Express Scripts Holding Company
) posted third quarter 2013 earnings per share (excluding special
items) of $1.08, up from $1.03 reported in the year-ago quarter.
The Zacks Consensus Estimate was $1.08.
Excluding special items but including amortization expense,
earnings per share came in at 71 cents compared to 64 cents in
the year-ago quarter.
Quarter in Detail
Revenues were down 3.2% year over year in the reported quarter
to $25.9 billion but surpassed the Zacks Consensus Estimate of
$25.0 billion. The decrease in revenues was attributed to lower
claims volume owing to the transition of claims of
Adjusted gross profit was down 3.4% to $2.1 billion in the
reported quarter. Adjusted selling, general and administrative
expenses declined 17.2% to $510.8 million.
Total adjusted claims at Express Scripts for the reported
quarter came in at $358.1 million, down 9% due to an expected
roll-off of claims from UnitedHealthcare Group.
Cash generated from operating activities came in at $1.0
billion, up 31% year over year. Express Scripts repurchased 11.6
million shares for $751.5 million and still has 51.3 million
shares remaining under its current share repurchase program. We
believe the buyback program highlights the company's commitment
to create value for shareholders.
2013 Earnings Outlook Narrowed
Apart from announcing third quarter 2013 results, Express
Scripts narrowed its earnings guidance range for 2013 due to a
reduced tax rate. The company now expects adjusted earnings in
the range of $4.30 - $4.34 per share in 2013 compared to the
earlier projected range of $4.26 - $4.34 per share.
The new projected range represents year- over-year growth of
15% - 16% compared to the earlier projected range of 14% -
The Zacks Consensus Estimate currently stands at $4.31 per
share, within the new guidance range.
For the fourth quarter of 2013, Express Scripts expects
adjusted earnings in the range of $1.09-$1.13 per share. The
Zacks Consensus Estimate for the fourth quarter is $1.12, towards
the higher end of the company's estimate.
The third quarter results did not surprise us. In Apr 2012,
Express Scripts acquired healthcare company Medco Health
Solutions. We view the acquisition as positive for the company
and are impressed by the integration process.
However, the introduction of insurance exchanges, additional
costly regulations, escalation of brand drug prices and increased
specialty drug utilization loom large on the company's business
in the long run.
Currently, Express Scripts carries a Zacks Rank #2 (Buy).
Other stocks which look attractive include
CVS Caremark Corporation
). While Cardinal Health carries a Zacks Rank #1 (Strong Buy),
both McKesson and CVS Caremark are Zacks Rank #2 (Buy)
CARDINAL HEALTH (CAH): Free Stock Analysis
CVS CAREMARK CP (CVS): Free Stock Analysis
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MCKESSON CORP (MCK): Free Stock Analysis
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