Express Scripts Reports Strong Fourth Quarter Earnings; $139 Million of Cash From Operations.Business Editors ST. LOUIS--(BUSINESS WIRE)--Feb. 12, 2003 Express Scripts, Inc. (Nasdaq:ESRX) announced net income of $56.7 million, or $0.72 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share for the fourth quarter, and $202.8 million, or $2.55 per diluted share for 2002. This compares with net income of $40.9 million, or $0.52 per diluted share for the fourth quarter of 2001, and $151.0 million, or $1.89 per diluted share for 2001, excluding the amortization of goodwill. This represents increases of 38 percent and 35 percent in per share amounts for the fourth quarter and full-year 2002, respectively. Results for 2002 include extraordinary losses on the early retirement of debt of $0.01 per diluted share. Express Scripts generated $139.0 million of cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses in the fourth quarter compared with $112.9 million in the same quarter last year. During the quarter, the company repurchased 722,000 shares of common stock for $40.3 million, and to date, Express Scripts has repurchased 5.8 million shares under its share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program, which was expanded to 10 million shares during 2002. Express Scripts also repaid $55.0 million of debt during the fourth quarter, and early in February February: see month. 2003, repaid an additional $25.0 million. For the full year, Express Scripts generated $426.0 million of cash flow from operations compared to $281.0 million in 2001. "By all measures, 2002 was another outstanding year, not only in terms of our strong financial performance, but also from our success in making prescription drugs prescription drug Prescription medication Pharmacology An FDA-approved drug which must, by federal law or regulation, be dispensed only pursuant to a prescription–eg, finished dose form and active ingredients subject to the provisos of the Federal Food, Drug, more affordable for our clients and their members," stated Barrett Barrett (sometimes spelled Barret or Barratt) is a surname that has been associated with several different people, places and organisations: Barrett is a popular surname in south and west Ireland. Toan, chairman and chief executive officer. "As we look forward to 2003 and beyond, our efforts will focus on making the prescription prescription In property law, the effect of the lapse of time in creating and destroying rights. Acquisitive prescription allows an individual, after unequivocal possession for a specific period, to acquire an interest in real property, such as an easement, but not the process safer through physician connectivity A generic term for connecting devices to each other in order to transfer data back and forth. It often refers to network connections, which embraces bridges, routers, switches and gateways as well as backbone networks. , and more affordable through greater use of generic drugs generic drug, a drug sold or prescribed under the nonproprietary name of its active ingredients or under a generally descriptive name rather than under a brand or trade name. , increased mail pharmacy pharmacy, art of compounding and dispensing drugs and medication. The term is also applied to an establishment used for such purposes. Until modern times medication was prepared and dispensed by the physician himself. In the 18th cent. delivery, improved formulary formulary /for·mu·lary/ (for´mu-lar?e) a collection of recipes, formulas, and prescriptions. National Formulary see under N. for·mu·lar·y n. compliance with low-cost brand drugs, and better management of specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. drugs." Strong Operating Results Revenues for the fourth quarter of 2002 were $3.6 billion, a 38 percent increase over $2.6 billion for the same quarter last year. This year-to-year increase is due primarily to increased rates of utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be of prescription drugs by members, the acquisition of National Prescription Administrators NPA was formed in 1977 as a privately held full-service PBM. The company grew to become a leading provider for labor unions and government groups in the northeast United States. Express Scripts acquired NPA on April 22, 2002. , Inc. (NPA (1) (Numbering Plan Area) The Bellcore/Telcordia telephone area code system in use in the U.S., Canada, Alaska, Hawaii and islands in the Caribbean. See NPA code. (2) (Network Professional Association, San Diego, CA, www.npanet. ), and drug price inflation. Revenues for 2002 were $13.2 billion, a 41 percent increase over last year. Mail pharmacy prescriptions increased to 7.1 million during the fourth quarter of 2002, a 25 percent increase compared with the same quarter last year. In addition, specialty distribution claims in the fourth quarter increased to 0.9 million, a 49 percent increase over last year's fourth quarter. Network pharmacy claims processed in the fourth quarter were 94.3 million, an 18 percent increase over the fourth quarter of 2001. For 2002, mail pharmacy prescriptions increased to 27.2 million, a 33 percent increase over 2001. Specialty distribution claims for the year totaled 3.1 million, a 63 percent increase over last year. Network pharmacy claims processed in 2002 were 354.9 million, a 21 percent increase over 2001. For the fourth quarter, generic drugs reached an all-time all-time adj. Exceeding all others up to the present time: an all-time speed skating record. all-time Adjective Informal high of 45.9 percent of total prescriptions compared to 41.7 percent for the same quarter last year. For 2002, generic drugs comprised 44.2 percent of all prescriptions compared to 41.1 percent for 2001. Increased mail penetration The successful unauthorized breach of a security perimeter. See penetration test. and higher levels of generic Generic Describes the characteristics and/or experience of the total universe of a coupon of MBS sector type; that is, in contrast to a specific pool or collateral group, as in a specific CMO issue. utilization have had a positive impact on the profitability per claim. