8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report

Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

Date of Report: February 24, 2004

Express Scripts, Inc.

(Exact Name of Registrant as specified in its Charter)

Delaware	0-20199	43-1420563
(State or other jurisdiction of corporation)	(Commission File No.)	(IRS Employer Identification No.)

13900 Riverport Drive, Maryland Heights, Missouri	63043
(Address of Principal Executive Offices)	(Zip Code)

Registrant's telephone number, including area code:           (314) 770-1666                                                            

(Former name or former address, if changed since last report)

Item 5.      Other Events

                    On February 24, 2004, Express Scripts, Inc. (the "Company") issued a press release. Selected unaudited financial information included in such press release is attached hereto as Exhibit 99.1 and incorported herein by reference.

Item 7.      Financial Statements, Pro Forma Financial Information and Exhibits

                   (c)   The following Exhibit is filed as part of this report on Form 8-K:

                           Exhibit 99.1     Selected unaudited financial information from the Company’s press release
                    dated February 24, 2004.

Item 12.      Results of Operations and Financial Conditions

                   The following information is furnished under Item 12 of this report on Form 8-K:

                   The Company’s entire February 24, 2004 press release is attached hereto as Exhibit 99.2 and incorporated herein by reference.

SIGNATURE

                   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 hereunto duly authorized.

	EXPRESS SCRIPTS, INC.
Date: February 24, 2004	By:       /s/ Barrett A. Toan
	Barrett A. Toan
	Chairman and Chief Executive Officer

EXHIBIT INDEX

Exhibit No.	Description
99.1	Unaudited Financial Information, dated February 24, 2004
99.2	Press release, dated February 24, 2004

EX-99

Exhibit 99.1

EXPRESS SCRIPTS, INC.
Unaudited Consolidated Statement of Operations

	Three months ended December 31,						Twelve months ended December 31,
(in thousands, except per share data)	2003			2002			2003			2002
Revenues	$	3,487,737		$	3,364,509		$	13,294,517		$	12,270,513
Cost of revenues		3,255,024			3,139,314			12,428,179			11,447,095
Gross profit		232,713			225,195			866,338			823,418
Selling, general and administrative		115,186			121,832			417,213			451,692
Operating income		117,527			103,363			449,125			371,726
Other (expense) income :
Undistributed loss from joint venture		(1,276	)		(1,255	)		(5,796	)		(4,549	)
Interest income		1,045			946			3,390			4,716
Interest expense		(8,245	)		(11,553	)		(41,417	)		(43,890	)
		(8,476	)		(11,862	)		(43,823	)		(43,723	)
Income before income taxes		109,051			91,501			405,302			328,003
Provision for income taxes		41,620			34,776			154,674			125,167
Income before cumulative effect of accounting change		67,431			56,725			250,628			202,836
Cumulative effect of accounting change, net of tax		-			-			(1,028	)		-
Net income	$	67,431		$	56,725		$	249,600		$	202,836
Basic earnings per share :
Before cumulative effect of accounting change	$	0.87		$	0.73		$	3.22		$	2.60
Cumulative effect of accounting change		-			-			(0.01	)		-
Net income	$	0.87		$	0.73		$	3.21		$	2.60
Weighted average number of common shares
outstanding during the period - Basic EPS		77,365			77,584			77,830			77,866
Diluted earnings per share :
Before cumulative effect of accounting change	$	0.86		$	0.72		$	3.17		$	2.55
Cumulative effect of accounting change		-			-			(0.01	)		-
Net income	$	0.86		$	0.72		$	3.16		$	2.55
Weighted average number of common shares
outstanding during the period - Diluted EPS		78,513			79,255			78,928			79,667

