9 billion, up
8% from fourth quarter 2010
- Gross profit and selling general and administrative
("SG&A") expenses were impacted by the continued acceleration
of projects to free up capacity for integration activities in
2012
- SG&A expenses include an unexpected $11 million charge for tax items
- EBITDA of $0.7 billion, up 8%
from fourth quarter 2010
- EBITDA per adjusted claim of $3.66, up 6% from fourth quarter 2010
- Cash flow from operations of $0.5
billion, up 93% from fourth quarter 2010
Full Year 2011 Review (Data reflected on an adjusted basis.
See Tables 2 and 3)
- Adjusted claims of 751.5 million, down slightly from 2010
- Gross profit of $3.4 billion, up
7% from 2010
- EBITDA of $2.7 billion, up 10%
from 2010
- EBITDA per adjusted claim of $3.54, up 11% from 2010
- Cash flow from operations of $2.2
billion, including merger-related costs, up 4% from
2010
Guidance
Although the Company will not provide 2012 guidance until after
the completion of the acquisition of Medco, which is expected in
the first half of 2012, the Company is reaffirming the
following:
- Claims utilization and in-group attrition expected to be
consistent with 2011 levels.
- Client retention, based on prescription volume, expected to be
greater than 97%.
- Through strong support from clients, greater than 95% of its
clients' prescription volume moved forward into 2012 without
Walgreens as a network provider.
- As a result of the preceding factors and sales activity to
date, which included three new signature wins, the Company expects
claims growth to be in a range of 0% to 2%.
About Express Scripts
Express Scripts, Inc., one of the largest pharmacy benefit
management companies in North
America, is leading the way toward creating better health
and value for patients through Consumerology®, the advanced
application of the behavioral sciences to healthcare. This approach
is helping millions of members realize greater healthcare outcomes
and lowering cost by assisting in influencing their behavior.
Headquartered in St. Louis,
Express Scripts provides integrated PBM services including
network-pharmacy claims processing, home delivery services,
specialty benefit management, benefit-design consultation,
drug-utilization review, formulary management, and medical and drug
data analysis services. The company also distributes a full range
of biopharmaceutical products and provides extensive
cost-management and patient-care services. More information can be
found at http://www.express-scripts.com/ and
http://www.consumerology.com/.
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 can
be found in the Management's Discussion and Analysis of Financial
Condition and Results of Operations in the Company's Form 10-K
filed with the SEC on February 22,
2012. A copy of this form can be found at the Investor
Relations section of Express Scripts' web site at
http://www.express-scripts.com.
We do 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.
EXPRESS
SCRIPTS, INC.
|
|
Unaudited
Consolidated Statement of Operations
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Year
Ended
December 31,
|
|
(in millions, except per
share data)
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
Revenues (1)
|
$ 12,101.4
|
|
$ 11,294.2
|
|
$ 46,128.3
|
|
$ 44,973.2
|
|
Cost of revenues (1)
|
11,256.9
|
|
10,520.8
|
|
42,918.4
|
|
42,015.0
|
|
Gross
profit
|
844.5
|
|
773.4
|
|
3,209.9
|
|
2,958.2
|
|
Selling, general and
administrative
|
269.6
|
|
215.5
|
|
898.2
|
|
887.3
|
|
Operating income
|
574.9
|
|
557.9
|
|
2,311.7
|
|
2,070.9
|
|
Other (expense)
income:
|
|
|
|
|
|
|
|
|
Interest income
|
4.6
|
|
0.5
|
|
12.4
|
|
4.9
|
|
Interest expense
and other
|
(115.4)
|
|
(40.1)
|
|
(299.7)
|
|
(167.1)
|
|
|
(110.8)
|
|
(39.6)
|
|
(287.3)
|
|
(162.2)
|
|
Income before income
taxes
|
464.1
|
|
518.3
|
|
2,024.4
|
|
1,908.7
|
|
Provision for income
taxes
|
173.7
|
|
188.7
|
|
748.6
|
|
704.1
|
|
Net income from continuing
operations
|
290.4
|
|
329.6
|
|
1,275.8
|
|
1,204.6
|
|
Net (loss) from discontinued
operations, net of tax
|
-
|
|
-
|
|
-
|
|
(23.4)
|
|
Net income
|
$
290.4
|
|
$
329.6
|
|
$ 1,275.8
|
|
$ 1,181.2
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
common shares
|
|
|
|
|
|
|
|
|
outstanding during the
period:
|
|
|
|
|
|
|
|
|
Basic
|
485.3
|
|
527.5
|
|
500.9
|
|
538.5
|
|
Diluted
|
489.0
|
|
532.9
|
|
505.0
|
|
544.0
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per
share:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
0.60
|
|
$
0.62
|
|
$
2.55
|
|
$
2.24
|
|
Discontinued
operations
|
-
|
|
-
|
|
-
|
|
(0.04)
|
|
Net
earnings
|
0.60
|
|
0.62
|
|
2.55
|
|
2.19
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per
share:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
0.59
|
|
$
0.62
|
|
$
2.53
|
|
$
2.21
|
|
Discontinued
operations
|
-
|
|
-
|
|
-
|
|
(0.04)
|
|
Net
earnings
|
0.59
|
|
0.62
|
|
2.53
|
|
2.17
|
|
|
|
|
|
|
|
|
|
|
(1) Includes retail pharmacy
co-payments of $1,412.6 million and $1,493.0 million for the three
months ended December 31, 2011 and 2010, respectively and $5,786.6
million and $6,181.4 million for the years ended December 31, 2011
and 2010, respectively.