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become per adjusted claim was $1.05 for the fourth quarter of 2002, a 21 percent increase over the fourth quarter of 2001. For 2002, EBITDA per adjusted claim was $1.03, a 17 percent increase over 2001. Express Scripts continuously explores the use of emerging technologies to improve the operational and administrative support functions of providing the pharmacy benefit. Several projects designed to promote member, client and physician connectivity, enhance the adjudication The legal process of resolving a dispute. The formal giving or pronouncing of a judgment or decree in a court proceeding; also the judgment or decision given. The entry of a decree by a court in respect to the parties in a case. process and improve the overall delivery of the pharmacy benefit were initiated during recent months. As a result of our continuing review of the useful lives of fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → supporting our business processes, we reduced the estimated useful lives of existing systems due to the progress in implementing new technologies. Accordingly, depreciation expense increased during the fourth quarter by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $6.5 million. The company established the Express Scripts Foundation, an independent charitable foundation, in 2001. During 2002, Express Scripts recorded charitable contributions charitable contribution n. in taxation, a contribution to an organization which is officially created for charitable, religious, educational, scientific, artistic, literary, or other good works. of approximately $13.75 million in selling, general and administrative expenses, the majority of which were contributed to the Foundation. 2003 Earnings Guidance Express Scripts enjoyed a strong selling season for new business. As a result, the company expects 2003 revenue growth of approximately 20 percent; about one-half of this growth is due to new business. The company believes its 2003 diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of will be in the $3.15 to $3.20 range. Financial performance for 2003 will be dependent, among other things, on mail pharmacy prescription volume, generic utilization, growth in specialty distribution services, and the successful integration of NPA. Express Scripts Enters Agreement with Managed Pharmacy Benefits, Inc. On December December: see month. 19, 2002, Express Scripts entered into an agreement with Managed Pharmacy Benefits, Inc. (MPB MPB Musica Popular Brasileira MPB Mountain Pine Beetle MPB Male Pattern Baldness MPB Most Precious Blood (band) MPB Mississippi Public Broadcasting MPB Ministry of Planning and Budget (South Korea) ) under which Express Scripts acquired certain assets from MPB for approximately $14.0 million, and entered into an outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. arrangement with respect to MPB's operations. MPB is a St. Louis-based pharmacy benefit manager and subsidiary of Medicine Shoppe International, Inc., a franchisor of apothecary-style retail pharmacies This article is a list of major pharmacies (also known as chemists and drugstores) by country. Australia Pharmacies in Australia are mostly independently-owned by pharmacists, often operated as franchises of retail brands offered by the three major , owned by Cardinal Health <includeonly></includeonly> Cardinal Health (NYSE: CAH) is a premier, global healthcare company dedicated to making healthcare safer and more productive. Overview Headquartered in Dublin, Ohio, Cardinal Health, Inc. , Inc. MPB processes approximately 6.0 million retail claims and 85,000 mail order claims annually. This transaction is expected to be neutral to earnings in 2003, and be slightly accretive in 2004. Tempe, Arizona Tempe (pronounced /tɛm.'piː/) is a city in Maricopa County, Arizona, USA, with a population of 169,712 according to 2006 Census Bureau estimates. mail pharmacy expansion Express Scripts was awarded a 5-year contract with the U.S. Department of Defense under the TRICARE Management Activity to provide mail pharmacy services to nearly 9 million beneficiaries beginning in March 2003. To support this contract and other mail growth, the company is building a new facility in Tempe, Arizona to accommodate the additional workforce and the equipment for pharmacy and mail order fulfillment Order fulfillment (in BE also: order fulfilment) is in the most general sense the complete process from point of sales inquiry to delivery of a product to the customer. Sometimes Order fulfillment . For the fourth quarter capital expenditures increased to $28.8 million compared to $20.5 million for the same quarter last year, mainly as a result of the expansion in the company's Tempe Tempe (tĕm`pē), city (1990 pop. 141,865), Maricopa co., S Ariz., in the Salt River valley, a suburb of Phoenix; inc. 1894. Its population has grown markedly since the 1970s with the expansion of the greater Phoenix area. facilities. Express Scripts Recognized for Consistent Financial Performance For the fourth year in a row, Express Scripts was included in the Forbes Forbes , B(ertie) C(harles) 1880-1954. American publisher and businessman who founded and edited (1916-1954) Forbes magazine. His son Malcolm Stevenson Forbes Platinum platinum (plăt`ənəm), metallic chemical element; symbol Pt; at. no. 78; at. wt. 195.08; m.p. 1,772°C;; b.p. 3,827±100°C;; sp. gr. 21.45 at 20°C;; valence +2 or +4. 