Express Scripts reports increased profit for Q4, fiscal year

Photo courtesy of Creative Commons
Photo courtesy of Creative Commons

Express Scripts Holding Co., the nation’s largest pharmacy benefits manager, reported strong earnings again Tuesday during its fourth-quarter earnings call.

In its quarterly earnings release, the St. Louis-based company reported net income of $581.8, up 16 percent from $501.9 million for the same quarter last year. Annual earnings also improved 9 percent, to $2 billion for fiscal 2014 from $1.8 billon in 2013.

Express Scripts also reported that earnings per share increased, to $1.39 in 2014 from $1.12 in 2013.

Annual revenues declined slightly, to about $100.1 billion in 2014 from about $105 billion in 2013. Quarterly revenues for the final quarter of 2014 grew 2 percent, to $26.3 billion from $25.8 billion in 2013.

Express Scripts’ bottom line rebounded in the fourth quarter after a rough first quarter in which revenue sunk by 9 percent. Later in the year, first-quarter losses were offset by thousands of layoffs stemming from Express Scripts’ 2012 acquisition of rival Medco.

In April, the company announced it would cut 1,890 jobs nationwide. Several more rounds of job cuts followed, including layoffs of 400 employees in November and 380 more layoffs last week.

Another prominent storyline for Express Scripts has been the company’s prolonged battle with Gilead Sciences over the cost of its Hepatitis C drug, Sovaldi. Express Scripts announced in December that it

would stop covering Sovaldi, in favor of a cheaper alternative made by another company.

During Tuesday’s earnings call President Tim Wentworth said the company is trying to find a balance between what’s best for patients and investors.

“We move quickly to lower the costs to cure to a level where every Hepatitis C patient, not just the sickest but all patients can be cured,” Wentworth said. “Nationally the cost of caring for Hepatitis C patients to be reduced by up to $4 billion as a direct result of our leadership.”

CEO George Paz said that Express Scripts processed 3.5 million claims in 2014, which was slightly more than the company expected. Overall, though, he said earnings were in line with what the company expected.

UnitedHealth Group , Express Scripts’ largest client, cut ties with the company in 2013. Wentworth said the company made several changes last year that addressed service errors experienced in 2013.

“After an unacceptable performance last year, we invested heavily to position ourselves for success,” Wentworth said. “We made significant operational leadership changes, and most importantly, we returned to the core elements of service that our clients and patients expect.”

Wentworth said this improvement in service pleased existing clients and patients, and he expects renewals of current plans to return to around 94 percent from around 92 percent in the second quarter of 2014.

Paz said that 2014 was a year of tremendous growth and change for the company. The CEO said that lower retention rates provided a wake-up call for Express Scripts to take action and improve service.

“We faced unexpected challenges, and we experienced a lot of change,” Paz said. “However, we finished the year with strong results financially and operationally.”

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