EXPRESS SCRIPTS, INC.
Unaudited Consolidated Balance Sheet

(in thousands, except share data)	December 31, 2003			December 31, 2002
Assets
Current assets:
Cash and cash equivalents	$	396,040		$	190,654
Receivables, net		1,011,154			988,544
Inventories		116,375			160,483
Deferred taxes		15,346			25,686
Prepaid expenses and other current assets		21,220			28,454
Total current assets		1,560,135			1,393,821
Property and equipment, net		177,312			168,973
Goodwill, net		1,421,493			1,378,436
Other intangible assets, net		232,059			251,111
Other assets		18,175			14,651
Total assets	$	3,409,174		$	3,206,992
Liabilities and Stockholders' Equity
Current liabilities:
Claims and rebate payable	$	1,178,321		$	1,084,906
Accounts payable		232,290			255,245
Accrued expenses		215,797			200,356
Current maturities of long-term debt		-			3,250
Total current liabilities		1,626,408			1,543,757
Long-term debt		455,018			562,556
Other liabilities		133,755			97,824
Total liabilities		2,215,181			2,204,137
Stockholders' equity:
Preferred stock, $0.01 par value per share, 5,000,000 shares            authorized and no shares issued and outstanding		-			-
Common stock, $0.01 par value per share, 181,000,000 shares
authorized, and 79,795,000 and 79,834,000 shares issued and
outstanding, respectively		798			798
Additional paid-in capital		484,663			503,746
Unearned compensation under employee compensation plans		(23,302	)		(8,179	)
Accumulated other comprehensive income		3,638			(4,422	)
Retained earnings		864,550			614,950
		1,330,347			1,106,893
Common Stock in treasury at cost, 2,223,000 and
1,963,000 shares, respectively		(136,354	)		(104,038	)
Total stockholders' equity		1,193,993			1,002,855
Total liabilities and stockholders' equity	$	3,409,174		$	3,206,992

EXPRESS SCRIPTS, INC.
Unaudited Condensed Consolidated Statement of Cash Flows

	Twelve months ended December 31,
(in thousands)	2003			2002
Cash flow from operating activities:
Net income	$	249,600		$	202,836
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization		54,030			82,038
Deferred income taxes		34,438			29,883
Bad debt expense		(2,573	)		17,865
Tax benefit relating to employee stock options		26,893			16,940
Amortization of unearned compensation
under employee plans		8,318			9,760
Cumulative effect of accounting change		1,663			-
Other, net		2,464			4,115
Changes in operating assets and liabilities, net of
changes resulting from acquisitions:
Receivables		(23,183	)		63,812
Inventories		44,108			(31,191	)
Other current and non-current assets		7,077			(15,065	)
Claims and rebates payable		93,294			26,243
Other current and non-current liabilities		(38,205	)		18,734
Net cash provided by operating activities		457,924			425,970
Cash flows from investing activities:
Purchases of property and equipment		(53,105	)		(61,303	)
Proceeds from sale of property and equipment		6,455			-
Acquisitions, net of cash acquired, and
investment in joint venture		3,871			(487,982	)
Other		(69	)		557
Net cash used in investing activities		(42,848	)		(548,728	)
Cash flows from financing activities:
Repayment of long-term debt		(160,430	)		(205,000	)
Proceeds from long-term debt		50,000			425,000
Treasury stock acquired		(143,041	)		(107,121	)
Deferred financing fees		(224	)		(3,862	)
Net proceeds from employee stock plans		41,227			26,606
Net cash (used in) provided by financing activities		(212,468	)		135,623
Effect of foreign currency translation adjustment		2,778			74
Net increase in cash and cash equivalents		205,386			12,939
Cash and cash equivalents at beginning of period		190,654			177,715
Cash and cash equivalents at end of period	$	396,040		$	190,654

EX-99

Exhibit 99.2

Express Scripts Reports Strong Fourth Quarter Earnings
Record cash flow from operations of $177 million

        ST.  LOUIS, February 24, 2004—Express Scripts, Inc. (Nasdaq: ESRX) announced net income of $67.4 million, or $0.86 per diluted share for the fourth quarter, and $249.6 million, or $3.16 per diluted share for 2003. This compares with net income of $56.7 million, or $0.72 per diluted share for the fourth quarter of 2002, and $202.8 million, or $2.55 per diluted share for 2002. This represents increases of 19 percent and 24 percent in per share amounts for the fourth quarter and full-year 2003, respectively.

        A record $176.5 million of cash flow from operations was generated in the fourth quarter compared with $139.0 million in the same quarter last year. The increase in cash flow reflects improved operating results and working capital management, including a reduction of inventory levels resulting from implementing a new wholesale purchasing agreement. During the fourth quarter, the Company repurchased 1.1 million shares of common stock for $64.0 million, and to date, Express Scripts has repurchased 8.1 million shares under its 10 million share repurchase program. For the full year, Express Scripts generated $457.9 million of cash flow from operations compared to $426.0 million in 2002.