|
|
|
|
|
|
|
|
|
|
EXPRESS
SCRIPTS, INC.
|
|
Unaudited
Consolidated Balance Sheet
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
(in millions, except share
data)
|
2011
|
|
2010
|
|
Assets
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash
equivalents
|
$ 5,620.1
|
|
$
523.7
|
|
Restricted cash and
investments
|
17.8
|
|
16.3
|
|
Receivables,
net
|
1,915.7
|
|
1,720.9
|
|
Inventories
|
374.4
|
|
382.4
|
|
Prepaid
expenses
|
68.7
|
|
177.6
|
|
Deferred taxes
|
45.8
|
|
86.0
|
|
Other current
assets
|
15.5
|
|
34.4
|
|
Total current
assets
|
8,058.0
|
|
2,941.3
|
|
Property and equipment,
net
|
416.2
|
|
372.7
|
|
Goodwill
|
5,485.7
|
|
5,486.2
|
|
Other intangible assets,
net
|
1,620.9
|
|
1,725.0
|
|
Other assets
|
26.2
|
|
32.6
|
|
Total
assets
|
$ 15,607.0
|
|
$ 10,557.8
|
|
|
|
|
|
|
Liabilities and Stockholders'
Equity
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Claims and rebates
payable
|
$ 2,874.1
|
|
$ 2,666.5
|
|
Accounts
payable
|
928.1
|
|
656.7
|
|
Accrued
expenses
|
656.0
|
|
593.9
|
|
Current maturities of
long-term debt
|
999.9
|
|
0.1
|
|
Total current
liabilities
|
5,458.1
|
|
3,917.2
|
|
Long-term debt
|
7,076.4
|
|
2,493.7
|
|
Other liabilities
|
598.8
|
|
540.3
|
|
Total
liabilities
|
13,133.3
|
|
6,951.2
|
|
|
|
|
|
|
Stockholders' Equity:
|
|
|
|
|
Preferred stock, 5,000,000
shares authorized, $0.01 par value per share;
|
|
|
|
|
and no shares issued and
outstanding
|
-
|
|
-
|
|
Common stock,
1,000,000,000 shares authorized, $0.01 par value per share;
|
|
|
|
|
shares issued: 690,650,000
and 690,231,000, respectively;
|
|
|
|
|
shares outstanding:
484,582,000 and 528,069,000, respectively
|
6.9
|
|
6.9
|
|
Additional paid-in
capital
|
2,438.2
|
|
2,354.4
|
|
Accumulated other
comprehensive income
|
17.0
|
|
19.8
|
|
Retained
earnings
|
6,645.6
|
|
5,369.8
|
|
|
9,107.7
|
|
7,750.9
|
|
Common stock in treasury
at cost, 206,068,000 and
|
|
|
|
|
162,162,000 shares,
respectively
|
(6,634.0)
|
|
(4,144.3)
|
|
Total
stockholders' equity
|
2,473.7
|
|
3,606.6
|
|
Total
liabilities and stockholders' equity
|
$ 15,607.0
|
|
$ 10,557.8
|
|
|
|
|
|
EXPRESS
SCRIPTS, INC.
