-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MQ7eNPnh/dlGu5vLodQpM0RRAJuxUPODQDWbAkIZ7hCDRotZJ+bHbxdxSkMJH5h+ iV/vO5VGPjudJ15NJKbcKA== 0000885721-00-000024.txt : 20000511 0000885721-00-000024.hdr.sgml : 20000511 ACCESSION NUMBER: 0000885721-00-000024 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000510 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EXPRESS SCRIPTS INC CENTRAL INDEX KEY: 0000885721 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SPECIALTY OUTPATIENT FACILITIES, NEC [8093] IRS NUMBER: 431420563 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-20199 FILM NUMBER: 624883 BUSINESS ADDRESS: STREET 1: 13900 REIVERPORT DRIVE CITY: MARYLAND HEIGHTS STATE: MO ZIP: 63043 BUSINESS PHONE: 3147701666 MAIL ADDRESS: STREET 1: 14000 REIVERPORT DRIVE CITY: MARYLAND HEIGHTS STATE: MO ZIP: 63043 10-Q 1 EXPRESS SCRIPTS, INC. 1ST QUARTER 2000 REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000. TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to _____________. Commission File Number: 0-20199 EXPRESS SCRIPTS, INC. (Exact name of registrant as specified in its charter) Delaware 43-1420563 (State of Incorporation) (I.R.S. employer identification no.) 13900 Riverport Dr., Maryland Heights, Missouri 63043 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (314) 770-1666 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___ Common stock outstanding as of April 30, 2000: 22,830,236 Shares Class A 15,020,000 Shares Class B EXPRESS SCRIPTS, INC. INDEX Page Number Part I Financial Information 3 Item 1. Financial Statements (unaudited) a) Consolidated Balance Sheet 3 b) Consolidated Statement of Operations 4 c) Consolidated Statement of Changes in Stockholders' Equity 5 d) Consolidated Statement of Cash Flows 6 e) Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Item 3. Quantitative and Qualitative Disclosures About Market Risks 16 Part II Other Information Item 1. Legal Proceedings 17 Item 2. Changes in Securities and Use of Proceeds - (Not Applicable) Item 3. Defaults Upon Senior Securities - (Not Applicable) Item 4. Submission of Matters to a Vote of Security Holders - (Not Applicable) Item 5. Other Information - (Not Applicable) Item 6. Exhibits and Reports on Form 8-K 17 Signatures 19 Index to Exhibits 20 - -------------------------------------------------------------------------------- PART I. FINANCIAL INFORMATION - -------------------------------------------------------------------------------- Item 1. Financial Statements EXPRESS SCRIPTS, INC. Unaudited Consolidated Balance Sheet
March 31, December 31, (in thousands) 2000 1999 ---------------- ---------------- Assets Current assets: Cash and cash equivalents $ 131,547 $ 132,630 Receivables, less allowance for doubtful accounts of $17,546 and $17,281, respectively 720,587 783,086 Inventories 77,426 113,248 Deferred taxes 26,400 32,248 Prepaid expenses 3,504 5,143 ---------------- ---------------- Total current assets 959,464 1,066,355 Investment in marketable securities 82,961 150,365 Property and equipment, less accumulated depreciation and amortization 104,216 97,573 Goodwill, less accumulated amortization 970,081 982,496 Other intangible assets, less accumulated amortization 176,348 183,420 Other assets 7,993 7,102 ================ ================ Total assets $ 2,301,063 $ 2,487,311 ================ ================ Liabilities and Stockholders' Equity Current liabilities: Claims and rebates payable $ 779,444 $ 850,630 Accounts payable 98,047 112,731 Accrued expenses 126,879 136,997 ---------------- ---------------- Total current liabilities 1,004,370 1,100,358 Long-term debt 605,839 635,873 Other liabilities 31,918 51,598 ---------------- ---------------- Total liabilities 1,642,127 1,787,829 ---------------- ---------------- Stockholders' equity: Preferred stock, $0.01 par value, 5,000,000 shares authorized, and no shares issued and outstanding Class A Common Stock, $0.01 par value, 150,000,000 shares authorized, 24,008,000 and 23,981,000 shares issued and outstanding, respectively 240 240 Class B Common Stock, $0.01 par value, 31,000,000 shares authorized, 15,020,000 shares issued and outstanding 150 150 Additional paid-in capital 419,926 418,921 Accumulated other comprehensive income (51,594) (9,521) Retained earnings 317,972 296,540 ---------------- ---------------- 686,694 706,330 Class A Common Stock in treasury at cost, 1,008,000 and 465,000 shares, respectively (27,758) (6,848) ---------------- ---------------- Total stockholders' equity 658,936 699,482 ================ ================ Total liabilities and stockholders' equity $ 2,301,063 $ 2,487,311 ================ ================
See accompanying Notes to Consolidated Financial Statements EXPRESS SCRIPTS, INC. Unaudited Consolidated Statement of Operations
Three Months Ended March 31, (in thousands, except per share data) 2000 1999 ---------------- ---------------- Revenues: Revenues $ 1,472,540 $ 899,087 Other revenues 2,969 - ---------------- ---------------- 1,475,509 899,087 Cost and expenses: Cost of revenues 1,343,063 823,647 Selling, general and administrative 83,371 46,440 ---------------- ---------------- 1,426,434 870,087 ---------------- ---------------- Operating income 49,075 29,000 ---------------- ---------------- Interest income (expense): Interest income 1,381 1,393 Interest expense (14,201) (6,222) ---------------- ---------------- (12,820) (4,829) ---------------- ---------------- Income before income taxes 36,255 24,171 Provision for income taxes 14,823 10,628 ================ ================ Net income $ 21,432 $ 13,543 ================ ================ Basic earnings per share $ 0.56 $ 0.41 ================ ================ Weighted average number of common shares outstanding during the period - Basic EPS 38,540 33,211 ================ ================ Diluted earnings per share $ 0.55 $ 0.40 ================ ================ Weighted average number of common shares outstanding during the period - Diluted EPS 39,206 34,154 ================ ================
See accompanying Notes to Consolidated Financial Statements EXPRESS SCRIPTS, INC. Unaudited Consolidated Statement of Changes in Stockholders' Equity
