Express Scripts Holding Company Updates 2017 Full-Year Guidance and Announces 2018 Financial Guidance
ST. LOUIS, Dec. 14, 2017 /PRNewswire/ -- Express Scripts Holding Company (Nasdaq: ESRX) increased its previously issued consolidated 2017 full-year adjusted EPS guidance range of $6.97 to $7.05 to $7.00 to $7.08, which represents growth of 10% over consolidated 2016 adjusted EPS results at the midpoint of the range. The Company narrowed its previously issued consolidated 2017 adjusted EBITDA(1) guidance from a range of $7,350 million to $7,470 million to a range of $7,370 million to $7,450 million, which maintains the midpoint of the range and represents growth of 2% over consolidated 2016 adjusted EBITDA results.
The Company anticipates achieving adjusted earnings per diluted share(2) for 2018 in the range of $7.67 to $7.87, representing growth of 9% to 12% from the midpoint of our updated 2017 adjusted EPS guidance range.
"The need for a focused PBM has never been greater than it is today," said Tim Wentworth, President and CEO of Express Scripts. "In 2017, we demonstrated the power of our model by consistently delivering savings to payers while ensuring our patients have access to the right medications at the best possible price and with the greatest level of care. We are proud of what we have accomplished in 2017, and are exceptionally well positioned to capture saving opportunities for our clients, achieve better health outcomes and deliver strong results to shareholders in the future."
2017 Guidance for Core Business
The Company expects 2017 full-year total adjusted claims for its Core business to be in the range of 1,158 million to 1,172 million, which is flat over Core 2016 total adjusted claims at the midpoint of the range. The Company expects Core 2017 full-year adjusted EBITDA guidance in the range of $4,910 million to $4,970 million, which represents growth of 3% over Core 2016 adjusted EBITDA results at the midpoint of the range. The Company is providing this information to assist in an analysis of the underlying performance of the Company's Core business, which excludes the contributions from Anthem, Coventry and Catamaran, which we also refer to as the "Transitioning Clients."
For a discussion of the financial measures presented herein which are not calculated or presented in accordance with U.S. generally accepted accounting principles ("GAAP"), see "Supplemental Information Regarding Non-GAAP Financial Measures" below.
2018 Guidance
The Company is providing the 2018 full-year guidance for the Core business and the consolidated business, which includes the pending acquisition of eviCore healthcare and assumes the completion of the Company's sale of its United BioSource subsidiary. The eviCore acquisition and the sale of United BioSource are expected to be completed in December 2017. We estimate that the eviCore acquisition will generate EBITDA of $265 million to $285 million in 2018.
Core Estimated Consolidated Estimated Change*
Guidance Ranges Guidance Ranges
--------------- ---------------
(in millions, except per share data) Year Ending Year Ending Core Consolidated
December vs. 2017 vs. 2017
31, 2018 December
31, 2018
--- --------
Adjusted earnings per diluted share N/A $7.67 to $7.87 N/A 9% - 12%
----------------------------------- --- -------------- --- -------
Total adjusted claims** 1,125 to 1,165 1,345 to 1,395 (3%) - flat (4%) - flat
---------------------- -------------- -------------- ----------- -----------
Revenue $80,500 to $83,000 $99,000 to $102,000 N/A N/A
------- ------------------ ------------------- --- ---
Adjusted EBITDA $5,250 to $5,400 $7,600 to $7,800 6% - 9% 3% - 5%
--------------- ---------------- ---------------- ------ ------
Diluted weighted average shares N/A 540 to 560 N/A (7%) - (4%)
outstanding during the period
-----------------------------
Cash flow from operations N/A $4,900 to $5,400 N/A (1%) - 9%
------------------------- --- ---------------- --- --------
*The change is calculated
based on the midpoint of
2017 guidance.
**Range reflects non-
specialty network claims
filled through our 90-day
programs multiplied by
three, as these claims, on
average, typically cover a
time period three times
longer than other network
claims. Home delivery
claims are also multiplied
by three, as home delivery
claims typically cover a
time period three times
longer than unadjusted
network claims.
While we expect conditions to completing these transactions will be substantially satisfied, no assurance can be given that these transactions will be completed. For more information on guidance information regarding eviCore, see "Supplemental Information Regarding Non-GAAP Financial Measures - eviCore 2018 Guidance Information" below.
Business Outlook
The Company's enterprise value initiative is currently estimated to cost approximately $600 million to $650 million and to deliver cumulative savings of nearly $1.2 billion by 2021. The Company's 2018 full-year guidance includes an estimated contribution of $65 million to $75 million in expense savings affecting the Core and consolidated businesses. This initiative is expected to help the Company achieve its targeted compounded annual EBITDA growth rate for the Core business from 2017-2020 of 2% to 4% and in 2018 will begin to drive significant value to all of its patients and clients.
Conference Call Details
The Company will hold its conference call to discuss 2018 financial guidance and the other matters described in this press release on Thursday, December 14, 2017, at 8:30 a.m. EST (7:30 a.m. CST). The call includes a slide presentation and is being webcast via the Internet and can be accessed at the Investor Relations section of Express Scripts' web site at http://www.express-scripts.com/corporate.
About Express Scripts
Express Scripts puts medicine within reach of tens of millions of people by aligning with plan sponsors, taking bold action and delivering patient-centered care to make better health more affordable and accessible.
