Earnings Review and Free Research Report: Express Scripts’ Adjusted EPS Jumped 10%; Beat Market Estimates
Research Desk Line-up: Anthem Post Earnings Coverage
LONDON, UK / ACCESSWIRE / August 2, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Express Scripts Holding Co. (NASDAQ: ESRX) ("Express Scripts"), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=ESRX, following the Company's release of its second quarter fiscal 2017 earnings results on July 25, 2017. The pharmacy benefit manager reported a marginal increase in revenue on a y-o-y basis while it raised its earnings guidance for FY17. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:
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Earnings Reviewed
For the three months ended June 30, 2017, Express Scripts recorded revenues of $25.35 billion compared to revenue of $25.22 billion in Q2 2016. The Company's revenue numbers missed analysts' estimates of $25.40 billion.
During Q2 2017, Express Scripts' adjusted claims were $350 million, above the midpoint of the Company's guidance range. The Company's adjusted selling, general, and administrative expenses (SG&A) fell 5% on a y-o-y basis as it continues to be focused on cost management.
For Q2 2017, Express Scripts' generated earnings before interest, taxes, depreciation, and amortization (EBITDA) of $1.82 billion. The Company noted that the reported quarter included approximately $53 million of incremental revenue and operating income related to the structure of the Company's contract with Anthem. Excluding the impact from the Anthem contractual payment, Express Scripts' EBITDA per adjusted claim was $5.06, up 5% on a y-o-y basis.
Express Scripts' core PBM EBITDA grew 6% in Q2 2017 and 3.5% year-to-date and was attributed to the acceleration of supply chain initiatives, including the Company's successful generic procurement process as well as cost management. Express Scripts is forecasting a core PBM EBITDA moderate growth slightly due to the certain cost benefits that occurred in 2016 that are not expected to recur in H2 2017.
Express Scripts reported Q2 2017 earnings of $801.8 million, or $1.37 per share, compared to earnings of $720.7 million, or $1.13 per diluted share. The Company's earnings, adjusted for amortization costs, were $1.73 per share, up 10% on a y-o-y basis, and topped Wall Street's expectations of $1.71 per share.
Cash Matters
During Q2 2017, Express Scripts generated $1.08 billion of net cash flow from operations, up 146% on a y-o-y basis. The Company also repurchased 18.5 million shares for approximately $1.2 billion during the reported quarter. At the end of Q2 2017, Express Scripts had cash and cash equivalents worth $2.35 billion compared to $3.08 billion at the end of 2016, while its total debt was $13.84 billion at the end of the reported quarter.
Enterprise Value Initiative
Express Scripts announced that it is developing a multi-year, enterprise-wide initiative to transform the organization by the end of 2021. The Company stated that its enterprise value initiative is currently estimated to cost approximately $600 million to $650 million and to deliver cumulative savings of nearly $1.2 billion by 2021. This initiative is expected to help the Company achieve its targeted Core PBM compounded annual EBITDA growth rate from 2017-2020 of 2% to 4% and drive significant value to all of its patients and clients beginning in 2018. Express Scripts expects to formalize the plan for its enterprise value initiative by the end of 2017.
Outlook
Express Scripts increased its guidance for 2017 adjusted earnings per diluted share from the earlier announced range of $6.90 to $7.04 to be in the band of $6.95 to $7.05, which represents growth of 10% over 2016 adjusted earnings per diluted share results at the mid-point of the range.
For Q3 2017, Express Scripts is forecasting total adjusted claims to be in the range of 340 million to 350 million. The Company is estimating adjusted earnings per diluted share in the reported quarter to be in the band of $1.88 to $1.92, which represents growth of 8% to 10% over Q3 2016.
Express Scripts also updated its expected 2018 retention rate for the 2017 selling season to be in the range of 94% to 96%, excluding the impact of the remaining Coventry business rolling off in 2017.
Stock Performance
On Tuesday, August 01, 2017, the stock closed the trading session at $62.36, slightly falling 0.45% from its previous closing price of $62.64. A total volume of 2.68 million shares have exchanged hands. Express Scripts' stock price advanced 1.07% in the last three months. The stock is trading at a PE ratio of 10.82. At Tuesday's closing price, the stock's net capitalization stands at $36.35 billion.
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