* Q1 adjusted EPS $1.10 vs Street view $1.10
* Revenue more than doubles to $11.14 billion
* Raises low end of EPS forecast to $4.85
* Shares fall 2.6 percent (Adds analyst’s comment, share price, earnings details, Medco earnings)
By Bill Berkrot
NEW YORK, April 28 (Reuters) - Pharmacy benefit manager Express Scripts Inc ESRX.O reported on Wednesday that its first-quarter profit rose 21 percent, in line with Wall Street expectations, and it raised the low end of its full-year earnings forecast.
The company said integration of its $4.68 billion acquisition of WellPoint’s WLP.N NetRx drug benefit business was progressing, with 15 percent of that membership now migrated to Express Scripts systems.
It still expects NetRx to generate more than $1 billion in incremental earnings once fully integrated.
Express posted a net profit of $260.2 million, or 94 cents per share, compared with a profit of $214.4 million, or 86 cents per share, a year ago.
Excluding items, St Louis-based Express had adjusted earnings of $1.10 per share, matching analysts’ average expectations, according to Thomson Reuters I/B/E/S.
Citing strong underlying fundamentals, Express raised the low end of its 2010 forecast by 5 cents and now expects to earn $4.85 to $5.00 per share, excluding items.
“By raising the low end I think they’re sending a signal pretty early on in the year that things may be going better than expected with integration of this NetRx asset,” said Arthur Henderson, an analyst for Jefferies & Co.
However, Express shares fell 2.6 percent, and analysts suggested investors accustomed to the company beating expectations may be disappointed with an in-line quarter.
There may also be some worry that NetRx integration should be further along than 15 percent, Henderson said, although he believes that concern to be unfounded.
Earlier on Wednesday, rival PBM Medco Health Solutions Inc MHS.N said net income rose to $320.5 million, or 67 cents per share, from $291 million, or 58 cents per share, a year earlier.
Excluding items, Medco earned 73 cents per share, topping Wall Street expectations by 1 cent, but its shares also fell.
Pharmacy benefit managers, or PBMs, administer prescription drug benefits for employers and health plans and operate large mail-order pharmacies.
Express Scripts revenue for the quarter more than doubled to $11.14 billion, topping Wall Street estimates of $10.92 billion, as the company added “hundreds of new clients” and began integrating the NetRx business.
“Their free cash flow was considerably higher than we thought it would be,” said Henderson, who was forecasting $420 million, while the actual number was about $727 million.
“They’re also paying down debt and buying back stock, which are both things I think investors are going to like,” he said.
Results were helped by increased use of generic drugs, which have a higher profit margin than more expensive branded medicines. Generic use rose to 70.2 percent from 67.7 percent a year ago.
Express shares fell to $99 in extended trading from their Nasdaq close of $101.68. Medco shares closed down $2.48, or 3.9 percent, at $60.54 on the New York Stock Exchange. (Reporting by Bill Berkrot; Editing by Robert MacMillan)