        “As we close the books on 2003, we believe we are well-positioned for 2004 and beyond,” stated Barrett Toan, chairman and chief executive officer. “Our business model, which aligns our interests with those of our clients and members in making prescription drugs more affordable, differentiates us in the marketplace and contributed to strong new sales. Our recently announced alliance with the National Association of Chain Drug Stores to seek endorsement of a jointly-sponsored Medicare discount card demonstrates our commitment to making the use of drugs safer and more affordable for Medicare beneficiaries.”

        “The recent addition of CuraScript to the Express Scripts’ family enhances our competitive positioning by increasing our ability to provide comprehensive clinical services for many diseases and improving the quality and affordability of specialty drug therapy for clients and patients, allowing us to offer our clients a cost-effective, single-source solution for drugs.”

Strong Operating Results

        Revenues for the fourth quarter of 2003 were $3.5 billion, a 4 percent increase over the same quarter last year mainly due to increased prescriptions managed by Express Scripts. Increased use of lower-cost generic drugs (approximately 48 percent of total prescriptions compared to 46 percent last year), and increased member co-payments to retail network pharmacies, which the Company does not record as revenue partially offset the increases from prescription sales. Revenues for 2003 were $13.3 billion, an 8 percent increase over last year.

        Mail pharmacy prescriptions increased to 8.6 million during the fourth quarter of 2003, a 21 percent increase compared with the same quarter last year. Mail claims as a percentage of total adjusted claims grew to 21 percent from 18 percent for the same period last year.

        Retail network claims processed in the fourth quarter were 95.8 million, a 2 percent increase over the fourth quarter of 2002. As discussed below, the Company expects an acceleration of claims growth beginning in mid 2004 resulting from new sales.

        For 2003, mail pharmacy prescriptions increased to 32.3 million, a 19 percent increase over 2002, while network pharmacy claims processed in 2003 were 378.9 million, a 7 percent increase over 2002.

        Gross profit per adjusted claim for the fourth quarter was $1.90, a slight decrease from $1.93 reported for the same quarter last year. This decrease is mainly due to the elimination of pharmaceutical manufacturer support of drug-specific therapy substitution programs, which reduced gross profit by approximately $8 million from the same period last year.

        Selling, general and administrative expenses of $115.2 million decreased 5 percent from $121.8 million reported for the same quarter last year due mainly to lower depreciation expense. Operating income for the fourth quarter increased 14 percent to $117.5 million from $103.4 million in the fourth quarter of 2002. EBITDA per adjusted claim was $1.08 compared to $1.05 for the same quarter last year.

        For the year, operating income increased 21 percent to $449.1 million from $371.7 million last year, while EBITDA per adjusted claim was $1.05 compared to $1.03 last year. Earnings per diluted share for 2003 and 2002 reflect additional interest charges of $0.04 and $0.01 per diluted share, respectively, resulting from the early retirement of debt.

2004 Earnings Guidance

        Express Scripts expects that its 2004 diluted earnings per share will increase 20 percent to 25 percent over 2003, excluding charges we expect to incur in 2004 that are associated with the early retirement of debt. The Company’s financial performance will benefit from increased mail and generic utilization, improved formulary compliance with preferred, lower-cost brands, increased productivity, growth in its specialty PBM offering, capital structure improvements and higher membership.

        Express Scripts experienced strong sales for 2004 business, and the net new business will begin during the second quarter with the addition of some large accounts including the TRICARE Retail Pharmacy program discussed below. Due to the fact that implementation dates for much of this new business will occur after the first quarter of 2004, but some of the corresponding implementation costs will be incurred in the first quarter, the Company expects that first quarter 2004 diluted earnings per share will be in the $0.87 to $0.89 range. Earnings per diluted share growth for the remaining quarters of 2004 is expected to accelerate to achieve the 20 percent to 25 percent growth for the year as discussed above.

        The contract for the TRICARE Retail Pharmacy program will begin June 1, 2004. Express Scripts will provide access to a retail pharmacy network, prior authorization services, beneficiary communication materials and a call center to handle beneficiary inquiries for approximately 2.5 million Department of Defense (“DoD”) beneficiaries who currently utilize the retail pharmacy benefit. The Company will record only administrative fees as revenue and will not include ingredient costs as components of revenue and costs of revenue.

