Pharmacy benefit manager Express Scripts Holding Company (ESRX) posted fourth-quarter 2014 earnings per share (excluding special items) of $1.39, beating the Zacks Consensus Estimate by a penny. Reported earnings were also above the year-ago figure by 24.1%. Shares were up following the release of fourth-quarter results.
On a reported basis, earnings per share came in at 79 cents compared with 63 cents in the year-ago quarter.
Quarterly Highlights
Revenues were up 2.1% year over year in the reported quarter to $26.3 billion and surpassed the Zacks Consensus Estimate of $25.6 billion.
Adjusted gross profit was up 5.1% to $2.3 billion in the reported quarter. Adjusted selling, general and administrative (SG&A) expenses were down 12% to $540.6 million.
Total adjusted claims at Express Scripts came in at 337.0 million, down from 360.7 million reported in the year-ago quarter.
Cash generated from operating activities was $2.9 billion. Express Scripts repurchased 10.1 million shares for $819.5 million. The company still has 83.7 million shares available under its current share repurchase program.
Annual Highlights
Total revenue came in at $100.9 billion in 2014, down 3.1% from 2013, but in line with the Zacks Consensus Estimate. Earnings (adjusted) per share came in at $4.88, up from $4.33 per share in 2013, in line with the Zacks Consensus Estimate.
2015 Outlook
The company expects adjusted earnings per share in the range of $5.35 to $5.49 in 2015, up 10% -13% over 2014. The Zacks Consensus Estimate of $5.43 is well within the company’s new guidance range. Express Scripts expects total adjusted claims in the range of 1.28 billion to 1.32 billion.
Earnings per share for the first quarter of 2015 are projected in the $1.07 – $1.11 band. The Zacks Consensus Estimate for the quarter currently stands at $1.16.
Our Take
Currently, Express Scripts carries a Zacks Rank #3 (Hold). The earnings beat in the fourth quarter was impressive. We expect the company to benefit from the growth in pharmacy benefit services, which should boost investor confidence.
Some better-ranked stocks in the broader healthcare sector include McKesson Corporation (MCK), Cardinal Health (CAH), and AmerisourceBergen Corporation (ABC). All three carry a Zacks Rank #2 (Buy).
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