UPDATE 1-Express Scripts profit beats estimates as expenses fall
* Second-qtr adj earnings $1.12 vs est $1.10
* Raises 2013 earnings forecast for second time
* Co says CFO to leave, appoints interim finance chief
July 29 (Reuters) - Express Scripts Holding Co, the largest pharmacy benefits manager in the United States, reported an adjusted profit that beat analysts' estimates for the fifth straight quarter, helped by a fall in expenses and growth in its specialty business.
The company, which administers drug benefits for employers and health plans and runs large mail-order pharmacies, has been cutting costs as a weak economy has hurt demand for healthcare services.
But Express Scripts and its peers such as CVS Caremark Corp and Catamaran Corp stand to gain from a rise in sales of generic drugs, which typically offer higher margins than branded drugs. Also, several blockbuster drugs are slated to go off patent from 2015.
Companies that provide their employees' insurance encourage the use of generic drugs to bring down their healthcare costs.
Express Scripts said 80.9 percent of prescriptions it filled in the second quarter were for generic drugs, up from 77.8 percent.
The company also raised its current-year profit forecast for the second time. Express Scripts lifted its forecast to $4.26-$4.34 per share from $4.23-$4.33.
Analysts on average were expecting earnings of $4.30 per share for the year, according to Thomson Reuters I/B/E/S.
Pharmacy benefit managers are expected to gain from the implementation of healthcare exchanges and the expansion of Medicaid, which will likely provide insurance to about 30 million people over the next decade.
Excluding items, the company earned $1.12 per share in the second quarter. Analysts on average had expected earnings of $1.10 per share.
"The guidance was taken up modestly, but I think that was expected, relative to the beat, some of which was driven by better tax," ISI Group analyst Ross Muken told Reuters.
"The likely driver of the beat was probably the specialty business."
Express Scripts operates specialty pharmacies that dispense high-cost drugs to treat specific chronic diseases. In its latest annual filing with the U.S. Securities and Exchange Commission, the company said it had 11 specialty home delivery pharmacies and 77 specialty branch pharmacies.
Selling, general and administrative expenses fell 28.9 percent to $1.13 billion in the quarter ended June 30.
Revenue fell 4 percent to $26.43 billion, but ahead of the average analyst estimate of $25.52 billion.
"The revenue beat was driven by revenue per prescription, which was higher than what the Street was projecting," Jefferies & Co analyst Brian Tanquilut said.
Express Scripts said Chief Financial Officer Jeff Hall will no longer serve in the role. The company, which started a search for a new finance chief, did not cite a reason for Hall's resignation.
Matthew Harper, vice president of financial planning and analysis, will serve as interim CFO from July 30, said the company, which became the largest U.S. pharmacy benefits manager after it bought rival Medco Health Solutions last year.
Express Scripts shares closed at $66.93 on the Nasdaq on Monday. The stock was down 1 percent in after-hours trading.
- Malaysia air probe finds scant evidence of attack: sources |
- Search widened as Malaysia air probe finds scant evidence of attack |
- Confrontation in Ukraine as diplomacy stalls |
- Exclusive: Chinese raw materials also found on U.S. B-1 bomber, F-16 jets
- Freescale loss in Malaysia tragedy leads to travel policy questions