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Express Scripts Q1 Profit Declines On Acquisition Costs

Express Scripts Holding Co.(ESRX: Quote) Wednesday reported a lower first-quarter profit, hurt mainly by expenses related Medco Health Solutions acquisition. The pharmacy benefits manager's earnings for the quarter were short of estimates, while revenues came in above expectations.

Moving forward, the company detailed its full-year 2012 earnings outlook for the combined company, however, the mid-point of the guidance is below Wall Street's current projections. This is the first guidance provided by Express Scripts since the completion of Medco acquisition.

Last month, Express Scripts completed the $29.1 billion acquisition of Medco, making it the largest PBM in the U.S. PBMs act as middlemen for drug makers, pharmacies and health-plan sponsors. They are responsible for processing and paying the prescription-drug benefits and claims.

Express Scripts said its revenues for the first quarter grew to $12.13 billion from $11.09 billion last year. Eighteen Wall Street analysts on consensus estimated revenues of $11.48 billion for the quarter.

Total claims for the quarter increased to 167 million from 162 million last year.

The St. Louis-based company's first-quarter net income dropped to $267.8 million or $0.55 per share from $326.5 million or $0.61 per share in the same quarter last year.

For the quarter, transaction and financing costs related to Medco acquisition was $0.13 per share.

Adjusted earnings, which exclude special charges and gains, rose to $0.73 per share from $0.66 per share last year. On average, 21 analysts polled by Thomson Reuters expected earnings of $0.77 per share for the quarter. Analysts' estimates typically exclude special items. Looking forward to full year 2012, Express Scripts expects adjusted earnings in a range of $3.36 to $3.66 per share. Analysts currently expect earnings of $3.63 per share for the year. Total combined adjusted claims are expected to be about 1.4 billion.

Express Scripts continues to expect Medco acquisition to be slightly accretive during the integration period and moderately accretive once the integration is complete, which is anticipated in the first half of 2014. The company expects to realize $1 billion in net synergies once fully integrated.

Medco's earnings for the first quarter were $0.62 per share compared to $0.80 per share a year ago. Adjusted earnings were $0.79 per share compared to $0.85 per share last year. First-quarter results of both companies were reported separately, because, both the PBMs were separate when the quarter ended.

ESRX closed Thursday's trading at $54.34, up $0.44 or 0.82%, on a volume of 9.3 million shares. The stock, however, lost $0.74 or 1.36% in after hours trade.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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