|
|
Unaudited
Consolidated Statement of Cash Flows
|
|
|
Year
Ended
December 31,
|
|
(in millions)
|
2011
|
|
2010
|
|
|
|
|
|
|
Cash flows from operating
activities:
|
|
|
|
|
Net income
|
$ 1,275.8
|
|
$ 1,181.2
|
|
Net loss from discontinued
operations, net of tax
|
-
|
|
23.4
|
|
Net income
from continuing operations
|
1,275.8
|
|
1,204.6
|
|
Adjustments to reconcile net
income to net cash provided by operating activities:
|
|
|
|
|
Depreciation and
amortization
|
253.4
|
|
244.7
|
|
Deferred income
taxes
|
137.8
|
|
110.4
|
|
Employee stock-based
compensation expense
|
48.8
|
|
49.7
|
|
Bad debt
expense
|
11.6
|
|
5.2
|
|
Deferred financing
fees
|
81.0
|
|
5.1
|
|
Other, net
|
4.5
|
|
9.4
|
|
Changes in operating assets and
liabilities:
|
|
|
|
|
Receivables
|
(206.1)
|
|
793.0
|
|
Inventories
|
8.0
|
|
(70.2)
|
|
Other current and
noncurrent assets
|
119.2
|
|
(90.0)
|
|
Claims and rebates
payable
|
207.5
|
|
(186.7)
|
|
Other current and
noncurrent liabilities
|
250.5
|
|
29.9
|
|
Net cash provided by operating
activities — continuing operations
|
2,192.0
|
|
2,105.1
|
|
Net cash provided by operating
activities — discontinued operations
|
-
|
|
12.3
|
|
Net cash flows provided by
operating activities
|
2,192.0
|
|
2,117.4
|
|
|
|
|
|
|
Cash flows from investing
activities:
|
|
|
|
|
Purchases of property and
equipment
|
(144.4)
|
|
(119.9)
|
|
Purchase of short-term
investments
|
(25.0)
|
|
(38.0)
|
|
Proceeds from sale of
short-term investments
|
45.0
|
|
8.6
|
|
Proceeds from the sale of
business
|
-
|
|
2.5
|
|
Other
|
0.5
|
|
1.7
|
|
Net cash used in investing
activities - continuing operations
|
(123.9)
|
|
(145.1)
|
|
Net cash used in investing
activities - discontinued operations
|
-
|
|
(0.8)
|
|
Net cash used in investing
activities
|
(123.9)
|
|
(145.9)
|
|
|
|
|
|
|
Cash flows from financing
activities:
|
|
|
|
|
Proceeds from long-term
debt, net of discounts
|
5,580.3
|
|
-
|
|
Treasury stock
acquired
|
(2,515.7)
|
|
(1,276.2)
|
|
Deferred financing
fees
|
(91.6)
|
|
(3.9)
|
|
Net proceeds from employee
stock plans
|
32.2
|
|
35.3
|
|
Tax benefit relating to
employee stock compensation
|
28.3
|
|
58.9
|
|
Repayment of long-term
debt
|
(0.1)
|
|
(1,340.1)
|
|
Other
|
(2.9)
|
|
3.0
|
|
Net cash provided by (used in)
financing activities
|
3,030.5
|
|
(2,523.0)
|
|
|
|
|
|
|
Effect of foreign currency
translation adjustment
|
(2.2)
|
|
4.8
|
|
|
|
|
|
|
Net increase (decrease) in cash
and cash equivalents
|
5,096.4
|
|
(546.7)
|
|
Cash and cash equivalents at
beginning of period
|
523.7
|
|
1,070.4
|
|
Cash and cash equivalents at end
of period
|
$ 5,620.1
|
|
$ 523.7
|
|
|
|
|
|
Table
1
|
|
Unaudited
Consolidated Selected Information
|
|
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Year
Ended
December 31,
|
|
Claims Volume
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Network
|
156.4
|
|
153.1
|
|
600.4
|
|
602.0
|
|
Home Delivery & Specialty
(1)
|
13.6
|
|
13.6
|
|
53.4
|
|
54.1
|
|
Total claims
|
170.0
|
|
166.7
|
|
653.8
|
|
656.1
|
|
|
|
|
|
|
|
|
|
|
Total adjusted claims
(2)
|
194.9
|
|
191.3
|
|
751.5
|
|
753.9
|
|
|
|
|
|
|
|
|
|
|
Depreciation and Amortization
(D&A):
|
|
|
|
|
|
|
|
|
Revenue amortization
(3)
|
$ 28.5
|
|
$ 28.5
|
|
$ 114.0
|
|
$ 114.0
|
|
Cost of revenues
depreciation
|
12.3
|
|
11.8
|
|
43.5
|
|
40.0
|
|
Selling, general and
administrative depreciation
|
14.9
|
|
13.3
|
|
55.2
|
|
50.0
|
|
Selling, general and
administrative amortization
|
10.2
|
|
10.2
|
|
40.7
|
|
40.7
|
|
Total
D&A
|
$ 65.9
|
|
$ 63.8
|
|
$ 253.4
|
|
$ 244.7
|
|
|
|
|
|
|
|
|
|
|
Generic Fill Rate
|
|
|
|
|
|
|
|
|
Network
|
75.8%
|
|
73.9%
|
|
75.3%
|
|
72.7%
|
|
Home Delivery
|
64.7%
|
|
60.9%
|
|
63.0%
|
|
60.2%
|
|
Overall
|
74.8%
|
|
72.7%
|
|
74.2%
|
|
71.6%
|
|
|
|
|
|
|
|
|
|
|
Note: See Appendix for
footnotes.
