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ESRX Reports In-Line 4Q Earnings

by Zacks Equity Research

February 19, 2013 | Comments : 0 Recommended this article: (0)

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Express Scripts Holding Company’s ( ESRX - Analyst Report ) fourth quarter 2012 adjusted earnings of $1.05 per share were in-line with the Zacks Consensus Estimate, and increased 28.1% from the year-ago period. Higher revenues aided earnings in the fourth quarter of 2012.

On a reported basis (including special items), earnings grew 5.1% to 62 cents in the fourth quarter of 2012.

For 2012, revenues came in at $93.8 billion, up 103.4% from 2011, and beat the Zacks Consensus Estimate of $92.8 billion. Adjusted earnings in 2012 came in $3.74, up 25.9% from 2011 and ahead of the Zacks Consensus Estimate of $3.72.

Quarter in Detail

Revenues jumped 126.5% in the reported quarter to $27.4 billion. The massive jump was attributable to the expanded product portfolio at Express Scripts due to the acquisition of Medco Health Solutions in 2011. Revenues were roughly in line with the Zacks Consensus Estimate.

Adjusted gross profit jumped 160.0% to $2.3 billion in the reported quarter. Gross profit was boosted by the inclusion of results of the erstwhile Medco Health Solutions, which led to improved operating performance, increased generic utilization and realization of synergies. Adjusted selling, general and administrative expenses climbed 263.9% to $784.5 million.

Total adjusted claims at Express Scripts for the reported quarter came in at 410.8 million, up 111%.

Cash flow from operations came in at $2.6 billion, significantly up from $0.5 billion in the fourth quarter of 2011.

2013 Earnings Outlook

We note that Express Scripts successfully integrated operations of erstwhile Medco Health Solutions in 2012. Express Scripts expects adjusted earnings for 2013 in the range of $4.20–$4.30 per share, up 12% – 15% over 2012.

The pre-earnings Zacks Consensus Estimate stands at $4.19. Adjusted claims are expected to grow 5% – 7% from 1,395.7 million in 2012, just shy of the company’s guidance.

Currently, Express Scripts carries a Zacks Rank #3 (Hold). Right now Covance Inc ( CVD - Snapshot Report ) , Omnicare Inc. ( OCR - Snapshot Report ) and Parexel International Corporation ( PRXL - Snapshot Report ) look better placed with a Zacks Rank #2 (Buy).

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