Shares of Express Scripts Holding Co. slid while the broader market rose slightly Friday afternoon, a day after the pharmacy benefits manager reported a 9 percent rise in third quarter earnings and narrowed its 2013 forecast.
THE SPARK: The St. Louis company said Thursday after markets closed that it earned $426.7 million, or 52 cents per share, in the quarter that ended Sept. 30. That compares to net income of $391.4 million, or 47 cents per share, last year. Revenue fell 3 percent to $25.92 billion.
Excluding one-time items, earnings totaled $1.08 per share, which matched average analyst expectations.
The company also processed fewer prescriptions in the quarter in part because a big client, insurer UnitedHealth Group Inc., is shifting its pharmacy benefits management in-house.
Express Scripts also said it now expects adjusted net income of $4.30 to $4.34 per share, compared to its previous range of $4.26 to $4.34 per share. Analysts expect $4.31 per share, on average.
THE BIG PICTURE: Express Scripts is the nation's largest pharmacy benefits managers, or PBM. They run prescription drug plans for employers, insurers and other customers. They also process mail-order prescriptions and handle bills for prescriptions filled at retail pharmacies.
Express Scripts closed on a $29.1 billion acquisition of Medco, a fellow PBM, last year. The deal created a company big enough to handle the prescriptions of more than one in three Americans, and the company's revenue has swelled since then.
THE ANALYSIS: Cowen and Co. analyst Charles Rhyee said in a research note investors may focus on the company's seemingly weaker profitability in the third quarter compared to the second. But he noted that the comparison amounted to a "mismatch of expectations" because the second quarter included a one-time client payment that helped results.
"We would be buyers on (share price) weakness," wrote the analyst, who has an "Outperform" rating and $76 price target on the stock.
SHARE ACTION: Down 4.3 percent, or $2.73, to $61.01 in afternoon trading. The company's stock has climbed about 13 percent so far this year.