400 list, which is made up of the "best big companies in America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. ," according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Forbes Magazine. Companies earn a place on the list based on a composite composite, alternate common name for Asteraceae or Compositae, the aster family. composite - aggregate score for sales and earnings growth and return on capital. On the recently released 2002 list, the company moved up one place in rank - from 23 to 22, and placed first in the business services sector for 5-year average growth in sales and earnings per share. Other Matters As part of the SEC's review of Fortune 500 company filings, Express Scripts has received a comment letter from the SEC pertaining per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. to previous filings. All but one of the issues relate to disclosure and reclassification Reclassification The process of changing the class of mutual funds once certain requirements have been met. These requirements are generally placed on load mutual funds. Reclassification is not considered to be a taxable event. matters, and none of the issues raised in the letter would affect the company's results of operations (which include gross profit, EBITDA and net income) or the balance sheet and statement of cash flows. One revenue recognition issue was raised in the letter, whether the company should include in revenue copayments paid by individual members to retail pharmacies for prescriptions filled in the company's retail networks. As, previously disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). in its periodic filings with the SEC, the company does not include retail copayments in its revenue. If the company were to include retail copayments in its revenue, it would result in an increase in reported revenue for 2002 and 2001 which the company estimates would be in a range of from 15 to 30 percent. Cost of revenue would increase by an amount equal to the increase in revenue, so the company's results of operations, which include gross profit, EBITDA and net income, the balance sheet, and the statement of cash flows would not be affected. The company is in discussion with the SEC about the issues raised in the comment letter. Conference Call Express Scripts will hold an investor conference call on February 13, 2003 at 7:30 a.m. CST CST abbr. 1. Central Standard Time 2. convulsive shock treatment CST Central Standard Time Noun 1. (8:30 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy ) to discuss its fourth quarter 2002 earnings. The call will be broadcast live as well as replayed through the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the . The webcast can be accessed through the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of Express Scripts' website at http://www.express-scripts.com. Express Scripts, Inc. is one of the largest pharmacy benefit management A Pharmacy Benefit Manager (PBM) is a third party administrator of prescription drug programs. They are primarily responsible for processing and paying prescription drug claims. (PBM PBM - play by mail. See play by electronic mail. ) companies in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. providing PBM services to over 50 million members through facilities in eight states and Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of . Express Scripts serves thousands of client groups, including managed care organizations, insurance carriers, third-party administrators, employers and union-sponsored benefit plans. Express Scripts provides integrated PBM services, including network pharmacy claims processing, mail pharmacy services, benefit design consultation, drug utilization review drug utilization review Health insurance A study of drug prescriptions to evaluate appropriateness and cost-effectiveness of drug therapy , formulary management, disease management, medical and drug data analysis services, medical information management services and informed decision counseling services through its Express Health Line(SM) division. The company also provides distribution services for specialty pharmaceuticals through its Specialty Distribution subsidiary and sample accountability The traceability of actions performed on a system to a specific system entity (user, process, device). For example, the use of unique user identification and authentication supports accountability; the use of shared user IDs and passwords destroys accountability. services through its Phoenix subsidiary. Express Scripts is headquartered in St. Louis Louis, titular duke of Burgundy Louis, 1682–1712, titular duke of Burgundy; grandson of King Louis XIV of France. He became heir to the throne on the death (1711) of his father, Louis the Great Dauphin. , Missouri Missouri, state, United States Missouri (mĭz  r`ē, –ə), one of the midwestern states of the United States. . More information can be found at
http://www.express-scripts.com, which includes expanded investor