|
|
|
|
|
|
|
|
|
|
Table
2
|
|
Calculation
of Adjusted Gross Profit and SG&A
|
|
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Year
Ended
December 31,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Gross profit, as
reported
|
$ 844.5
|
|
$ 773.4
|
|
$ 3,209.9
|
|
$ 2,958.2
|
|
Amortization of NextRx-related
intangible assets (3)
|
28.5
|
|
28.5
|
|
114.0
|
|
114.0
|
|
Non-recurring NextRx
integration-related costs (4)
|
-
|
|
31.8
|
|
-
|
|
94.5
|
|
Non-recurring benefit related to
client contract amendment (5)
|
-
|
|
-
|
|
-
|
|
(30.0)
|
|
Accrual related to client
contractual dispute(11)
|
30.0
|
|
-
|
|
30.0
|
|
-
|
|
Adjusted gross profit
|
$ 903.0
|
|
$ 833.7
|
|
$ 3,353.9
|
|
$ 3,136.7
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses, as reported
|
$ 269.6
|
|
$ 215.5
|
|
$ 898.2
|
|
$ 887.3
|
|
Amortization of legacy
intangible assets (6)
|
8.5
|
|
8.5
|
|
34.2
|
|
34.2
|
|
Amortization of NextRx-related
intangible assets (3)
|
1.7
|
|
1.7
|
|
6.5
|
|
6.5
|
|
Non-recurring Medco
transaction-related costs (7)
|
42.2
|
|
-
|
|
62.5
|
|
-
|
|
Non-recurring NextRx
integration-related costs (4)
|
-
|
|
5.4
|
|
-
|
|
28.1
|
|
Adjusted selling, general and
administrative expenses
|
$ 217.2
|
|
$ 199.9
|
|
$ 795.0
|
|
$ 818.5
|
|
|
|
|
|
|
|
|
|
|
Note: See Appendix for
footnotes.
|
|
|
|
|
|
|
|
|
|
|
The Company is providing
adjusted gross profit and selling, general and administrative
expenses excluding the impact of non-recurring charges and
amortization of intangible assets in order to compare the
underlying financial performance to prior periods.
|
|
|
|
|
|
|
|
|
|
Table
3
|
|
EBITDA
Reconciliation
|
|
(in
millions, except per claim data)
|
|
The following is a
reconciliation of net income from continuing operations to
EBITDA(8) from continuing operations. The Company believes
net income is the most directly comparable measure calculated under
U.S. GAAP.
|
|
|
Three Months
Ended
December 31,
|
|
Year
Ended
December 31,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Net income from continuing
operations, as reported
|
$ 290.4
|
|
$ 329.6
|
|
$ 1,275.8
|
|
$ 1,204.6
|
|
Provision for income
taxes
|
173.7
|
|
188.7
|
|
748.6
|
|
704.1
|
|
Depreciation and
amortization
|
65.9
|
|
63.8
|
|
253.4
|
|
244.7
|
|
Interest expense,
net
|
110.8
|
|
39.6
|
|
287.3
|
|
162.2
|
|
EBITDA from continuing
operations, as reported
|
640.8
|
|
621.7
|
|
2,565.1
|
|
2,315.6
|
|
Non-recurring Medco
transaction-related costs (7)
|
42.2
|
|
-
|
|
62.5
|
|
-
|
|
Non-recurring NextRx
integration-related costs (4)
|
-
|
|
37.2
|
|
-
|
|
122.6
|
|
Non-recurring benefit related to
client contract amendment (5)
|
-
|
|
-
|
|
-
|
|
(30.0)
|
|
Accrual related to client
contractual dispute (11)
|
30.0
|
|
-
|
|
30.0
|
|
-
|
|
Adjusted EBITDA from continuing
operations
|
$ 713.0
|
|
$ 658.9
|
|
$ 2,657.6
|
|
$ 2,408.2
|
|
|
|
|
|
|
|
|
|
|
Total adjusted claims
|
194.9
|
|
191.3
|
|
751.5
|
|
753.9
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA per adjusted
claim
|
$ 3.66
|
|
$ 3.44
|
|
$
3.54
|
|
$
3.19
|
|
|
|
|
|
|
|
|
|
|
Note: See Appendix for
footnotes.
