Back to top

Analyst Blog

Express Scripts Holding Company (ESRX - Analyst Report) posted first quarter 2014 earnings per share (excluding special items) of 99 cents, flat with the year-ago quarter. However, the result fell short of the Zacks Consensus Estimate of $1.01.

Excluding special items but including amortization expense, earnings per share came in at 65 cents compared to 62 cents in the year-ago quarter.

Quarter in Detail

Revenues were down 9.0% year over year in the reported quarter to $23.7 billion but marginally surpassed the Zacks Consensus Estimate of $23.5 billion. We note that the expected roll-off of UnitedHealth Group claims was completed by the end of 2013.

The first quarter results were impacted by lower adjusted prescription volume due to severe winter weather, later than expected enrollment in public exchanges (under the Affordable Care Act) and lower net new healthcare reform lives.

Adjusted gross profit was down 7.3% to $1.9 billion in the reported quarter. Adjusted selling, general and administrative expenses declined 5.5% to $506.3 million.

Total adjusted claims at Express Scripts for the reported quarter came in at $320.0 million, down 17.9% from the year-ago quarter.

Cash generated from operating activities came in at $454 million compared to $963.4 million in the year-ago quarter. Express Scripts repurchased 8.0 million shares for $618.2 million.

Earnings Outlook Lowered

Express Scripts lowered its annual guidance for 2014 and the company now expects adjusted earnings in the range of $4.82–$4.94, down from the earlier projected range of $4.88–$5.00. The Zacks Consensus Estimate currently stands at $4.95 per share. The guidance was lowered due to an expected decline in prescription volume.

Express Scripts now expects adjusted prescription volume to be in the range of 1.27 billion – 1.33 billion, down from the earlier anticipated range of $1.30–$1.36 billion. The volume shortfall is primarily attributed to the delay of several client implementations from mid 2014 to Jan 1, 2015. In addition, in-group attrition along with lower net new healthcare reform lives also led to a decline in guidance.

Earnings per share for the second quarter are projected at $1.20–$1.24, short of the Zacks Consensus Estimate of $1.27.

Our Take

We were disappointed by the first quarter results, which missed the Zacks Consensus Estimate and the subsequent lowering of guidance. The decline in prescription volume will adversely impact results in 2014.

Shares of Express Scripts were down 5.56% in after hours trading following the release of results.

Currently, Express Scripts carries a Zacks Rank #2 (Buy). Other stocks that look attractive include Charles River Laboratories (CRL - Snapshot Report), Cardinal Health (CAH - Analyst Report), and MedAssets (MDAS - Snapshot Report).  Both carry a Zacks Rank #2.

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
PLANAR SYST… PLNR 4.44 +5.21%
BITAUTO HOL… BITA 81.71 +5.12%
CTPARTNERS… CTP 16.66 +4.26%
CHINA BIOLO… CBPO 47.91 +3.30%
MALLINCKROD… MNK 72.94 +2.85%