information and resources.SAFE HARBOR Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. STATEMENT This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , 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: -- risks associated with our acquisitions of Phoenix Marketing Group (Holdings), Inc. and NPA, including integration risks and costs, risks of client retention and repricing of client contracts, and risks associated with the operations of acquired businesses -- risks associated with our ability to maintain internal growth rates, or to control operating or capital costs -- continued pressure on margins resulting from client demands for lower prices, enhanced service offerings and/or higher service levels, and the possible termination of, or unfavorable modification to, contracts with key clients or providers -- competition in the PBM industry, and our ability to consummate contract negotiations with prospective clients, as well as competition from new competitors offering services that may in whole or in part replace services that we now provide to our customers -- adverse results in regulatory matters, the adoption of new legislation or regulations (including increased costs associated with compliance with new laws and regulations, such as privacy regulations under the Health Insurance Portability and Accountability Act (HIPAA)), more aggressive enforcement of existing legislation or regulations, or a change in the interpretation of existing legislation or regulations -- increased compliance risks relating to our contracts with the Department of Defense Tricare Plan and various state governments -- risks arising from investigations of certain PBM practices and pharmaceutical pricing, marketing and distribution practices currently being conducted by the U.S. Attorney offices in Philadelphia and Boston and other regulatory agencies -- the possible loss, or adverse modification of the terms, of our relationships with pharmaceutical manufacturers, or changes in pricing, discount or other practices of pharmaceutical manufacturers -- adverse results in litigation -- risks associated with the use and protection of the intellectual property we use in our business -- risks associated with our leverage and debt service obligations, including the effect of certain covenants in our borrowing agreements -- risks associated with our ability to continue to develop new products, services and delivery channels -- general developments in the health care industry, including the impact of increases in health care costs, changes in drug utilization and cost patterns and introductions of new drugs -- uncertainties regarding the implementation and the ultimate terms of proposed government initiatives, including a Medicare prescription drug benefit -- increase in credit risk relative to our clients due to adverse economic trends -- risks associated with our inability to attract and retain qualified personnel -- other risks described from time to time in our filings with the Securities and Exchange Commission We do not undertake any obligation to release publicly any revisions ReVisions is a 2004 anthology of alternate history short-stories. It is edited by Julie E. Czerneda and Isaac Szpindel. Contents Title Author The Resonance of Light James Alan Gardner Out of China Julie E. to such forward-looking statements to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" or to reflect the occurrence of unanticipated events. FINANCIAL TABLES FOLLOW
EXPRESS SCRIPTS, INC.
Unaudited Consolidated Statement of Operations
(in thousands, except per share data)
Three months ended Year ended
December 31, December 31,
------------------------------------------------
2002 2001 2002 2001
----------- ----------- ------------ -----------
Revenues $3,609,479 $2,609,647 $13,187,384 $9,328,782
Cost of revenues 3,384,284 2,453,415 12,363,966 8,732,914
----------- ----------- ------------ -----------
Gross profit (1) 225,195 156,232 823,418 595,868
Selling, general and
administrative (1) 121,832 92,081 451,692 358,691
----------- ----------- ------------ -----------
Operating income 103,363 64,151 371,726 237,177
----------- ----------- ------------ -----------
Other (expense)
income :
Undistributed loss
from joint
venture (1,255) (741) (4,549) (1,834)
Interest income 946 1,599 4,716 7,120
Interest expense (10,700) (8,029) (42,235) (34,219)
----------- ----------- ------------ -----------
(11,009) (7,171) (42,068) (28,933)
----------- ----------- ------------ -----------
Income before income
taxes 92,354 56,980 329,658 208,244
Provision for income
taxes 35,097 22,794 125,795 83,172
----------- ----------- ------------ -----------
Income before
extraordinary items 57,257 34,186 203,863 125,072
Extraordinary items,
net of taxes (532) - (1,027) (372)
----------- ----------- ------------ -----------
Net income $56,725 $34,186 $202,836 $124,700
=========== =========== ============ ===========
Basic earnings per
share (2):
Before extraordinary
items $0.74 $0.44 $2.61 $1.60
Extraordinary items (0.01) - (0.01) -
----------- ----------- ------------ -----------
Net income $0.73 $0.44 $2.60 $1.60
=========== =========== ============ ===========
Weighted average number of common
shares
outstanding during the
period - basic (2) 77,584 77,478 77,866 77,857
=========== =========== ============ ===========
Diluted earnings per
share (2):
Before extraordinary
items $0.72 $0.43 $2.56 $1.56
Extraordinary items - - (0.01) -
----------- ----------- ------------ -----------
Net income $0.72 $0.43 $2.55 $1.56
=========== =========== ============ ===========
Weighted average number of common
shares
outstanding during the
period - diluted (2) 79,255 79,185 79,667 79,827
=========== =========== ============ ===========
Reconciliation of prior year
under FAS 142
Goodwill amortization,
net of tax $6,674 $26,299
Net income before
extraordinary items $40,860 $151,371
Extraordinary
items, net of tax $- $(372)
Net income $40,860 $150,999
Net income before
extraordinary items per
share:
Basic $0.53 $1.94
Diluted $0.52 $1.89
Net income per
share:
Basic $0.53 $1.94
Diluted $0.52 $1.89
EBITDA (3) $122,425 $84,569 $453,764 $315,358
=========== =========== ============ ===========
See Notes to Unaudited Consolidated Statement of Operations
EXPRESS SCRIPTS, INC.
