Express Scripts Holding Co. (ESRX: Quote), Tuesday reported a lower second-quarter profit, hurt mainly by integration costs and amortization expenses related to Medco Health Solutions acquisition. This is the first combined results of Express Scripts and Medco since the acquisition.
Nevertheless, the pharmacy benefits manager's earnings for the quarter trumped analysts' estimates, as did revenues. Looking ahead, the company lifted its full-year 2012 earnings outlook. Express Scripts shares are currently up seven percent in after-hours trade, following the news.
In April, Express Scripts completed the $29.1 billion acquisition of Medco, making it the largest pharmacy benefits manager, or PBM, in the US. 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.
Chief Executive George Paz said, "We are fully underway with the integration process and will continue to focus on lowering healthcare costs while improving health outcomes. As a result of our steadfast commitment to providing exemplary service and innovative offerings to clients and patients, we are experiencing strong retention rates."
Express Scripts said its revenues for second quarter surged to $27.69 billion from $11.36 billion last year. Nineteen analysts on a consensus estimated revenues of $26.57 billion for the quarter.
Total claims for the quarter rose to 326.3 million from 161.4 million last year.
Second-quarter gross margin advanced to 7.8 percent from 7.1 percent last year.
The St. Louis-based company's second-quarter net income dropped to $170.9 million or $0.21 per share from $334.2 million or $0.66 per share last year.
The second quarter bottom line included transaction and integration costs of $0.25 per share, and amortization of Medco-related intangible assets of $0.34 per share.
Adjusted earnings, which exclude special charges and gains, climbed to $0.88 per share from $0.71 per share last year. On average, 22 analysts polled by Thomson Reuters expected earnings of $0.82 per share for the quarter. Analysts' estimates typically exclude special items.
Looking forward to full year 2012, Express Scripts now expect adjusted earnings of $3.60 to $3.75 per share, compared to its prior outlook of $3.36 to $3.66 per share. Analysts currently expect earnings of $3.53 per share for fiscal year 2012.
Express Scripts raised its outlook to reflect strong operating performance, increased generic utilization and the accelerated realization of synergies. The company still expects to realize $1 billion in net synergies once fully integrated.
Last month, Express Scripts and Walgreen Co. (WAG: Quote) announced a multi-year pharmacy network agreement, settling a dispute between the two firms running for months.
ESRX closed Tuesday's trading at $56.02, up $0.04 or 0.07%, on a volume of 5.8 million shares. The stock further gained $3.95 or 7.05% in after hours trade.
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by RTT Staff Writer
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