Other Matters

        As previously reported, we received a comment letter from the SEC with respect to our Annual Report on Form 10-K for 2001 and 2002 and subsequent reports on Form 10-Q. Most issues raised by the SEC relate to segment reporting and disclosure and reclassification matters, and would not affect our consolidated results of operations, which include gross profit and net income, or the consolidated balance sheet and consolidated statement of cash flows. The segment reporting issue considers whether the PBM business should be comprised of two separate segments or a single segment representing an integrated product. In our segment reporting under FAS 131, “Disclosures about Segments of an Enterprise and Related Information,” we currently report our integrated PBM business as a single business segment. An additional issue raised in the SEC comment letter is whether we should include in revenue co-payments paid by clients’ members to retail network pharmacies with respect to prescriptions filled in the retail stores included in our networks. We do not include such co-payments in revenue or cost of revenue. We estimate that the inclusion of retail co-payments in revenue and cost of revenue would result in an increase in reported revenue and cost of revenue of approximately 23 percent to 29 percent (excluding member co-payments on plans wherein we do not include ingredient costs in revenue). Beginning in 2004, we will include on the face of our Consolidated Statement of Operations the estimated amount of network co-payments excluded from revenues and cost of revenues. We are in discussions with the SEC about all of the issues raised in the comment letter.

        Express Scripts, Inc. is one of the largest PBM companies in North America providing PBM services to over 50 million members through facilities in thirteen states and Canada. Express Scripts serves thousands of client groups, including managed care organizations, insurance carriers, third-party administrators, government-sponsored benefit plans, employers, and union-sponsored benefit plans.

        Express Scripts provides integrated PBM services, including network pharmacy claims processing, mail pharmacy services, benefit design consultation, drug utilization review, formulary management, disease management, medical and drug data analysis services, and medical information management services. The Company also provides distribution services for specialty pharmaceuticals. Express Scripts is headquartered in St. Louis, Missouri. More information can be found at http://www.express-scripts.com, which includes expanded investor information and resources.

SAFE HARBOR STATEMENT

        This press release contains forward-looking statements, including, but not limited to, statements related to the Company’s plans, objectives, expectations (financial and otherwise) or intentions. Actual results may differ significantly from those projected or suggested in any forward-looking statements. Factors that may impact these forward-looking statements include but are not limited to:

• risks associated with our acquisitions (including our acquisition of CuraScript) which include integration risks and costs, risks of client retention and repricing of client contracts, and risks associated with the operations of acquired businesses

• risks associated with our ability to maintain growth rates, or to control operating or capital costs

• continued pressure on margins resulting from client demands for lower prices, enhanced service offerings and/orhigher service levels, and the possible termination of, or unfavorable modification to, contracts with keyclients or providers

• competition in the PBM industry, and our ability to consummate contract negotiations with prospective clients, as well as competition from new competitors offering services that may in whole or in part replace services that we now provide to our customers

• adverse results in regulatory matters, the adoption of new legislation or regulations (including increased costs associated with compliance with new laws and regulations, such as privacy regulations under the Health Insurance Portability and Accountability Act (“HIPAA”)), more aggressive enforcement of existing legislation or regulations, or a change in the interpretation of existing legislation or regulations

• increased compliance risks relating to our contracts with the DoD TRICARE Plan and various state governments and agencies

• risks arising from investigations of certain PBM practices and pharmaceutical pricing, marketing and distribution practices currently being conducted by the U.S. Attorney offices in Philadelphia and Boston and other regulatory agencies including the Department of Labor

• the possible loss, or adverse modification of the terms, of relationships with pharmaceutical manufacturers, or changes in pricing, discount or other practices of pharmaceutical manufacturers

• adverse results in litigation, including a number of pending class action cases that challenge certain of our business practices

• risks associated with the use and protection of the intellectual property we use in our business

• risks associated with our leverage and debt service obligations, including the effect of certain covenants in our borrowing agreements

• risks associated with our ability to continue to develop new products, services and delivery channels

• general developments in the health care industry, including the impact of increases in health care costs, changes in drug utilization and cost patterns and introductions of new drugs

• uncertainties regarding the implementation and the ultimate terms of proposed government initiatives, including the Medicare prescription drug benefit

• increase in credit risk relative to our clients due to adverse economic trends

• risks associated with our inability to attract and retain qualified personnel

• 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.