Notes to Unaudited Consolidated Statement of Operations
(in thousands)
(1) Includes depreciation and amortization expense of:
3 months ended Year ended
December 31, December 31,
--------------------------------------
2002 2001 2002 2001
--------- -------- --------- ---------
Gross profit $6,233 $3,947 $25,399 $14,429
Selling, general and
administrative $12,829 $16,471 $56,639 $63,752
(2) Earnings per share and weighted average shares outstanding have
been restated to reflect the two-for-one stock split effective
June 22, 2001.
(3) EBITDA is earnings before other income (expense), taxes,
depreciation and amortization, or operating income plus depreciation
and amortization.
3 months ended Year ended
December 31, December 31,
--------------------------------------
2002 2001 2002 2001
--------- -------- --------- ---------
Operating income $103,363 $64,151 $371,726 $237,177
Depreciation and amortization 19,062 20,418 82,038 78,181
--------- -------- --------- ---------
EBITDA $122,425 $84,569 $453,764 $315,358
========= ======== ========= =========
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, as an alternative to cash flow or a measure
of liquidity. In addition, our calculation of EBITDA may not be
identical to that used by other companies.
EBITDA in prior periods was restated to conform with the current
quarter's presentation. The prior periods were adjusted to exclude
from depreciation and amortization the amortization of prepaid
client discounts. For 2002 and 2001, this amounted to $4.8 million and
$1.9 million, respectively.
EXPRESS SCRIPTS, INC.
Unaudited Consolidated Balance Sheet
(in thousands)
December 31, December 31,
2002 2001
----------- -----------
ASSETS
Current assets
Cash and cash equivalents $190,654 $177,715
Receivables, net 988,544 883,827
Inventories 160,483 122,375
Other current assets 54,140 29,286
----------- -----------
Total current assets 1,393,821 1,213,203
Property and equipment, net 168,973 165,263
Goodwill, net 1,378,436 942,280
Other intangible assets, net 251,111 165,349
Other assets 14,651 14,150
----------- -----------
Total assets $3,206,992 $2,500,245
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Claims and rebate payable $1,084,906 $910,360
Other current liabilities 455,601 335,257
Current maturities of long term debt 3,250 -
----------- -----------
Total current liabilities 1,543,757 1,245,617
Long-term debt 562,556 346,119
Other long-term liabilities 97,824 76,512
----------- -----------
Total liabilities 2,204,137 1,668,248
Total stockholders' equity 1,002,855 831,997
----------- -----------
Total liabilities and stockholders' equity $3,206,992 $2,500,245
=========== ===========
EXPRESS SCRIPTS, INC.
Unaudited Condensed Consolidated Statement of Cash
Flows
(in thousands)
Year ended
December 31,
-------------------
2002 2001
--------- ---------
Cash flow from operating activities:
Net income $202,836 $124,700
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 82,038 78,181
Other 141,096 78,109
--------- ---------
Net cash provided by operating activities: 425,970 280,990
--------- ---------
Cash flows from investing and financing
activities:
Purchases of property and equipment (61,303) (57,286)
Acquisitions and joint venture (487,982) (20,265)
Treasury stock acquired (107,121) (54,463)
Repayment of long-term debt (205,000) (50,000)
Proceeds from long-term debt 425,000 -
Other 23,375 25,535
--------- ---------
Net cash used in investing and
financing activities (413,031) (156,479)
--------- ---------
Net increase in cash and
cash equivalents 12,939 124,511
Cash and cash equivalents at beginning
of period 177,715 53,204
--------- ---------
Cash and cash equivalents at end
of period $190,654 $177,715
========= =========
EXPRESS SCRIPTS, INC.
