Express Scripts Holding Company ESRX announced that its board of directors has approved the repurchase of an additional 60 million shares.
With the additional authorization, the company can now repurchase a total of 265 million shares.
We note that the company did not repurchase any shares during the third quarter of 2015. In the first nine months of the year, Express Scripts repurchased 55.1 million shares for $4.7 billion. As of Sep 30, 2015, there were 28.6 million shares remaining under the company’s repurchase program. The company had approximately $438.2 million of cash and equivalents as of Sep 30, 2015.
Although Express Scripts does not pay any dividends, it remains committed to increase shareholder value through share repurchases.
The company has an accelerated share repurchase program worth $5.5 billion, which it expects to complete in the first half of 2016. The program was initiated in Apr 2015.
We remind investors that the company entered into a credit agreement in Apr 2015, which provided it a 5-year $2,000.0 million revolving credit facility, a 2-year $2,500.0 million term loan and a 5-year $3,000.0 million term loan. Net proceeds from the same were used to repay its 2011 term loan, terminate the commitments under its 2011 revolving facility, enter into an accelerated share repurchase program and for other general corporate purposes.
The increased repurchase authorization will lower the share count and thus increase returns per share.
We note that Express Scripts reported better-than-expected sales and earnings in the third quarter of 2015, thereby keeping its earnings surprise streak alive. The latest news will further boost investor interest. Hence, we expect analysts to raise their estimates, going forward.
Express Scripts currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the healthcare sector include AstraZeneca PLC AZN, Eli Lilly and Company LLY and Biodel Inc. BIOD. AstraZeneca sports a Zacks Rank #1 (Strong Buy), while Eli Lilly and Biodel carry a Zacks Rank #2 (Buy).
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