FINANCIAL TABLES FOLLOW

EXPRESS SCRIPTS, INC.
Unaudited Consolidated Statement of Operations

	Three months ended December 31,						Twelve months ended December 31,
(in thousands, except per share data)	2003			2002			2003			2002
Revenues	$	3,487,737		$	3,364,509		$	13,294,517		$	12,270,513
Cost of revenues		3,255,024			3,139,314			12,428,179			11,447,095
Gross profit		232,713			225,195			866,338			823,418
Selling, general and administrative		115,186			121,832			417,213			451,692
Operating income		117,527			103,363			449,125			371,726
Other (expense) income :
Undistributed loss from joint venture		(1,276	)		(1,255	)		(5,796	)		(4,549	)
Interest income		1,045			946			3,390			4,716
Interest expense		(8,245	)		(11,553	)		(41,417	)		(43,890	)
		(8,476	)		(11,862	)		(43,823	)		(43,723	)
Income before income taxes		109,051			91,501			405,302			328,003
Provision for income taxes		41,620			34,776			154,674			125,167
Income before cumulative effect of accounting change		67,431			56,725			250,628			202,836
Cumulative effect of accounting change, net of tax		-			-			(1,028	)		-
Net income	$	67,431		$	56,725		$	249,600		$	202,836
Basic earnings per share :
Before cumulative effect of accounting change	$	0.87		$	0.73		$	3.22		$	2.60
Cumulative effect of accounting change		-			-			(0.01	)		-
Net income	$	0.87		$	0.73		$	3.21		$	2.60
Weighted average number of common shares
outstanding during the period - Basic EPS		77,365			77,584			77,830			77,866
Diluted earnings per share :
Before cumulative effect of accounting change	$	0.86		$	0.72		$	3.17		$	2.55
Cumulative effect of accounting change		-			-			(0.01	)		-
Net income	$	0.86		$	0.72		$	3.16		$	2.55
Weighted average number of common shares
outstanding during the period - Diluted EPS		78,513			79,255			78,928			79,667

EXPRESS SCRIPTS, INC.
Unaudited Consolidated Balance Sheet

(in thousands, except share data)	December 31, 2003			December 31, 2002
Assets
Current assets:
Cash and cash equivalents	$	396,040		$	190,654
Receivables, net		1,011,154			988,544
Inventories		116,375			160,483
Deferred taxes		15,346			25,686
Prepaid expenses and other current assets		21,220			28,454
Total current assets		1,560,135			1,393,821
Property and equipment, net		177,312			168,973
Goodwill, net		1,421,493			1,378,436
Other intangible assets, net		232,059			251,111
Other assets		18,175			14,651
Total assets	$	3,409,174		$	3,206,992
Liabilities and Stockholders' Equity
Current liabilities:
Claims and rebate payable	$	1,178,321		$	1,084,906
Accounts payable		232,290			255,245
Accrued expenses		215,797			200,356
Current maturities of long-term debt		-			3,250
Total current liabilities		1,626,408			1,543,757
Long-term debt		455,018			562,556
Other liabilities		133,755			97,824
Total liabilities		2,215,181			2,204,137
Stockholders' equity:
Preferred stock, $0.01 par value per share, 5,000,000 shares            authorized and no shares issued and outstanding		-			-
Common stock, $0.01 par value per share, 181,000,000 shares
authorized, and 79,795,000 and 79,834,000 shares issued and
outstanding, respectively		798			798
Additional paid-in capital		484,663			503,746
Unearned compensation under employee compensation plans		(23,302	)		(8,179	)
Accumulated other comprehensive income		3,638			(4,422	)
Retained earnings		864,550			614,950
		1,330,347			1,106,893
Common Stock in treasury at cost, 2,223,000 and
1,963,000 shares, respectively		(136,354	)		(104,038	)
Total stockholders' equity		1,193,993			1,002,855
Total liabilities and stockholders' equity	$	3,409,174		$	3,206,992