Number of Shares Amount ------------------- ------------------------------------------------------------------------------ Accumulated Class A Class B Class A Class B Additional Other Common Common Common Common Paid-in Comprehensive Retained Treasury (in thousands) Stock Stock Stock Stock Capital Income Earnings Stock Total - ------------------------------- --------- --------- --------- --------- ---------- -------------- ----------- ---------- --------- Balance at December 31, 1999 23,981 15,020 $ 240 $ 150 $418,921 $ (9,521) $296,540 $(6,848) $699,482 --------- --------- --------- --------- ---------- -------------- ----------- ---------- --------- Comprehensive income: Net income - - - - - - 21,432 - 21,432 Other comprehensive income, Foreign currency translation adjustment - - - - - (14) - - (14) Unrealized loss on investment, net of tax benefits of $25,344 - - - - - (42,059) - - (42,059) --------- --------- --------- --------- ---------- -------------- ----------- ---------- --------- Comprehensive income - - - - - (42,073) 21,432 - (20,641) Repurchase of Class A Common Stock - - - - - - - (20,910) (20,910) Common stock issued under employee plans 21 - - - 780 - - - 780 Exercise of stock options 6 - - - 168 - - - 168 Tax benefit relating to employee stock options - - - - 57 - - - 57 --------- --------- --------- --------- ---------- -------------- ----------- ---------- --------- Balance at March 31, 2000 24,008 15,020 $ 240 $ 150 $419,926 $ (51,594) $317,972 $(27,758) $658,936 ========= ========= ========= ========= ========== ============== =========== ========== =========
See accompanying Notes to Consolidated Financial Statements EXPRESS SCRIPTS, INC. Unaudited Consolidated Statement of Cash Flows
Three Months Ended March 31, (in thousands) 2000 1999 --------------- ---------------- Cash flows from operating activities: Net Income $ 21,432 $ 13,543 Adjustments to reconcile net income to net cash provided operating activities: Depreciation and amortization 22,153 8,685 Deferred income taxes 11,588 1,545 Bad debt expense 2,599 1,592 Tax benefit relating to employee stock options 57 1,571 Net changes in operating assets and liabilities 2,847 (30,744) --------------- ---------------- Net cash provided by (used in) operating activities 60,676 (3,808) --------------- ---------------- Cash flows from investing activities: Purchases of property and equipment (11,723) (5,677) --------------- ---------------- Net cash (used in) investing activities (11,723) (5,677) --------------- ---------------- Cash flows from financing activities: Repayment of long-term debt (30,000) - Repurchase of Class A Common Stock (20,910) - Other, net 888 2,722 --------------- ---------------- Net cash (used in) provided by financing activities (50,022) 2,722 --------------- ---------------- Effect of foreign currency translation adjustment (14) 12 --------------- ---------------- Net decrease in cash and cash equivalents (1,083) (6,751) Cash and cash equivalents at beginning of period 132,630 122,589 =============== ================ Cash and cash equivalents at end of period $ 131,547 $ 115,838 =============== ================
See accompanying Notes to Consolidated Financial Statements EXPRESS SCRIPTS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS Note 1 - Summary of Significant Accounting Policies Financial statement note disclosures, normally included in financial statements prepared in conformity with generally accepted accounting principles, have been omitted in this Form 10-Q pursuant to the Rules and Regulations of the Securities and Exchange Commission. However, in our opinion, the disclosures contained in this Form 10-Q are adequate to make the information presented not misleading when read in conjunction with the notes to consolidated financial statements included in our Annual Report on Form 10-K for the Year Ended December 31, 1999, as filed with the Securities and Exchange Commission on March 29, 2000. In our opinion, the accompanying unaudited consolidated financial statements reflect all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Unaudited Consolidated Balance Sheet at March 31, 2000, the Unaudited Consolidated Statement of Operations for the three months ended March 31, 2000, and 1999, the Unaudited Consolidated Statement of Changes in Stockholders' Equity for the three months ended March 31, 2000, and the Unaudited Consolidated Statement of Cash Flows for the three months ended March 31, 2000, and 1999. Operating results for the three months ended March 31, 2000 are not necessarily indicative of the results that may be expected for the year ended December 31, 2000. Note 2 - Receivables As of March 31, 2000 and December 31, 1999, unbilled receivables were $356,951,000 and $416,740,000, respectively. Unbilled receivables are billed to clients typically within 30 days based on the contractual billing schedule agreed upon with the client. Note 3 - Earnings Per Share Basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed in the same manner as basic earnings per share but adds the number of additional common shares that would have been outstanding for the period if the dilutive potential common shares had been issued. The only difference between the number of weighted average shares used in the basic and diluted calculation for all years is stock options and stock warrants we granted using the "treasury stock" method. Note 4 - Acquisition On April 1, 1999, we completed our acquisition of Diversified Pharmaceutical Services, Inc. and Diversified Pharmaceutical Services (Puerto Rico) Inc. (collectively, "DPS"), from SmithKline Beecham Corporation and SmithKline Beecham InterCredit BV (collectively, "SB") for approximately $715 million, which includes a purchase price adjustment for closing working capital and transaction costs. We filed an Internal Revenue Code ss.338(h)(10) election, making amortization expense of intangible assets, including goodwill, tax deductible. We used approximately $48 million of our own cash and financed the remainder of the purchase price and related acquisition costs. The acquisition has been accounted for using the purchase method of accounting. The results of operations of DPS have been included in the consolidated financial statements and pharmacy benefit management ("PBM") segment since April 1, 1999. The purchase price has been preliminarily allocated based on the estimated fair values of net assets acquired at the date of the acquisition. The excess of purchase price over tangible net assets acquired has been preliminarily allocated to other intangible assets consisting of customer contracts in the amount of $129,500,000 which are being amortized using the straight-line method over the estimated useful lives of 1 to 20 years and goodwill in the amount of $730,773,000 which is being amortized using the straight-line method over the estimated useful life of 30 years. In conjunction with the acquisition, DPS retained the following liabilities: (in thousands) - ------------------------------------------------------------- Fair value of assets acquired $ 1,006,028 Cash paid for the capital stock (714,678) ======================= Liabilities retained $ 291,350 ======================= The following unaudited pro forma information presents a summary of our combined results of operations and those of DPS as if the acquisition had occurred at the beginning of the periods presented, along with certain pro forma adjustments to give effect to amortization of goodwill, other intangible assets, interest expense on acquisition debt and other adjustments. The pro forma financial information is not necessarily indicative of the results of operations as they would have been had the