Express Scripts Holding Co. (ESRX:US) rose after the largest U.S. processor of drug prescriptions gave a profit forecast that exceeded analysts’ lowered estimates.
Express Scripts gained 2.5 percent to $56.98 at the close in New York, its highest share price since Nov. 5. The company’s shares have gained 9.2 percent in the past 12 months.
Earnings excluding one-time items will be $4.20 to $4.30 a share this year, St. Louis-based Express Scripts said yesterday in a statement. Analysts expected (ESRX:US) $4.20, the average of 21 estimates compiled by Bloomberg, which was reduced from $4.50 in November when the company suggested predictions were too high.
Express Scripts, which bought Medco Health Solutions Inc. for $29 billion last year, manages drug benefits for insurers and employers, and sells drugs through mail-order pharmacies. While drug claims rose 86 percent to about 1.4 billion in 2012 because of the acquisition, slowing growth of the mail-order business may weigh on performance, said Ross Muken, an analyst at International Strategy and Investment Group in New York.
“The underlying health of the business is still quite mixed,” Muken said in a telephone interview.
Like other health-care companies, Express Scripts faces an altered environment starting in 2014 as the new U.S. health insurance exchanges open as part of the Affordable Care Act. George Paz, chairman and chief executive officer, told analysts in a conference call that he doesn’t expect many of the company’s corporate clients to drop their insurance plans and send workers to the new exchanges.
“Clearly some employers that are in deep financial stress, that have no other choice to survive, will make decisions like that, but I think there’s going to be a lot of wait and let’s see,” he said. “I don’t think you’re going to see this rush of people dropping; nothing we see shows that evidence or shows those numbers.”
The company had said in November that analysts’ views for profit growth were overly aggressive, citing a business climate that may lead to a loss of members, less drug utilization and price pressure.
Express Scripts gave the 2013 forecast as it announced fourth-quarter earnings. Income from continuing operations rose to $516 million, or 62 cents a share, in the period, from $290 million, or 59 cents, a year earlier.
Earnings excluding one-time items were $1.05 a share, the company said, topping the $1.04 average of 19 analysts’ estimates (ESRX:US) compiled by Bloomberg.
Sales in the quarter rose to $27.4 billion, from $12.1 billion, aided by the Medco acquisition.
Full-year profit for 2012 was $1.3 billion on sales of $94 billion, the company said.
“2012 was a monumental year for Express Scripts as we closed the acquisition of Medco and made significant progress integrating the two companies,” Paz said in yesterday’s statement.
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