Express Scripts Holding Company's
) third quarter 2012 adjusted earnings of $1.02 per share beat
the Zacks Consensus Estimate of 99 cents and increased 29.1% from
the year-ago period. Higher revenues boosted earnings in the
third quarter of 2012.
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On a reported basis (including special items), earnings declined
28.8% to 47 cents in the third quarter of 2012. The decline was
primarily due to the expenses associated with Express Script's
purchase of Medco Health Solutions in April 2012.
Revenues jumped 133.3% in the reported quarter to $27.0 billion.
The massive jump in revenues was attributable to the expanded
product portfolio at Express Scripts due to the acquisition of
Medco Health Solutions. Revenues however fell short of the Zacks
Consensus Estimate of $27.5 billion.
Adjusted gross profit jumped 152.8% to $2.2 billion in the
reported quarter, boosted by the inclusion of results of the
erstwhile Medco Health Solutions. Adjusted selling, general and
administrative expenses climbed 225.0% to $650.9 million.
Total adjusted claims at Express Scripts for the reported quarter
came in at 398.9 million as opposed to 184.8 million in the third
quarter of 2011.
2012 Earnings Outlook
Apart from releasing third quarter results, Express Scripts upped
the lower end of its adjusted earnings guidance for 2012. The
company now expects adjusted earnings for 2012 in the range of
$3.65-$3.75 per share (previous guidance: $3.60 - $3.75 per
share). The Zacks Consensus Estimate currently stands at $3.70
Impressive operating performance, increased generic utilization
and the accelerated realization of savings led Express Scripts to
increase its projected earnings range for 2012. The company is
projecting 750 million diluted weighted average shares
outstanding in 2012.
Express Scripts is on-track to complete integration of Medco
Health Solutions' operations into Express Scripts' business and
expects to at least meet its targets. The company continues to
expect total adjusted claims for 2012 to be $1.4 billion.
We currently have an Outperform recommendation on Express
Scripts. The stock carries a Zacks #2 Rank (Buy rating) in the
Express Scripts revenues received a major boost with the
acquisition of Medco Health. We are also impressed by the
favorable resolution of Express Scripts' long-standing dispute
with retail giant
). In July 2012, the companies inked a multi-year pharmacy
network agreement. The favorable resolution has removed a major
overhang on Express Scripts' shares.