transaction been effected on the assumed date, nor is it an indication of trends in future results. Three Months Ended March 31, (in thousands, except per share data) 1999 - ------------------------------------------------------------------- Total revenues $ 964,453 Net income 14,720 Basic earnings per share 0.44 Diluted earnings per share 0.43 Note 5 - Marketable Securities All investments not included in a money market fund are accounted for under Financial Accounting Standards Board Statement No. 115, "Accounting for Certain Investments in Debt and Equity Securities." Available-for-sale securities are reported at fair value, which is based upon quoted market prices, with unrealized gains and losses, net of tax, reported as a component of other comprehensive income in stockholders' equity until realized. Unrealized losses are charged against income when a decline in fair value is determined to be other than temporary. At March 31, 2000 and December 31, 1999, available-for-sale securities totaled $82,961,000 and $150,365,000, respectively, with related gross unrealized losses, net of taxes of $42,059,000 and $9,555,000, respectively. These unrealized losses are considered to be temporary, thus are reported as a component of other comprehensive income in stockholders' equity. These investments consist of shares of PlanetRx.com, Inc. common stock. Note 6 - Financing Our Senior Notes are unconditionally and joint and severally guaranteed by our wholly-owned domestic subsidiaries other than Practice Patterns Sciences, Inc., Great Plains Reinsurance Co., ValueRx of Michigan, Inc., Diversified NY IPA, Inc., and Diversified Pharmaceutical Services (Puerto Rico), Inc. Separate financial statements of the Guarantors are not presented as we have determined them not to be material to investors. Therefore, the following condensed consolidating financial information has been prepared using the equity method of accounting in accordance with the requirements for presentation of such information. We believe that this information, presented in lieu of complete financial statements for each of the guarantor subsidiaries, provides sufficient detail to allow investors to determine the nature of the assets held by, and the operations of, each of the consolidating groups. As of January 1, 2000, we undertook an internal corporate reorganization to eliminate various entities whose existence was deemed to be no longer necessary, including, among others, ValueRx Pharmacy Program, Inc. ("ValueRx"), and to create several new entities to house certain activities, including Express Scripts Specialty Distribution Services, Inc. ("SDS") and ESI Mail Pharmacy Services, Inc. ("ESI MPS"). Consequently, the assets, liabilities and operations of ValueRx are incorporated into those of the issuer, Express Scripts, Inc. and the assets, liabilities and operations of SDS and ESI MPS are incorporated into those of the Guarantors for 2000.
Express Non-Guarantors (in thousands) Scripts, Inc. Guarantors Eliminations Consolidated - ------------------------------------------- ---------------- --------------- ---------------- --------------- ---------------- As of March 31, 2000 Current assets $ 794,115 $ 156,783 $ 8,566 $ - $ 959,464 Property and equipment, net 88,748 10,775 4,693 - 104,216 Investments in subsidiaries 725,468 - 2,261 (727,729) - Investments in marketable securities - - 82,961 82,961 Intercompany 585,654 (570,505) (15,149) - - Goodwill, net 258,400 706,274 5,407 - 970,081 Other intangible assets, net 67,746 108,556 46 - 176,348 Other assets 14,747 564 (7,171) (147) 7,993 ================ =============== ================ =============== ================ Total assets $ 2,534,878 $ 412,447 $ 81,614 $ (727,876) $ 2,301,063 ================ =============== ================ =============== ================ Current liabilities $ 657,450 $ 338,083 $ 8,837 $ - $ 1,004,370 Long-term debt 605,839 - - - 605,839 Other liabilities 72,433 2 (40,517) - 31,918 Stockholders' equity 1,199,156 74,362 113,294 (727,876) 658,936 ---------------- --------------- ---------------- --------------- ---------------- Total liabilities and stockholders' equity $ 2,534,878 $ 412,447 $ 81,614 $ (727,876) $ 2,301,063 ================ =============== ================ =============== ================ As of December 31, 1999 Current assets $ 549,374 $ 506,976 $ 10,005 $ - $ 1,066,355 Property and equipment, net 39,036 55,386 3,151 - 97,573 Investments in subsidiaries 725,468 - 2,261 (727,729) - Investments in marketable securities - - 150,365 150,365 Intercompany 463,438 (388,760) (74,678) - - Goodwill, net 168 976,759 5,569 - 982,496 Other intangible assets, net 22,458 160,901 61 - 183,420 Other assets 13,179 799 (6,729) (147) 7,102 ================ =============== ================ =============== ================ Total assets $ 1,813,121 $ 1,312,061 $ 90,005 $ (727,876) $ 2,487,311 ================ =============== ================ =============== ================ Current liabilities $ 527,312 $ 563,002 $ 10,044 $ - $ 1,100,358 Long-term debt 635,873 - - - 635,873 Other liabilities 83,365 (16,294) (15,473) - 51,598 Stockholders' equity 566,571 765,353 95,434 (727,876) 699,482 ---------------- --------------- ---------------- --------------- ---------------- Total liabilities and stockholders' equity $ 1,813,121 $ 1,312,061 $ 90,005 $ (727,876) $ 2,487,311 ================ =============== ================ =============== ================ Three months ended March 31, 2000 Total revenues $ 906,852 $ 563,281 $ 5,376 $ - $ 1,475,509 Operating expenses 881,169 538,678 6,587 - 1,426,434 ---------------- --------------- ---------------- --------------- ---------------- Operating income (loss) 25,683 24,603 (1,211) - 49,075 Interest income (expense), net (12,816) (2) (2) - (12,820) ---------------- --------------- ---------------- --------------- ---------------- Income (loss) before tax effect 12,867 24,601 (1,213) - 36,255 Income tax provision (benefit) 5,243 10,062 (482) - 14,823 ================ =============== ================ =============== ================ Net income (loss) $ 7,624 $ 14,539 $ (731) $ - $ 21,432 ================ =============== ================ =============== ================ Three months ended March 31, 1999 Total revenues $ 493,545 $ 401,878 $ 3,664 $ - $ 899,087 Operating expenses 466,356 400,698 3,033 - 870,087 ---------------- --------------- ---------------- --------------- ---------------- Operating income 27,189 1,180 631 - 29,000 Interest income (expense), net (4,939) 66 44 - (4,829) ---------------- --------------- ---------------- --------------- ---------------- Income before tax effect 22,250 1,246 675 - 24,171 Income tax provision 8,451 1,894 283 - 10,628 ================ =============== ================ =============== ================ Net income (loss) $ 13,799 $ (648) $ 392 $ - $ 13,543 ================ =============== ================ =============== ================