Headquartered in St. Louis, Express Scripts provides integrated pharmacy benefit management services, including network-pharmacy claims processing, home delivery pharmacy care, specialty pharmacy care, specialty benefit management, benefit-design consultation, drug utilization review, formulary management, and medical and drug data analysis services. Express Scripts also distributes a full range of biopharmaceutical products and provides extensive cost-management and patient-care services.
For more information, visit Lab.Express-Scripts.com or follow @ExpressScripts on Twitter.
Supplemental Information Regarding Non-GAAP Financial Measures
The following provides supplemental information regarding the non-GAAP financial measures presented herein, for both consolidated and Core financial measures. Adjusted EPS and adjusted EBITDA are non-GAAP financial measures presented herein, are not calculated or presented in accordance with U.S. generally accepted accounting principles ("GAAP"), and should be considered in addition to, but not as a substitute for, or superior to, financial measures prepared in accordance with GAAP. These non-GAAP financial measures are determined by excluding certain amounts, expenses, income or other impacts, including the impact of discrete tax and other items, from the corresponding financial measures determined in accordance with GAAP. The Company believes that these non-GAAP financial measures provide management and investors with useful information about the earnings impact of certain expenses and are useful for (i) comparison of our earnings to those of other companies; (ii) a better understanding of the Company's ongoing Core performance; (iii) planning and forecasting for future periods; and (iv) assessing period-to-period performance trends. Management assesses the Company's operating performance using adjusted EBITDA in order to better isolate the impact of certain expenses that may not be comparable between periods or indicative of the ongoing performance of our Core operations.
Consolidated and Core 2017 and 2018 Guidance Information: The financial measure attributable to our Core business presented herein, including adjusted EBITDA, is also a non-GAAP financial measure. This measure is not calculated or presented in accordance with GAAP, and should be considered in addition to, but not as a substitute for, or superior to, financial measures prepared in accordance with GAAP. This measure represents operating results excluding specific clients of the Company; however, it is not regularly reviewed by our Chief Executive Officer to assess the performance of any of these clients or make decisions about resources to be allocated to any such client. This measure also reflects management's estimates as to allocation of costs of its PBM business to each of the Transitioning Clients and may not be indicative of costs actually incurred as a result of servicing each of these clients. However, management is unable to reasonably estimate the allocation of certain key items that would impact net income attributable to each of the Transitioning Clients, including interest and depreciation and amortization. Accordingly, the Company is unable to provide net income attributable to any of its Core business excluding the Transitioning Clients, and is unable to provide a reconciliation of adjusted EBITDA to net income. For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could have a significant impact on the Company's long-term outlook for the Core, as discussed above.
Due to the inherent difficulty of forecasting the timing and amount of certain items that would impact EPS and net income, including discrete tax and other items, the Company is unable to reasonably estimate the related impact of such items to EPS and net income, the GAAP financial measures most directly comparable to adjusted EPS and adjusted EBITDA, respectively. Accordingly, the Company is unable to provide a reconciliation of consolidated and Core 2017 and 2018 guidance for either adjusted EPS to EPS or adjusted EBITDA to net income. For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could have a significant impact on the Company's full-year consolidated and Core 2017 and 2018 GAAP financial results. With respect to consolidated adjusted EPS amortization of intangible assets is expected to be approximately $1.58 and $1.86 per share for the full-year 2017 and 2018, respectively.
eviCore 2018 Guidance Information: The financial measures attributable to the eviCore acquisition presented herein, including EBITDA, is also a non-GAAP financial measure. This measure is not calculated or presented in accordance with GAAP, and should be considered in addition to, but not as a substitute for, or superior to, financial measures prepared in accordance with GAAP. This measure reflects management's estimate of the business prior to closing. However, management is unable to reasonably estimate the allocation of certain key items that would impact net income attributable to eviCore, including interest and depreciation and amortization. Accordingly, the Company is unable to provide net income attributable to eviCore, and is unable to provide a reconciliation of EBITDA to net income. For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could have a significant impact on the Company's full-year consolidated and Core 2018 GAAP financial results.
Safe Harbor Statement
This press release contains forward-looking statements, including, but not limited to, our 2017 and 2018 guidance and our statements related to the Company's plans, objectives, expectations (financial and otherwise) or intentions. Actual results may differ materially from those projected or suggested in any forward-looking statements. Factors that may impact these forward-looking statements can be found in Management's Discussion and Analysis of Financial Condition and Results of Operations and Item 1A - "Risk Factors" in the Company's Annual Report on Form 10-K filed with the SEC on February 14, 2017 and the Company's Quarterly Report on Form 10-Q filed with the SEC on October 24, 2017. A copy of these documents can be found at the Investor Information section of Express Scripts' web site at http://www.express-scripts.com/corporate.
We do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
(1) Throughout this press release, "adjusted EBITDA" is adjusted earnings before income taxes, depreciation and amortization and other expense and is presented throughout this press release as attributable to Express Scripts, excluding non-controlling interest representing the share allocated to members of our consolidated affiliates.
(2) Throughout this press release, "earnings per diluted share" or "EPS" refer to earnings per diluted share attributable to Express Scripts, excluding non-controlling interest representing the share allocated to members of our consolidated affiliates.
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