|
|
|
|
|
|
|
|
|
|
|
The Company is providing EBITDA
excluding the impact of non-recurring charges in order to compare
the underlying financial performance to prior periods.
|
|
|
|
|
|
|
|
|
|
Table
4
|
|
Calculation
of Adjusted EPS
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
Year
Ended
December 31,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
(per diluted
share)
|
|
EPS from continuing operations,
as reported
|
$ 0.59
|
|
$ 0.62
|
|
$ 2.53
|
|
$ 2.21
|
|
|
|
|
|
|
|
|
|
|
Non-recurring/transaction-related
items:
|
|
|
|
|
|
|
|
|
Medco transaction-related costs
(7)
|
0.06
|
|
-
|
|
0.08
|
|
-
|
|
Medco financing costs
(9)
|
0.08
|
|
-
|
|
0.13
|
|
-
|
|
NextRx integration-related costs
(4)
|
-
|
|
0.04
|
|
-
|
|
0.14
|
|
Benefit related to client
contract amendment (5)
|
-
|
|
-
|
|
-
|
|
(0.03)
|
|
Accrual related to client
contractual dispute (11)
|
0.04
|
|
-
|
|
0.04
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of:
|
|
|
|
|
|
|
|
|
Legacy intangible assets
(6)
|
0.01
|
|
0.01
|
|
0.04
|
|
0.04
|
|
|
|
|
|
|
|
|
|
|
NextRx-related intangible assets
(3)
|
0.04
|
|
0.04
|
|
0.15
|
|
0.14
|
|
|
|
|
|
|
|
|
|
|
EPS from continuing operations,
adjusted
|
$ 0.82
|
|
$ 0.71
|
|
$ 2.97
|
|
$ 2.50
|
|
|
|
|
|
|
|
|
|
|
EPS from discontinued
operations, as reported
|
$
-
|
|
$
-
|
|
$
-
|
|
$ (0.04)
|
|
|
|
|
|
|
|
|
|
|
Non-recurring
items:
|
|
|
|
|
|
|
|
|
Impairment and other charges
(10)
|
-
|
|
-
|
|
-
|
|
0.04
|
|
|
|
|
|
|
|
|
|
|
EPS from discontinued
operations, adjusted
|
$
-
|
|
$
-
|
|
$
-
|
|
$
-
|
|
|
|
|
|
|
|
|
|
|
Total EPS,
adjusted
|
$ 0.82
|
|
$ 0.71
|
|
$ 2.97
|
|
$ 2.50
|
|
|
|
|
|
|
|
|
|
|
Note: See Appendix for
footnotes.
|
|
|
|
|
|
|
|
|
|
|
The Company is providing diluted
earnings per share excluding the impact of non-recurring charges
and intangibles amortization in order to compare the underlying
financial performance to prior periods.
|
|
|
|
|
|
|
|
|
|
Appendix
|
|
Footnotes
|
|
|
|
(1) These claims include home
delivery, specialty and other claims including: (a) drugs
distributed through patient assistance programs (b) drugs we
distribute to other PBM's clients under limited distribution
contracts with pharmaceutical manufacturers and (c) FreedomFP
claims.
|
|
|
|
(2) Total adjusted claims
reflect home delivery claims multiplied by 3, as home delivery
claims typically cover a time period 3 times longer than retail
claims.
|
|
|
|
(3) Amortization of
NextRx-related intangible assets include amounts in both revenues
and selling, general and administrative expense. Revenue
amortization is related to the customer contract with WellPoint
which consummated upon closing of the NextRx acquisition in 2009.
Under U.S. GAAP standards, amortization of intangibles that
arise in connection with consideration given to a customer by a
vendor is characterized as a reduction of revenues.
Intangible amortization of $28.5 million ($17.9 million and
$18.1 million net of tax, respectively) is included as a reduction
to revenue for the three months ended December 31, 2011 and 2010
and $114.0 million ($71.9 million net of tax) is included as a
reduction to revenue for the years ended December 31, 2011 and
2010.