Note 7 - Restructuring During the second quarter of 1999, we recorded a pre-tax restructuring charge of $9,400,000 associated with the consolidation of our Plymouth, Minnesota facility into our Bloomington, Minnesota facility. In December 1999, the associated accrual was reduced by $2,301,000, primarily as a result of subleasing a portion of the unoccupied space. The consolidation plan includes the relocation of all employees at the Plymouth facility to the Bloomington facility that began in August 1999 and will end in the third quarter of 2000. Included in the restructuring charge are anticipated cash expenditures of approximately $4,823,000 for lease termination fees and rent on unoccupied space (which payments will continue through April 2001, when the lease expires) and anticipated non-cash charges of approximately $2,276,000 for the write-down of leasehold improvements and furniture and fixtures. The restructuring charge does not include any costs associated with the physical relocation of the employees. During December 1999, we recorded a pre-tax restructuring charge of $2,633,000 associated with the outsourcing of our computer operations to EDS. The principal actions of the plan included cash expenditures of approximately $2,148,000 for the transition of 51 employees to the outsourcer and the elimination of contractual obligations of ValueRx, which had no future economic benefit to us, and non-cash charges of approximately $485,000 due to the reduction in the carrying value of certain capitalized software to its net realizable value. We expect to complete this plan during the second quarter of 2000 when remaining cash payments will be made. Also in December 1999, we recorded a pre-tax restructuring charge of $969,000 associated with restructuring our Practice Patterns Science, Inc. ("PPS") majority-owned subsidiary and the purchase of the remaining PPS Common Stock from management. The charge consists of cash expenditures of $559,000 relating to stock compensation expense and $410,000 of severance payments to 9 employees (of which $133,000 was paid during December 1999). This plan was completed in January 2000.
Balance at Balance at December 31, 2000 2000 March 31, (in thousands) 1999 Additions Usage 2000 - ------------------------------------- ---------------- ------------- ------------ ---------------- Non-cash Write-down of long-lived assets $ 28 $ - $ - $ 28 Cash Employee transition costs 1,592 - 1,592 - Stock compensation 559 - 559 - Termination fees and rent 1,338 - 113 1,225 ================ ============= ============ ================ $ 3,517 $ - $ 2,264 $ 1,253 ================ ============= ============ ================
All of the restructuring charges which include tangible assets to be disposed of are written down to their net realizable value, less cost of disposal. We expect recovery to approximate its cost of disposal. Considerable management judgment is necessary to estimate fair value; accordingly, actual results could vary from such estimates. Note 8 - Common Stock As of March 31, 2000, we have repurchased a total of 1,018,000 shares of our Class A Common Stock under the stock repurchase program that we announced on October 25, 1996, 543,000 shares of which were repurchased during the first quarter of 2000. Our Board of Directors approved the repurchase of up to 2,500,000 shares, and placed no limit on the duration of the program. Additional purchases, if any, will be made in such amounts and at such times as we deem appropriate based upon prevailing market and business conditions, subject to restrictions on stock repurchases contained in our bank credit facility and the Indenture under which our Senior Notes were issued. Note 9 - Segment Reporting We are organized on the basis of services offered and have determined that we have two reportable segments: PBM services and non-PBM services. We manage the pharmacy benefit within an operating segment that encompasses a fully-integrated PBM service. The remaining two operating service lines (IVTx and Specialty Distribution) have been aggregated into a non-PBM reporting segment. The following table presents information about the reportable segments for the three months ended March 31: (in thousands) PBM Non-PBM Total - ----------------------------------------------------------------------- 2000 Total revenues $ 1,454,241 $ 21,268 $1,475,509 Income before income taxes 31,064 5,191 36,255 - ----------------------------------------------------------------------- 1999 Total revenues $ 884,436 $ 14,651 $ 899,087 Income before income taxes 22,660 1,511 24,171 Item 2. Management's Discussion And Analysis Of Financial Condition And Results Of Operations In this Item 2, "we," "us," "our" and the "Company" refer to Express Scripts, Inc. and its subsidiaries, unless the context indicates otherwise. Information included in this Quarterly Report on Form 10-Q, and information that may be contained in other filings by us with the Securities and Exchange Commission ("SEC") and releases issued or statements made by us, contain or may contain forward-looking statements, including but not limited to statements of our plans, objectives, expectations or intentions. Such forward-looking statements necessarily involve risks and uncertainties. Our actual results may differ significantly from those projected or suggested in any forward-looking statements. Factors that might cause such a difference to occur include, but are not limited to: o risks associated with the implementation of our Internet strategy o risks associated with the integration of ValueRx and DPS o risks associated with our leverage and debt service obligations o risks associated with our ability to manage and maintain internal growth o competition, including price competition, competition in the bidding and proposal process and our ability to consummate contract negotiations with prospective clients o the possible termination of contracts with certain key clients or providers o the possible loss of relationships with pharmaceutical manufacturers, or changes in pricing, discount, rebate or other practices of pharmaceutical manufacturers o adverse results in litigation o adverse results in regulatory matters, the adoption of adverse legislation or regulations, more aggressive enforcement of existing legislation or regulations, or a change in the interpretation of existing legislation or regulations o developments in the healthcare industry, including the impact of increases in health care costs, changes in drug utilization patterns and introductions of new drugs o dependence on key members of management o our relationship with New York Life Insurance Company, which possesses voting control of us o other risks described from time to time in our filings with the SEC We do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. OVERVIEW During the first quarter of 2000 we continued to execute our growth strategy of generating sales to new clients, expanding the