Express Scripts falls after profit growth report

Express Scripts shares fall a day after PBM reports soaring 2nd qtr profit, higher guidance

Associated Press

Shares of Express Scripts Holding Co. slipped Tuesday in trading, a day after the pharmacy benefits manager said its second-quarter profit soared and it raised its 2013 forecast.

THE SPARK: The St. Louis company said Monday after markets closed that its second-quarter earnings more than tripled compared to last year, when costs from its acquisition of competitor Medco Health Solutions weighed on its performance.

Express Scripts earned $543 million, or 66 cents per share, in the quarter ended June 30. That compares to $149.6 million, or 18 cents per share, a year ago.

Express Scripts said it earned $1.12 per share if one-time items are excluded, and revenue fell 4 percent to $26.43 billion in a performance that topped Wall Street expectations.

The company said its prescriptions fell 7 percent after it lost a contract with UnitedHealth Group Inc., the largest U.S. health insurer.

Express Scripts also raised its full-year guidance to a range of $4.26 to $4.34 per share, up from its previous estimate of $4.23 to $4.33 per share.

It also said Jeff Hall would no longer serve as company chief financial officer.

THE BIG PICTURE: Express Scripts Holding Co. is the nation's largest pharmacy benefits manager. It runs prescription drug plans for employers, insurers and other customers. Express Scripts and other PBMs process mail-order prescriptions and handle bills for prescriptions filled at retail pharmacies.

THE ANALYSIS: Cowen and Co. analyst Charles Rhyee called the CFO announcement a "major surprise."

"While we are uncertain of the reasons for the change, we believe the switch could prove a positive catalyst for the company as management sets out to drive a new message on the future growth opportunities for the company," the analyst said in a research note.

S&P Capital IQ analyst Herman Saftlas said in an interview he thinks the share drop on Tuesday may stem in part from investors taking profits.

The stock price had climbed about 24 percent so far this year, as of Monday's close.

"You don't really see that much to worry about here," he said. "They integrated Medco pretty good."

SHARE ACTION: Down 3.4 percent, or $2.26, to $64.67 Tuesday afternoon, while the Nasdaq exchange advanced slightly.

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