EXPRESS SCRIPTS, INC.
Unaudited Condensed Consolidated Statement of Cash Flows

	Twelve months ended December 31,
(in thousands)	2003			2002
Cash flow from operating activities:
Net income	$	249,600		$	202,836
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization		54,030			82,038
Deferred income taxes		34,438			29,883
Bad debt expense		(2,573	)		17,865
Tax benefit relating to employee stock options		26,893			16,940
Amortization of unearned compensation
under employee plans		8,318			9,760
Cumulative effect of accounting change		1,663			-
Other, net		2,464			4,115
Changes in operating assets and liabilities, net of
changes resulting from acquisitions:
Receivables		(23,183	)		63,812
Inventories		44,108			(31,191	)
Other current and non-current assets		7,077			(15,065	)
Claims and rebates payable		93,294			26,243
Other current and non-current liabilities		(38,205	)		18,734
Net cash provided by operating activities		457,924			425,970
Cash flows from investing activities:
Purchases of property and equipment		(53,105	)		(61,303	)
Proceeds from sale of property and equipment		6,455			-
Acquisitions, net of cash acquired, and
investment in joint venture		3,871			(487,982	)
Other		(69	)		557
Net cash used in investing activities		(42,848	)		(548,728	)
Cash flows from financing activities:
Repayment of long-term debt		(160,430	)		(205,000	)
Proceeds from long-term debt		50,000			425,000
Treasury stock acquired		(143,041	)		(107,121	)
Deferred financing fees		(224	)		(3,862	)
Net proceeds from employee stock plans		41,227			26,606
Net cash (used in) provided by financing activities		(212,468	)		135,623
Effect of foreign currency translation adjustment		2,778			74
Net increase in cash and cash equivalents		205,386			12,939
Cash and cash equivalents at beginning of period		190,654			177,715
Cash and cash equivalents at end of period	$	396,040		$	190,654

EXPRESS SCRIPTS, INC. Table 1 Unaudited Operating Statistics (in thousands, except per claim)
	3 months ended 12/31/2003			3 months ended 09/30/2003			3 months ended 06/30/2003			3 months ended 03/31/2003			3 months ended 12/31/2002
Revenue Detail
Network revenues	$	2,344,426		$	2,201,301		$	2,303,311		$	2,188,208		$	2,314,967
Mail revenues (1)		1,067,299			984,468			964,119			972,255			981,354
Services revenues		21,358			14,922			17,787			18,811			24,500
PBM revenues		3,433,083			3,200,691			3,285,217			3,179,274			3,320,821
Services revenues		26,941			26,082			28,637			27,793			27,071
Other revenues (1)		27,713			21,829			20,343			16,914			16,617
Non-PBM revenues		54,654			47,911			48,980			44,707			43,688
Total revenues (2)	$	3,487,737		$	3,248,602		$	3,334,197		$	3,223,981		$	3,364,509
Per Claim
Network revenue/claim	$	24.47		$	24.34		$	23.99		$	22.64		$	24.55
Mail revenue/claim (1)	$	123.76		$	120.70		$	118.65	(3)	$	130.84		$	137.68
Claims Detail
Network (4)		95,808			90,427			96,025			96,667			94,289
SDS		859			896			966			889			863
Mail		8,624			8,156			8,126			7,431			7,128
Total claims		105,291			99,479			105,117			104,987			102,280
Adjusted claims (5)		122,539			115,791			121,369			119,849			116,536
Margin Analysis
Gross profit margin		6.7	%		6.4	%		6.5	%		6.5	%		6.7	%
EBITDA margin (6)		3.8	%		3.9	%		3.7	%		3.8	%		3.6	%
Per Adjusted Claim
Gross profit	$	1.90		$	1.79		$	1.79		$	1.75		$	1.93
EBITDA (6)	$	1.08		$	1.09		$	1.02		$	1.01		$	1.05

See Notes to Unaudited Operating Statistics

Selected Ratio Analysis
Table 2

	As of 12/31/2003			As of 09/30/2003			As of 06/30/2003			As of 03/31/2003			As of 12/31/2002
Debt to EBITDA ratio (7)		0.	9x		0.	9x		1.	0x		1.	2x		1.	2x
EBITDA interest coverage (8)		12.	1x		11.	0x		9.	8x		10.	1x		10.	3x
Operating cash flow interest coverage (9)		11.	0x		9.	4x		7.	2x		10.	7x		9.	7x
Debt to capitalization (10)		27.	6%		27.	9%		29.	7%		33.	6%		36.	1%

EXPRESS SCRIPTS, INC.