In addition, intangible
amortization of $1.7 million ($1.1 million net of tax) is included
in selling, general and administrative expense in the three months
ended December 31, 2011 and 2010 and $6.5 million ($4.1 million net
of tax) is included in selling, general and administrative expense
in the years ended December 31, 2011 and 2010.
|
|
|
|
(4) Integration-related costs
include those costs directly related to the acquisition of NextRx,
primarily comprised of transition services, integration, site
closures and severance costs. $31.8 million ($20.2 million
net of tax) is included in cost of revenues for the three months
ended December 31, 2010 and $94.5 million ($59.6 million net of
tax) is included in cost of revenues for the year ended December
31, 2010.
Additionally, the Company
incurred integration-related costs of $5.4 million ($3.4 million
net of tax) included in selling, general and administrative expense
in the three months ended December 31, 2010 and $28.1 million
($17.7 million net of tax) included in selling, general and
administrative expense for the year ended December 31,
2010.
|
|
|
|
(5) Non-recurring benefit
relating to an amendment of a client contract. $30.0 million
($18.9 million net of tax) is included as an increase to revenue
for year ended December 31, 2010. This amount was originally
accrued in the NextRx opening balance sheet and in accordance with
business combination accounting guidance the reversal of the
accrual was recorded in revenue, since it relates to client
guarantees, upon amendment of the contract during the second
quarter of 2010.
|
|
|
|
(6) This adjustment represents
the effect of Express Scripts' legacy intangible amortization,
prior to the acquisition of NextRx. Intangible amortization
of $8.5 million ($5.3 million and $5.4 million net of tax) is
included in selling, general and administrative expense for three
months ended December 31, 2011 and 2010, respectively. $34.2
million ($21.6 million net of tax) is included in selling, general
and administrative expense for the year ended December 31, 2011 and
2010.
|
|
|
|
(7) Non-recurring
transaction-related costs include those directly related to the
proposed acquisition of Medco Health Solutions, Inc., and is
primarily composed of professional fees. $42.2 million ($26.4
million net of tax), included in selling, general and
administrative expense for the three months ended December 31, 2011
and $62.5 million ($39.4 million net of tax) is included in
selling, general and administrative expense for the year ended
December 31, 2011.
|
|
|
|
(8) EBITDA is earnings before
taxes, depreciation and amortization, net interest and other income
(expense); or alternatively calculated as operating income plus
depreciation and amortization. EBITDA is presented because it
is a widely accepted indicator of a company's ability to service
indebtedness and is frequently used to evaluate a company's
performance. EBITDA, however, should not be considered as an
alternative to net income, as a measure of operating performance,
as an alternative to cash flow, as a measure of liquidity or as a
substitute for any other measure computed in accordance with U.S.
GAAP. In addition, this definition and calculation of EBITDA may
not be comparable to that used by other companies.
|
|
|
|
(9) Financing costs include fees
related to the termination of a portion of the bridge loan,
amortization of remaining bridge loan fees, commitment fees related
to the new credit agreement and interest and fees on the senior
notes secured in conjunction with the proposed acquisition of Medco
Health Solutions, Inc. Costs of $63.1 million ($39.5 million
net of tax) is included in interest expense in the three months
ended December 31, 2011 and $105.0 million ($66.2 million) is
included in interest expense in the year ended December 31,
2011.
|
|
|
|
(10) The Company recorded
charges of $36.5 million ($23.0 million net of tax) during the year
ended December 31, 2010, the majority of which reflects one-time
costs associated with discontinued operations, including goodwill
and asset impairment, subsequent write-down of assets to fair
market value and the loss on sale of the Phoenix Marketing Group
("PMG") business during the year. $23.0 million is included
in "Net loss from discontinued operations, net of tax" on the
income statement for the year ended December 31, 2010, related to
these charges.
|
|
|
|
(11) In December 2011, the
Company received a proposal from a client asserting claims
regarding the contractual interpretation of certain contractual
terms. The Company responded with an offer to settle these
issues with a lump sum payment of $30 million. Based on
authoritative accounting guidance, the Company determined that
these communications indicate that a loss is both probable and
estimable and we recorded an accrual of $30 million ($18.9 million
net of tax) as an offset to revenues for the year ended December
31, 2011. While no final agreement has been reached on the matter,
the parties are engaged in active discussions and continue to work
to resolve the open issues.
|
|
|
SOURCE Express Scripts, Inc.