Table 1
Unaudited Operating Statistics
(in thousands, except per claim)
----------------------------------------------------------------------
3 months 3 months 3 months
ended ended ended
12/31/2002 09/30/2002 06/30/2002
----------- ----------- -----------
Revenue Detail
--------------
PBM revenues (1) $3,560,705 $3,382,600 $3,360,382
Non-PBM revenues 48,774 43,598 42,256
----------- ----------- -----------
Total revenues $3,609,479 $3,426,198 $3,402,638
=========== =========== ===========
Per Claim
---------
Network revenue/claim $26.85 $26.89 $26.05
Mail revenue/claim $142.76 $139.50 $137.87
Claims Detail
-------------
Network (3) 94,289 88,869 91,610
SDS 863 794 759
Mail 7,128 7,036 6,967
----------- ----------- -----------
Total claims 102,280 96,699 99,336
=========== =========== ===========
Adjusted claims (4) 116,536 110,771 113,270
=========== =========== ===========
Margin Analysis
---------------
Gross profit margin 6.2% 6.2% 6.2%
EBITDA margin 3.4% 3.2% 3.3%
Per Adjusted Claim
------------------
Gross profit $1.93 $1.91 $1.87
EBITDA $1.05 $1.00 $1.00
3 months 3 months
ended ended
03/31/2002 12/31/2001
----------- -----------
Revenue Detail
--------------
PBM revenues (1) $2,720,200 $2,590,515 (2)
Non-PBM revenues 28,869 19,132
----------- -----------
Total revenues $2,749,069 $2,609,647
=========== ===========
Per Claim
---------
Network revenue/claim $23.95 $23.40
Mail revenue/claim $130.91 $123.75
Claims Detail
-------------
Network (3) 80,112 79,967
SDS 666 581
Mail 6,039 5,714
----------- -----------
Total claims 86,817 86,262
=========== ===========
Adjusted claims (4) 98,895 97,690
=========== ===========
Margin Analysis
---------------
Gross profit margin 6.4%(9) 6.0%
EBITDA margin 3.9%(9) 3.2%
Per Adjusted Claim
------------------
Gross profit $1.77 (9) $1.60
EBITDA $1.08 (9) $0.87
----------------------------------------------------------------------
See Notes to Unaudited Operating Statistics
Selected Ratio Analysis
Table 2
----------------------------------------------------------------------
As of As of As of
12/31/2002 09/30/2002 06/30/2002
----------- ----------- -----------
Debt to EBITDA ratio (5) 1.2x 1.5x 1.8x
EBITDA interest coverage (6) 10.7x 10.5x 10.6x
Operating cash flow interest 10.1x 10.1x 10.5x
coverage (7)
Debt to capitalization (8) 36.1% 39.0% 42.8%
----------------------------------------------------------------------
As of As of
03/31/2002 12/31/2001
----------- -----------
Debt to EBITDA ratio (5) 1.0x 1.1x
EBITDA interest coverage (6) 10.5x 9.2x
Operating cash flow interest coverage (7) 7.7x 8.2x
Debt to capitalization (8) 28.3% 29.4%
EXPRESS SCRIPTS, INC.
Notes
Unaudited Operating Statistics (excludes non-recurring items)
(1) Our PBM revenues generally include administrative fees, dispensing
fees and ingredient costs of pharmaceuticals dispensed from retail
pharmacies included in one of our networks or from one of our mail
pharmacies, and the associated costs are recorded in cost of
revenues (the Gross Basis). Where we only administer the contracts
between our clients and the clients' retail pharmacy networks we
record as revenues only the administrative fee we received from
our activities (the Net Basis).
(2) This increase primarily reflects higher utilization of
prescription drugs, the acquisition of NPA in April 2002 and drug
price inflation.
(3) Network claims exclude drug formulary only claims where we only
administer the clients formulary and approx. 0.5 million manual
claims per quarter.
(4) Adjusted claims represent network claims and specialty
distribution claims plus mail claims, which are multiplied by 3,
as mail claims are typically 90 day scripts and network claims are
generally 30 day scripts.
(5) Represents debt as of the balance sheet date divided by EBITDA for
the twelve months ended
(6) Represents EBITDA for the twelve months ended divided by interest
for the twelve months ended
(7) Represents Operating Cash Flow for the twelve months ended divided
by interest for the twelve months ended
(8) Represents debt divided by the total of debt and stockholders
equity
(9) Includes a non-recurring item pertaining to the elimination of a
contract pricing reserve which resulted in an increase in gross
profit of $15 million. Excluding this one-time item, gross profit
and EBITDA per adjusted claim is $1.62 and $0.93, respectively.
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