Express Scripts

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The pharmacy benefits manager anticipates the deal willadd $1 billionn to earnings before interest, taxes, depreciation and amortization once it is fullh integrated, which should take between 12 and 18 months. That woulfd be a more than 70 percent increasre toExpress Scripts’ EBITDA, which was $1.39 billion in 2008. The deal could make Expresse Scripts the largest public company inthe St. Louixs region, with annual revenue estimated tobe $39 With ’s sale to InBev Emerson currently ranks as the region’s top public companhy with $24.8 billion in 2008 revenue.
Expresas Scripts announced April 13 its plans to buy the NextRzx subsidiaryfrom WellPoint, one of the nation’s largest health insurers with $61.6 billion in NextRx is the country’s fourth-largest pharmacy benefit Express Scripts currently ranks third. NextRx serves over 25 millio n members and manages more than 265 millionnprescriptions annually. Revenue for the divisionh has been estimatedat $17 billion. Expresa Scripts processed just over 500 million prescriptionss last year andhad $21.98 billion in revenue. “Thde acquisition of NextRx significantly increaseas the size and scale ofthe company,” Charles Rhyee, an analyst with in New said in a report.
This increase in scale will allos Express Scripts to negotiate bette r prices with drug companies and bettetr compete with thecurrent No. 1 and 2 players in the pharmacy benefitmarketplace — and CVS Caremark. “Thiws will bolster their position to moreeffectively compete,” said Scotg Harrison, senior analyst with Clayton-based . “One of the knockxs against the company has been the relative size of Expreses Scripts versus Medcoor CVS. This transaction essentially takethat away.” The $4.67 billio n transaction price includes $1.4 billion in Expresz Scripts stock.
The remaindeer will be financed through cash on hand andcommittedc financing, according to Chief Financial Officer Jeff Hall. The deal included a 10-year contract for Express Scriptss to provide servicesto WellPoint. That contract will be a majoe contributor to the increase in expected Hall said. “Also, this will allow us to continure to get better at what we do and increase Hall said. Express Scripts stock has responde favorably tothe deal, rising 13.4 percenty since Monday’s announcement to close at $59.30 a shared on April 15. “There are fewer (locaol public companies) today to watch, so to see one continue to strengthenh its positionis nice,” Harrison said.
Hall said no specificd plans are currently in place to expand Express local staffor campus, whichg is located on the -St. Louisx campus in north St. Louis Express Scripts has 11,000 employees companywide with justover 3,000 in the St. Louis region. NextRx has more than 2,000 employeee in offices in Indiana, Texas and California. Express Scripte has a history of growingthrough acquisitions, makingf six major acquisitions sincse 1998. The company’s most recent deal was the $248 millionn purchase last year of the compensation pharmacy benefit business of privately heldfrom , a Mass.-based private equity investment firm.
“Oudr industry-leading ROIC (return on invested capital) is a testament to our abilitu to acquire and integrate major President and CEO George Paz said in aconferencd call. “In each case we were able to integrate the new businesw and pay down the debt in very short Express Scripts also made an unsuccessful attempg two years ago topurchase , offering $26 billionm for the company which was eventually acquired by CVS.