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Earnings Preview: Express Scripts reports on 3Q


Express Scripts Holding Co., by far the country's largest pharmacy benefits manager, will give investors a better sense of how its acquisition of Medco Health Solutions is working when it reports third-quarter earnings Monday after the close of trading on Wall Street.

WHAT TO WATCH FOR: Express Scripts, which is based in St. Louis, boosted its 2012 earnings forecast in August and said it had recorded better-than-expected savings from its combination with Medco.

The company closed its $29.1 billion acquisition of Medco, a fellow pharmacy benefits manager, or PBM, in early April. The deal created a company big enough to handle the prescriptions of more than one in three Americans.

Express Scripts said in August that its second-quarter revenue swelled past $27 billion due to the acquisition, and its prescription count shot up. But one-time charges weighed on its earnings.

Citing better-than-expected integration savings in the quarter, Express Scripts raised its full-year guidance for its adjusted earnings to between $3.60 and $3.75 per share, from $3.36 and $3.66 per share.

Analysts expect $3.71 per share, according to FactSet.

Express Scripts also announced in July that it will resume working with Walgreen Co., the nation's largest drugstore chain. The companies had stopped doing business at the end of last year after they couldn't agree to a new contract. That new deal started Sept. 15, or about two weeks before the third quarter ended.

Shares of Express Scripts have climbed almost 40 percent so far this year.

The company will host a Tuesday morning conference call with analysts to discuss results after releasing earnings on Monday.

WHY IT MATTERS: Pharmacy benefits managers run prescription drug plans for employers, insurers and other customers. They process mail-order prescriptions and handle bills for prescriptions filled at retail pharmacies. They use large purchasing power to negotiate lower drug prices and make money by reducing costs for health plan sponsors and members.

WHAT'S EXPECTED: Analysts expect, on average, earnings of 99 cents per share on $27.47 billion in revenue.

LAST YEAR'S QUARTER: Express Scripts said its 2011 third-quarter earnings climbed 8 percent to $324.7 million, or 66 cents per share. Revenue grew 3 percent to $11.57 billion. The PBM handled 184.8 million adjusted prescription claims, which represented a slight drop compared to the previous year.

Adjusted prescriptions count 90-day mail order prescriptions as three one-month prescriptions. These results took place before the Medco deal closed.


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