The nation’s largest
pharmacy benefits manager (PBM)
Casey Bozeman
Company Overview
 Integrated PBM services, including:
 network-pharmacy claims processing
 drug-utilization review
 formulary management
 mail-order pharmacy service
 benefit-design consultation
 medical & drug data analysis services
 Clients include
government agencies, corporations,
and labor unions
Company Overview, cont’d
 1.4 billion prescriptions managed annually
 135 million patients (1 in 3 Americans)
 $94 billion in revenue in past 12 months
 Doubled in size with acquisition of Medco
in April 2012
 Traded on NASDAQ as ESRX
Company Overview, cont’d
 Headquartered in Cool Valley, Missouri
 George Paz, President & CEO since 2005
 CPA, Financial genius, PR nightmare
 #6 most highly-compensated CEO in U.S.:
$52M (Forbes)
 Not a single pharmacist on his leadership
team
Earlier News Stories (prior to 2013)
 Bitter contract dispute with Walgreens,
nation’s largest drugstore chain
 No contract for 9 months in 2011
 Walgreens suffered nearly 30% loss in script
volume, ESRX barely flinched
 New contract agreed upon in September 2012
Background info sources: Express-Scripts.com, Wikipedia, Insider-Monkey.com
January 22, 2013
Five Pharmacies Now Dominate
U.S. Prescription Dispensing
 CVS Caremark, Walgreens, Express Scripts,
Rite Aid, and Walmart
 63% of U.S. Rx dispensing revenues in 2012
 Healthcare reform will benefit these
companies, due to increase in total Rx
spending
BusinessWire.com
January 23, 2013
Express Scripts Lays Off
330 Employees Nationwide
 Layoffs across 55 different sites
 100 employees in a former Medco office in
NJ were impacted
Memphis Business Journal
February 7, 2013
Express Scripts Bleeds
the Medco Ranks, Again
 “Express Scripts is reportedly telling up to 200
workers to accept a pay cut of up to 40 percent
or leave...”
 Medco acquisition cost $29 billion last spring
 Suspicion that ESRX may abandon Medco’s
HQ in New Jersey
Pharmalive.com
Q1 2013
Express Scripts Labs:
ScreenRx
 Express Scripts’ proprietary solution
 Uses 400 known factors about the patient,
MD, the disease, and the medication to
predict non-compliance before it happens
 Up to 98% accuracy
 Pharmacist can intervene to help high-risk
patients
Lab.Express-Scripts.com
February 19, 2013
Express Scripts Accuses Ernst & Young
of Stealing Trade Secrets
 One of E&Y’s former partners allegedly snuck into ESRX
facilities several times in 2012, emailed confidential files
to himself
 Over 200,000+ pages of pricing info, business
projections and strategy were stolen
 “Evil motive”: to boost E&Y’s own healthcare business
 Complaint seeks damages plus a court order barring the
disclosure of the stolen data
Reuters.com
February 19, 2013
Express Scripts 4Q Profit Jumps 74%
 More pts used generic drugs, increasing ESRX’s
profitability
 Patents expired on many common drugs
 ESRX continued to absorb Medco
 Successful contract with Walgreens
contributed greatly
 ESRX has very low operating margins: ~5%
PharmPro.com (Associated Press)
Q2 2013
Express Scripts Labs: Rx Abuse &
Pharmacy Fraud More Deadly than
Cocaine & Heroin Combined
 15,000+ Americans die annually from prescription
drug OD
 Estimated 3-10% of healthcare spending is lost to
fraud in U.S.
 Express Scripts data analytics uncovers patterns of
potential fraud/abuse
 Estimated savings due to 435 cases referred to
authorities by ESRX in 2011: $500M
Lab.Express-Scripts.com
March 15, 2013
Express Scripts:
Best Places to Work Finalist
St. Louis Business Journal
 Employees must adopt a “can-do” attitude
 Culture is one of “high energy”
St. Louis Business Journal
April 1, 2013
3 Reasons to Buy Express Scripts
 Motley Fool says ESRX stock is a “Buy”:
 $290 billion in drugs coming off patent
over the next 5 years
 Aging population
 ObamaCare: many more people will have
Rx insurance
Motley Fool (Fool.com)
April 8, 2013
Bonuses are Back at Express Scripts
 ESRX share price rose 21% in 2012
 vs. S&P 500 increase of 13.4%
 Revenue more than doubled
March 28, 2013
Express Scripts CEO’s Compensation
Jumps 50%
St. Louis Today (STLToday.com), Yahoo! News (news.yahoo.com)
Stock Trend, YTD
Stock Trend, YTD vs. NASDAQ
Stock Trend, 10 yr
To Buy or Not to Buy?
 If it’s good enough for the Fool…
 EPS has consistently risen since 2006
 Long-term earnings potential, staying
power, and negotiating power
To Work or Not to Work?
 I’d rather not…