Express Scripts Raises 2013 Forecast for Second Time

Express Scripts Holding Co. (ESRX), the largest U.S. processor of prescription drug claims, raised its forecast for a second time this year on second-quarter earnings that topped analysts’ estimates.

Earnings excluding one-time items were $1.12 a share in the quarter compared with the $1.10 average of 22 analysts’ estimates compiled by Bloomberg. Net income increased to $543 million, or 66 cents a share, from $149.6 million, or 18 cents, a year earlier, the St. Louis-based company said today in a statement.

Express Scripts, which bought competitor Medco Health Solutions Inc. for $29 billion last year, manages drug benefits for insurers and employers and sells drugs through its own mail-order pharmacy. Even with the acquisition, Express Scripts faces aggressive competitors such as Catamaran Corp. (CCT), which beat the bigger company for a contract to cover 180,000 workers at Target Corp (TGT) starting in April.

“As we head toward 2014 and the introduction of insurance exchanges, additional costly regulations, escalation of brand drug prices and increased specialty drug utilization, our clients face unprecedented challenges to manage the cost and complexity of the pharmacy benefit,” George Paz, Express Scripts’ chairman and chief executive officer, said in the statement. “Our clinical specialization, advanced application of the behavioral sciences, and ability to leverage actionable data allow us to drive down costs, reduce waste and improve health in ways no other company can.”

Future Plans

Investors have been anxious for Express Scripts to “more clearly lay out its views” on the industry and its own strategy, including how the company might “deploy its substantial free cash flow,” analyst Thomas Gallucci of Lazard Capital Markets in New York said in a July 25 note to clients.

Express Scripts warned in November that analysts’ expectations of profit growth were too ambitious, saying that it faced pressure including the loss of members and lower drug utilization. The company then provided a 2013 full-year profit forecast that exceeded analysts’ lowered estimates.

Express Scripts today raised its full-year forecast excluding one-time items to $4.26 a share to $4.34 a share, from $4.23 to $4.33 a share projected in April.

Second-quarter sales declined to $26.4 billion, from $27.5 billion. Analysts had estimated $25.5 billion.

To contact the reporter on this story: Alex Wayne in Washington at awayne3@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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