services provided to existing clients and developing new products and services for sale to existing clients and pharmaceutical manufacturers. As previously disclosed, on April 1, 1999, we acquired Diversified Pharmaceutical Services, Inc. and Diversified Pharmaceutical Services (Puerto Rico) Inc. (collectively, "DPS"), from SmithKline Beecham Corporation ("SmithKline Beecham") and SmithKline Beecham InterCredit BV for approximately $715 million, which includes a purchase price adjustment for closing working capital and transaction costs. Consequently, our operating results include those of DPS from April 1, 1999. The net assets acquired from DPS have been preliminarily recorded at their estimated fair value, resulting in $730,773,000 of goodwill that is being amortized over 30 years. This acquisition has been accounted for under the purchase method of accounting. The acquisition of DPS increased our membership base to approximately 38.5 million members, excluding the 9.5 million members served under the United HealthCare ("UHC") contract, as of March 31, 2000 from approximately 23 million lives as of March 31, 1999. We have one of the largest managed care membership bases of any pharmacy benefit management ("PBM") company. Although our membership counts are based on eligibility data provided by our clients, they necessarily involve some estimates, extrapolations and approximations. As one example, some plan designs allow for family coverage under a single identification number, and we make assumptions about the average number of persons per family in calculating the membership covered by such plans. Because these assumptions may vary between PBMs, membership counts may not be comparable between our competitors and us. However, we believe our membership count provides a reasonable estimation of the population we serve, and can be used as one measure of our growth. We derive our revenues primarily from the sale of PBM services in the United States and Canada. Our PBM revenues generally include administrative fees, dispensing fees and ingredient costs of pharmaceuticals dispensed from retail pharmacies included in one of our networks or from one of our mail pharmacies, and the associated costs are recorded in cost of revenues (the "Gross Basis"). Where we only administer the contracts between our clients and the clients' retail pharmacy networks, as is the case for most of the customer contracts with DPS, we record as revenues only the administrative fee we receive from our activities (the "Net Basis"). We also derive PBM revenues from the sale of informed decision counseling services through our Express Health LineSM division, and the sale of medical information management services (which include the development of data warehouses to combine medical claims and prescription drug claims), disease management support services and quality and outcomes assessments through our Health Management Services ("HMS") division and Practice Patterns Science, Inc. ("PPS") subsidiary. Non-PBM revenues are derived from: o The sale of pharmaceuticals for and the provision of infusion therapy services through our subsidiary IVTx, Inc., doing business as Express Scripts Infusion Services o Administrative fees received from drug manufacturers for the dispensing or distribution of their pharmaceuticals requiring special handling or packaging through our Express Scripts Specialty Distribution Services subsidiary RESULTS OF OPERATIONS REVENUES
Three Months Ended March 31, (in thousands) 2000 Increase 1999 - ----------------------------------------------------------------------------- PBM Gross Basis revenues $ 1,377,468 56.8% $ 878,254 PBM Net Basis revenues 73,804 1,093.9% 6,182 Other revenues 2,969 nm - ---------------------------------------- Total PBM revenues $ 1,454,241 64.4% $ 884,436 Non-PBM revenues 21,268 45.2% 14,651 ======================================== Total revenues $ 1,475,509 64.1% $ 899,087 ========================================
nm = not meaningful Our growth in PBM Gross Basis revenues during the first quarter of 2000 over 1999 is primarily due to increased member utilization and higher drug ingredient costs resulting from price increases for existing drugs, new drugs introduced into the marketplace and the conversion of DPS clients to our network. Our growth in PBM Net Basis revenues during the first quarter of 2000 over 1999 is the result of our acquisition of DPS. Revenues for network pharmacy claims and network pharmacy claims processed increased $404,554,000, or 62.8%, and 43,990,000, or 122.1%, respectively, during the first quarter of 2000 over 1999. The average revenue per network pharmacy claim decreased 26.7% from the first quarter of 1999 primarily due to the acquisition of DPS, as DPS records revenue on the Net Basis which substantially reduces the average revenue per network pharmacy claim. Excluding DPS, the average revenue per network pharmacy claim increased 22.3% over the first quarter of 1999. Revenues for mail pharmacy services during the first quarter of 2000 increased $160,393,000, or 68.9%, over first quarter of 1999 as a result of the growth in mail pharmacy claims processed of 1,236,000 claims, or 54.2%, during the same period. These increases are primarily due to increased utilization by existing members as well as the addition of new members having high mail utilization. For the three months ended March 31, 2000 the average revenue per mail pharmacy claim increased 9.5% over the three months ended March 31, 1999 primarily due to higher drug ingredient costs as stated above. The increase in revenue for non-PBM services in the first quarter of 2000 is primarily due to additional volume within our Specialty Distribution Services subsidiary resulting from a new contract that took effect during the fourth quarter of 1999. COST AND EXPENSES
Three Months Ended March 31, (in thousands) 2000 Increase 1999 - ---------------------------------------------------------------------------------------- PBM $ 1,328,864 63.6% $ 812,092 Percentage of total PBM revenues 91.4% 91.8% Non-PBM 14,199 22.9% 11,555 Percentage of non-PBM revenues 66.8% 78.9% --------------------------------------- Cost of revenues 1,343,063 63.1% 823,647 Percentage of total revenues 91.0% 91.6% Selling, general and administrative 64,381 60.1% 40,218 Percentage of total revenues 4.4% 4.5% Depreciation and amortization(1) 18,990 205.2% 6,222 Percentage of total revenues 1.3% 0.7% ======================================= Total cost and expenses $ 1,426,434 63.9% $ 870,087 ======================================= Percentage of total revenues 96.7% 96.8% (1) Represents depreciation and amortization expense included in selling, general and administrative expenses on our Statement of Operations. Cost of revenues, above, also includes depreciation and amortization expense on property and equipment of $2,577 and $2,265 for the three months ended March 31, 2000 and 1999, respectively.