Notes to Unaudited Operating Statistics and Selected Ratio Analysis
(in thousands)

(1)        Certain prior quarter amounts have been reclassified to conform to current presentation.

(2)        During 2002, we early adopted EITF No. 02-16, “Accounting by a Reseller for Cash Consideration Received from a Vendor.” EITF 02-16 requires any consideration received from a vendor to be characterized as a reduction of cost of revenues. Therefore, revenues for the three and twelve months ended December 31, 2002 have been reduced by $244,970 and $916,871, respectively. Cost of revenues have been reduced by the same amount. These amounts represent the gross amount of rebates and administrative fees received from pharmaceutical manufacturers for collecting, processing and reporting drug utilization data, for monitoring formulary compliance, and for calculating and distributing rebates to those of our clients for whom our PBM services includes the claim processing function. Our client’s portion, a majority of such amounts, will continue to be classified as a reduction of revenues. Our consolidated gross profit was not impacted as a result of this adoption.

(3)        The decrease in mail revenue per claim in the second quarter of 2003 as compared to the first quarter of 2003 reflects the Department of Defense (“DoD”) TRICARE Management Activity mail contract in which we earn a fee per prescription filled by our mail order facility. Revenues and cost of revenues do not include ingredient costs.

(4)        Network claims exclude drug formulary only claims where we only administer the clients formulary and approximately 0.5 million manual claims per quarter.

(5)        Adjusted claims represent network claims and specialty distribution claims plus mail claims, which are multiplied by 3, as mail claims are typically 90 day claims and network claims are generally 30 day claims.

(6)        The following is a reconciliation of EBITDA to net income and to net cash provided by operating activities as the Company believes they are the most directly comparable measures calculated under Generally Accepted Accounting Principles: <PRE>

	3 months ended December 31,						12 months ended December 31,
	2003			2002			2003			2002
Net income	$	67,431		$	56,725		$	249,600		$	202,836
Income taxes		41,620			34,776			154,674			125,167
Depreciation and amortization *		14,343			19,062			54,030			82,038	**
Interest expense, net		7,200			10,607			38,027			39,174
Undistributed loss from joint venture		1,276			1,255			5,796			4,549
Cumulative effect of accounting change, net of tax		-			-			1,028			-
EBITDA		131,870			122,425			503,155			453,764
Current income taxes		(41,378	)		(23,667	)		(120,236	)		(95,284	)
Interest expense less amortization		(6,755	)		(10,071	)		(34,963	)		(35,275	)
Undistributed loss from joint venture		(1,276	)		(1,255	)		(5,796	)		(4,549	)
Other adjustments to reconcile net income
to net cash provided by operating activities		94,067			51,574			115,764			107,314
Net cash provided by operating activities	$	176,528		$	139,006		$	457,924		$	425,970

EBITDA is earnings before other income (expense), interest, taxes, depreciation and amortization, or operating income plus depreciation and amortization. EBITDA is presented because it is a widely accepted indicator of a company’s ability to service indebtedness and is frequently used to evaluate a company’s performance. EBITDA, however, should not be considered as an alternative to net income, as a measure of operating performance, as an alternative to cash flow, as a measure of liquidity or as a substitute for any other measure computed in accordance with accounting principles generally accepted in the United States. In addition, our definition and calculation of EBITDA may not be comparable to that used by other companies.

* Includes depreciation and amortization expense of:
Gross profit	$	5,706	$	6,233	$	21,262	$	25,399
Selling, general and administrative		8,637		12,829		32,768		56,639
	$	14,343	$	19,062	$	54,030	$	82,038

        ** Includes additional depreciation of approximately $7,000 and $30,000, respectively, for the 3 and 12 months ended December 31, 2002 resulting from shortening estimated useful lives on certain assets associated with legacy information systems.

    (7)        Represents debt as of the balance sheet date divided by EBITDA for the twelve months ended.

    (8)        Represents EBITDA for the twelve months ended divided by interest for the twelve months ended.

    (9)        Represents Operating Cash Flow for the twelve months ended divided by interest for the twelve months ended. For the second quarter of 2003, this ratio was negatively impacted by the non-recurring charges to interest expense of $5.0 million which pertains to the early retirement of debt.

    (10)        Represents debt divided by the total of debt and stockholders equity.