Our cost of revenues for PBM services as a percentage of total PBM revenues decreased slightly in the first quarter of 2000 from 1999 primarily due to the acquisition of DPS, as DPS records revenues under the Net Basis. In future periods, we expect the gross margin percentage will continue to be somewhat higher than in prior periods until we convert DPS clients to our pharmacy networks. As this conversion occurs, we will record revenues for converted clients on the Gross Basis and we anticipate that the gross margin percentage will then begin to decline, although profitability is not expected to be adversely affected by these changes. Cost of revenues for non-PBM services decreased as a percentage of non-PBM revenues for the first quarter of 2000 from 1999 primarily due to additional volume of business within our Specialty Distribution Services subsidiary, where we record as revenue our administrative fee for distributing pharmaceutical products held on consignment for manufacturers. The subsidiary was also able to derive operating cost efficiencies as a result of the higher volume from its new contract. Selling, general and administrative expenses, excluding depreciation and amortization, increased $24,163,000 or 60.1%, in the first quarter of 2000 over 1999. However, as a percentage of total revenue, selling, general and administrative expenses decreased slightly to 4.4%. The increase in 2000 is primarily due to our acquisition of DPS, costs incurred during the integration of DPS and ValueRx ($2,629,000 in the first quarter of 2000 and $1,587,000 in the first quarter of 1999), costs incurred in funding our Internet initiatives and expenditures required to expand the operational and administrative support functions to enhance management of the pharmacy benefit. During the first quarter of 2000 and 1999, we capitalized $3,420,000 and $1,081,000, respectively, in new systems development costs related to integration. Depreciation and amortization substantially increased for the three months ended March 31, 2000 over 1999 due to the acquisition of DPS. During 2000, we have recorded amortization expense for goodwill and other intangible assets of $16,476,000 compared to $4,277,000 in 1999. The remaining increases in 2000 were primarily due to integration, expanding our operations and enhancing our information systems to better serve our clients. INTEREST INCOME (EXPENSE), NET The $7,979,000, or 128.2% increase for the quarter ended March 31, 2000 over the 1999 interest expense is due to the debt incurred to purchase DPS on April 1, 1999. PROVISION FOR INCOME TAXES Our effective tax rate for continuing operations decreased to 40.9% for the first quarter of 2000 from 44.0% for the first quarter of 1999 primarily due to the reduction in the non-deductible goodwill and customer contract amortization expense associated with the ValueRx acquisition as a percentage of income before income taxes. The goodwill and customer contract amortization for the DPS acquisition is deductible for income tax purposes due to the filing of an Internal Revenue Code ss.338(h)(10) election. NET INCOME AND EARNINGS PER SHARE Our net income increased $7,889,000, or 58.3%, for the first quarter of 2000 over 1999. Basic and diluted weighted average shares outstanding for the first quarter of 2000 increased 36.6% and 37.5%, respectively, over the first quarter of 1999. The increase for both basic and diluted shares outstanding is primarily related to our offering of 5,175,000 shares of our Class A Common Stock in June 1999, slightly offset by the repurchase of 543,000 shares of our Class A Common Stock during the first quarter of 2000 under the open-market stock repurchase program (see "--Liquidity and Capital Resources"). LIQUIDITY AND CAPITAL RESOURCES During the first quarter of 2000, net cash provided by operations increased $64,484,000 to $60,676,000 from net cash used of $3,808,000 in 1999. This increase is primarily due to bringing our inventory levels back down to our normal operating levels after increasing our inventory during the fourth quarter of 1999 by approximately $30,000,000 for our mail pharmacies' anticipation of potentially higher demand due to our members' Year 2000 concerns. Days sales outstanding ("DSO") decreased to 31.5 days at March 31, 2000 from 37.0 days at March 31, 1999. Gross revenues must be used to calculate the days sales outstanding due to the impact of the Gross Basis versus the Net Basis of recording revenues, as discussed in "--Overview" and "-- Revenues." The accounts receivable balance includes the cost of the pharmaceutical dispensed, which may not be included in revenues, as required by generally accepted accounting principles, based on the contractual terms embedded in client and pharmacy contracts. The following table presents our days sales outstanding for the years ended:
Three Months Ended March 31, (in thousands) 2000 1999 - ------------------------------------------------------------------------------- Total revenues $ 1,475,509 $ 899,087 Client/pharmacy pass through 795,979 232,962 ================ =============== Total $ 2,271,488 $ 1,132,049 ================ =============== Average monthly gross receivables $ 786,595 $ 465,424 ================ =============== DSO 31.5 37.0 ================ ===============
Our allowance for doubtful accounts has increased $265,000 or 1.5% to $17,546,000 at March 31, 2000 from $17,281,000 at December 31, 1999. As a percentage of at risk receivables (i.e., receivables for which we have a corresponding contractual obligation to pay the applicable retail pharmacy), the allowance for doubtful accounts is 2.9% at March 31, 2000 compared to 2.6% at December 31, 1999. We previously announced that we anticipated our cash flow from operations will be temporarily reduced by approximately $20,000,000 due to the termination of the United HealthCare contract during the third quarter of 2000. We are currently discussing with UHC a revision to the previously announced transition plan, which, if implemented, could extend the transition period and cause the temporary cash reduction to occur after the third quarter of 2000. The effect of any such extension would be to reduce the maximum amount of the reduction and spread the effect over a longer period of time, thereby reducing the effect in any one quarter. We expect to primarily fund the termination of the United HealthCare contract in 2000 with operating cash flow. We will continue to utilize our operating cash flows for future debt prepayments, stock repurchases, integration costs, Internet initiatives and other normal operating cash needs as we deem appropriate. Our capital expenditures for the three months ended March 31, 2000 increased $6,046,000 or 106.5% over 1999 primarily due to integration related activities as a result of our acquisitions, our concerted effort to invest in our information technology to enhance the services provided to our clients and the continued renovation of our St. Louis site operations facility. We expect to continue investing in technology that will provide efficiencies in operations, manage growth and enhance the service provided to our clients. We expect to fund future anticipated capital expenditures primarily with operating cash flow or, to the extent necessary, with working capital borrowings under our $300 million revolving credit facility, discussed below. During the first quarter of 2000, we used our excess cash balances to prepay $30,000,000 on our bank revolving facility and repurchase 543,000 shares of our class A Common Stock for $20,910,000. As of March 31, 2000, we have repurchased a total of 1,018,000 shares of our Class A Common Stock under the stock repurchase program that we announced on October 25, 1996. Our Board of Directors approved the repurchase of up to 2,500,000 shares, and placed no limit on the duration of the program. Additional debt prepayments or common stock repurchases, if any, will be made in such amounts and at such times as we deem appropriate based upon prevailing market and business conditions, subject to restrictions on stock repurchases contained in our bank credit facility and the Indenture under which our Senior Notes were issued. We have a credit facility with a bank syndicate led by Credit Suisse First Boston and Bankers Trust Company consisting of $285 million of Term A loans and a $300 million revolving credit facility. The Term A loans and the revolving credit facility mature on March 31, 2005. The credit facility is secured by the capital stock of each of our existing and subsequently acquired domestic subsidiaries, excluding Practice Patterns Science, Inc., Great Plains Reinsurance, ValueRx of Michigan, Inc., Diversified NY IPA, Inc. and Diversified Pharmaceutical Services (Puerto Rico), Inc., and is also secured by 65% of the stock of our foreign subsidiaries. The credit facility requires us to pay interest quarterly on an interest rate spread based on several London Interbank Offered Rates ("LIBOR") or base rate options. Using a LIBOR spread, the Term A loans and the revolving loan had an interest rate of 8.21% on March 31, 2000. To alleviate interest rate volatility, we have entered into two separate swap arrangements, which are discussed in "--Market Risk" below. Beginning in March 2001, we are required to make annual principal payments on the Term A loans of $42,750,000 in 2001, $57,000,000 in 2002 and 2003, $62,700,000 in 2004 and $65,550,000 in 2005. The credit facility contains covenants that limit the indebtedness we may incur, dividends paid and the amount of annual capital expenditures. The covenants also establish a minimum interest coverage ratio, a maximum leverage ratio, and a minimum fixed charge coverage ratio. In addition, we are required to pay an annual fee of 0.5%, payable in quarterly installments, on the unused portion of the revolving credit facility ($230 million at March 31, 2000). At March 31, 2000, we are in compliance with all covenants associated with the credit facility. In June 1999, we issued $250 million of 9 5/8% Senior Notes due 2009, which require interest to be paid semi-annually on June 15 and December 15 of each year. The Senior Notes are callable at specified rates beginning in June 2004. The Senior Notes are unconditionally and joint and severally guaranteed by our wholly-owned domestic subsidiaries other than PPS, Great Plains Reinsurance Co., ValueRx of Michigan, Inc., Diversified NY IPA, Inc., and Diversified Pharmaceutical Services (Puerto Rico), Inc. In April 2000, we repurchased approximately $3 million of the Senior Notes on the open market. We have reviewed and currently intend to continue reviewing potential acquisitions and affiliation opportunities. We believe that available cash resources, bank financing or the issuance of additional common stock could be used to finance such acquisitions or affiliations. However, there can be no assurance we will make other acquisitions or affiliations in 2000 or thereafter. OTHER MATTERS In June 1998, Financial Accounting Standards Board Statement 133, Accounting for Derivative Instruments and Hedging Activities ("FAS 133") was issued. FAS 133 requires all derivatives to be recognized as either assets or liabilities in the statement of financial position and measured at fair value. In addition, FAS 133 specifies the accounting for changes in the fair value of a derivative based on the intended use of the derivative and the resulting designation. The effective date for FAS 133 was originally effective for all fiscal quarters of fiscal years beginning after June 15, 1999. However, the Financial Accounting Standards Board has deferred the effective date so that it will begin for all fiscal quarters of fiscal years beginning after June 15, 2000, and will be applicable to our first quarter of fiscal year 2001. Our present interest rate swaps will be considered cash flow hedges. Accordingly, the change in the fair value of the swaps will be reported on the balance sheet as an asset or liability. The corresponding unrealized gain or loss representing the effective portion of these hedges will be initially recognized in stockholders' equity and other comprehensive income and subsequently any changes in unrealized gain or loss from the initial measurement date will be recognized in earnings concurrent with the interest expense on our underlying variable rate debt. If we had adopted FAS 133 as of March 31, 2000, we would have recorded the unrealized gain of $8,175,000 as an asset and increase in stockholders' equity and other comprehensive income. IMPACT OF INFLATION Changes in prices charged by manufacturers and wholesalers for pharmaceuticals affect our revenues and cost of revenues. To date, we have been able to recover price increases from our clients under the terms of our agreements, although under selected arrangements in which we have performance measurements on drug costs with our clients we could be adversely affected by inflation in drug costs if the result is an overall increase in the cost of the drug plan to the client. To date, changes in pharmaceutical prices have not had a significant adverse affect on us. MARKET RISK We have entered into two interest rate swaps that have fixed the interest rate as of March 31, 2000 for $306 million of our variable rate debt under our Credit Facility. As of March 31, 2000, only one swap is effective, with a notional principal amount of $306 million and a fixed rate of interest of 5.88% per annum, plus the interest rate spread of 2%. This swap began amortizing in April 1999 in semi-annual installments that increased to $36 million in April 2000, reducing the principal notional amount of the swap to $270 million. Also in April 2000, our second swap became effective with an initial notional principal amount of $15 million and a fixed rate of interest of 6.25% per annum, plus the interest rate spread of 2%. Therefore, starting in April 2000, we have, in effect, converted $270 million of our variable rate debt under our Credit Facility to fixed rate debt at 5.88% per annum, plus the interest rate spread of 2%, and $15 million of our variable rate debt under our Credit Facility to fixed rate debt at 6.25% per annum, plus the interest rate spread of 2%. The fair value of the swaps at March 31, 2000 is $8,175,000. Interest rate risk is monitored on the basis of changes in the fair value and a sensitivity analysis is used to determine the impact interest rate changes will have on the fair value of the interest rate swaps, measuring the change in the net present value arising from the change in the interest rate. The fair value of the swaps are then determined by calculating the present value of all cash flows expected to arise thereunder, with future interest rate levels implied from prevailing mid-market yields for money-market instruments, interest rate futures and/or prevailing mid-market swap rates. Anticipated cash flows are then discounted on the assumption of a continuously compounding zero-coupon yield curve. A 10 basis point decline in interest rates at March 31, 2000 would have caused the fair value of the swaps to decrease by $2,661,000, resulting in a fair value of $5,514,000. Item 3. Quantitative and Qualitative Disclosures About Market Risk Response to this item is included in Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operations--Market Risk" above. - -------------------------------------------------------------------------------- PART II. OTHER INFORMATION - -------------------------------------------------------------------------------- Item 1. Legal Proceedings As discussed in detail in the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1998, filed with the Securities and Exchange Commission on August 13, 1998 (the "Second Quarter 10-Q"), the Company acquired all of the outstanding capital stock of Value Health, Inc., a Delaware corporation ("VHI"), and Managed Prescription Network, Inc., a Delaware corporation ("MPN") from Columbia HCA/HealthCare Corporation ("Columbia") and its affiliates on April 1, 1998 (the "Acquisition"). VHI, MPN and/or their subsidiaries (collectively, the "Acquired Entities"), were party to various legal proceedings, investigations or claims at the time of the Acquisition. The effect of these actions on the Company's future financial results is not subject to reasonable estimation because considerable uncertainty exists about the outcomes. Nevertheless, in the opinion of management, the ultimate liabilities resulting from any such lawsuits, investigations or claims now pending will not materially affect the consolidated financial position, results of operations or cash flows of the Company. A brief update of the most notable of the proceedings follows: As discussed in detail in the Second Quarter 10-Q, the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1998, filed with the Securities and Exchange Commission on November 16, 1998, the Company's Annual Report on Form 10-K/A for the year ended December 31, 1998, filed with the Securities and Exchange Commission on June 10, 1999, the Company's Quarterly Report on Form 10-Q for the period ended March 31, 1999, filed with the Securities and Exchange Commission on May 14, 1999, the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1999, filed with the Securities and Exchange Commission on August 12, 1999, the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999, filed with the Securities and Exchange Commission on November 15, 1999, and the Company's Annual Report on Form 10-K for the year ended December 31, 1999, filed with the Securities and Exchange Commission on March 29, 2000, VHI and one of its subsidiaries are party to two securities litigation matters, Bash, et al. v. Value Health, Inc., et al., No. 3:97cv2711 (JCH) (D.Conn.), and Freedman, et al. v. Value Health, Inc., et al., No. 3:95 CV 2038 (JCH) (D.Conn). The two lawsuits, filed in 1995, allege that VHI and certain other defendants made false or misleading statements to the public in connection with VHI's acquisition of Diagnostek, Inc. in 1995. The Bash lawsuit also alleges false or misleading statements by Diagnostek and certain of its former officers and directors concerning its financial condition prior to its acquisition by VHI. On April 24, 1998, the two lawsuits were consolidated. On February 18, 1999, the court granted plaintiffs' motions for class certification and certified a class consisting of (i) all persons who purchased or otherwise acquired shares of VHI during the period from April 3, 1995, through and including November 7, 1995, including those who acquired shares issued in connection with the Diagnostek transaction; and (ii) all persons who purchased or otherwise acquired shares of Diagnostek during the period from April 3, 1995, through and including July 28, 1995. Fact discovery in the consolidated lawsuit is complete. Expert discovery is expected to be completed and dispositive motions are expected to be filed over the next several months. No trial date has been set. In connection with the Acquisition, Columbia has agreed to defend and hold the Company and its affiliates (including VHI) harmless from and against any liability that may arise in connection with either of the foregoing proceedings. Consequently, the Company does not believe it will incur any material liability in connection with the foregoing matters. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. See Index to Exhibits on page 20. (b) Reports on Form 8-K. (i) On February 10, 2000, we filed a Current Report on Form 8-K dated January 26, 2000 under Items 5 and 7, regarding a press release we issued concerning the election of five members to our board of directors. (ii) On February 10, 2000, we filed a Current Report on Form 8-K, dated February 9, 2000 under Items 5 and 7, regarding a press release we issued concerning our year end 1999 financial performance. (iii)On March 3, 2000, we filed a Current Report on Form 8-K, dated March 2, 2000 under Item 5 regarding a Dow Jones news wire issued concerning our amended relationship with Aetna US Healthcare, Inc. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. EXPRESS SCRIPTS, INC. (Registrant) Date: May 8, 2000 By: /s/ Barrett A. Toan --------------------------- Barrett A. Toan, President and Chief Executive Officer Date: May 8, 2000 By: /s/ George Paz --------------------------- George Paz, Senior Vice President and Chief Financial Officer INDEX TO EXHIBITS (Express Scripts, Inc. - Commission File Number 0-20199) Exhibit Number Exhibit 2.1** Stock Purchase Agreement by and among SmithKline Beecham Corporation, SmithKline Beecham InterCredit BV and Express Scripts, Inc., dated as of February 9, 1999, and certain related Schedules, incorporated by reference to Exhibit No. 2.1 to the Company's Current Report on Form 8-K filed February 18, 1999. 2.2 Asset Contribution and Reorganization Agreement dated August 31, 1999 by and among PlanetRx.com, Inc., PRX Holdings, Inc., PRX Acquisition, Corp., YourPharmacy.com, Inc., and Express Scripts, Inc. (incorporated by reference to the Exhibit No. 2.1 to PlanetRx's Registration Statement on Form S-1, as amended (Registration Number 333-82485)). 3.1 Certificate of Incorporation of the Company, as amended, incorporated by reference to Exhibit No. 3.1 to the Company's Quarterly Report on Form 10-Q for the quarter ending June 30, 1999. 3.2 Second Amended and Restated Bylaws, incorporated by reference to Exhibit No. 3.3 to the Company's Quarterly Report on Form 10-Q for the quarter ending September 30, 1998. 4.1 Form of Certificate for Class A Common Stock, incorporated by reference to Exhibit No. 4.1 to the Company's Registration Statement on Form S-1 filed June 9, 1992 (No. 33-46974) (the "Registration Statement"). 4.2 Indenture, dated as of June 16, 1999, among the Company, Bankers Trust Company, as trustee, and Guarantors named therein, incorporated by reference to Exhibit No. 4.4 to the Company's Registration Statement on Form S-4 filed August 4, 1999 (No. 333-83133) (the "S-4 Registration Statement"). 4.3 Supplemental Indenture, dated as of October 6, 1999, to Indenture dated as of June 16, 1999, among the Company, Bankers Trust Company, as trustee, and Guarantors named therein, incorporated by reference to Exhibit No. 4.3 to the Company's Annual Report on Form 10-K for the year ending December 31, 1999. 27.1* Financial Data Schedule (provided for the information of the U.S. Securities and Exchange Commission only). * Filed herein. ** The Company agrees to furnish supplementally a copy of any omitted schedule to this agreement to the Commission upon request. EX-27 2 FDS - EXPRESS SCRIPTS, INC.
5 0000885721 Express Scripts, Inc. 1,000 U.S.Dollars 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 1 131,547 0 738,133 17,546 77,426 959,464 158,902 54,686 2,301,063 1,004,370 605,839 0 0 390 658,546 2,301,063 1,472,540 1,475,509 1,343,063 1,426,434 0 0 14,201 36,255 14,823 21,432 0 0 0 21,432 0.56 0.55
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