Express Scripts (ESRX) Stock Analysis

Market Cap	51.49 B	P/E(ttm)	36.20
Enterprise Value	63.94 B	P/B	2.20

Financial Strength : 7/10

		vs industry	vs history
Cash to Debt	0.176	ESRX's Cash to Debt is ranked lower than 59% of the 32 Companies in the Global Health Care Plans industry. ( Industry Median: 0.60 vs. ESRX: 0.176 )	ESRX' s 10-Year Cash to Debt Range Min: 0.09 Max: 0.87 Current: 0.18 0.09 0.87
Equity to Asset	0.402	ESRX's Equity to Asset is ranked higher than 72% of the 32 Companies in the Global Health Care Plans industry. ( Industry Median: 0.38 vs. ESRX: 0.402 )	ESRX' s 10-Year Equity to Asset Range Min: 0.13 Max: 0.4 Current: 0.4 0.13 0.4
Interest Coverage	4.6	ESRX's Interest Coverage is ranked higher than 56% of the 32 Companies in the Global Health Care Plans industry. ( Industry Median: 7.60 vs. ESRX: 4.6 )	ESRX' s 10-Year Interest Coverage Range Min: 3 Max: 25 Current: 4.6 3 25

F-Score: 7
Z-Score: 2.99
M-Score: -2.58

Profitability & Growth : 8/10

		vs industry	vs history
Operating margin (%)	3.00	ESRX's Operating margin (%) is ranked higher than 56% of the 32 Companies in the Global Health Care Plans industry. ( Industry Median: 4.90 vs. ESRX: 3.00 )	ESRX' s 10-Year Operating margin (%) Range Min: 2.5 Max: 6.1 Current: 3 2.5 6.1
Net-margin (%)	1.4	ESRX's Net-margin (%) is ranked higher than 56% of the 32 Companies in the Global Health Care Plans industry. ( Industry Median: 2.50 vs. ESRX: 1.4 )	ESRX' s 10-Year Net-margin (%) Range Min: -0.1 Max: 3.5 Current: 1.4 -0.1 3.5
ROE (%)	5.6	ESRX's ROE (%) is ranked higher than 59% of the 32 Companies in the Global Health Care Plans industry. ( Industry Median: 10.80 vs. ESRX: 5.6 )	ESRX' s 10-Year ROE (%) Range Min: -1.3 Max: 81.5 Current: 5.6 -1.3 81.5
ROA (%)	2.3	ESRX's ROA (%) is ranked higher than 62% of the 32 Companies in the Global Health Care Plans industry. ( Industry Median: 3.00 vs. ESRX: 2.3 )	ESRX' s 10-Year ROA (%) Range Min: -0.4 Max: 14.1 Current: 2.3 -0.4 14.1
Revenue Growth (%)	28.2	ESRX's Revenue Growth (%) is ranked higher than 97% of the 32 Companies in the Global Health Care Plans industry. ( Industry Median: 3.70 vs. ESRX: 28.2 )	ESRX' s 10-Year Revenue Growth (%) Range Min: 9.1 Max: 28.2 Current: 28.2 9.1 28.2
EBITDA Growth (%)	19.8	ESRX's EBITDA Growth (%) is ranked higher than 91% of the 32 Companies in the Global Health Care Plans industry. ( Industry Median: 5.60 vs. ESRX: 19.8 )	ESRX' s 10-Year EBITDA Growth (%) Range Min: 14.2 Max: 23.9 Current: 19.8 14.2 23.9
EPS Growth (%)	3.1	ESRX's EPS Growth (%) is ranked higher than 72% of the 32 Companies in the Global Health Care Plans industry. ( Industry Median: 0.00 vs. ESRX: 3.1 )	ESRX' s 10-Year EPS Growth (%) Range Min: 3.1 Max: 24.4 Current: 3.1 3.1 24.4

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Guru Trades

Q2 2012

Q3 2012

Q4 2012

Q1 2013

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Insider Trades

Latest Guru Trades with ESRX

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Guru	Date	Trades	Impact to Portfolio	Price Range * (?)	Current Price	Change from Average	Current Shares
Glenn Greenberg	2013-03-31	Add 145.69%	7.23%	$53.36 - $59.77	$ 62.94	12%	3998341
Lee Ainslie	2013-03-31	Reduce -64.95%	2.6%	$53.36 - $59.77	$ 62.94	12%	1772991
Richard Perry	2013-03-31	Reduce -43.27%	2.29%	$53.36 - $59.77	$ 62.94	12%	1500000
Wallace Weitz	2013-03-31	Add 95.77%	0.98%	$53.36 - $59.77	$ 62.94	12%	856500
Ray Dalio	2013-03-31	Add 97.99%	0.07%	$53.36 - $59.77	$ 62.94	12%	284088
John Keeley	2013-03-31	New Buy	0.04%	$53.36 - $59.77	$ 62.94	12%	33493
Mario Gabelli	2013-03-31	Add 70.91%	0.01%	$53.36 - $59.77	$ 62.94	12%	43104
Glenn Greenberg	2012-12-31	New Buy	5.3%	$50.05 - $65.45	$ 62.94	10%	1627364
George Soros	2012-12-31	Sold Out	2.2%	$50.05 - $65.45	$ 62.94	10%	0
Steve Mandel	2012-12-31	Sold Out	1.7%	$50.05 - $65.45	$ 62.94	10%	0
Lee Ainslie	2012-12-31	Add 57.84%	1.47%	$50.05 - $65.45	$ 62.94	10%	5059061
Richard Perry	2012-12-31	Add 35.21%	1.38%	$50.05 - $65.45	$ 62.94	10%	2644000
Wallace Weitz	2012-12-31	New Buy	1%	$50.05 - $65.45	$ 62.94	10%	437500
Leon Cooperman	2012-12-31	Add 37.68%	0.71%	$50.05 - $65.45	$ 62.94	10%	2670400
John Keeley	2012-12-31	Sold Out	0.05%	$50.05 - $65.45	$ 62.94	10%	0
Ray Dalio	2012-12-31	Add 188.78%	0.05%	$50.05 - $65.45	$ 62.94	10%	143488
Richard Perry	2012-09-30	Reduce -38.89%	2.8%	$54.08 - $64.25	$ 62.94	6%	1955408
Lee Ainslie	2012-09-30	New Buy	2.7%	$54.08 - $64.25	$ 62.94	6%	3205274
Steve Mandel	2012-09-30	Reduce -39.77%	0.95%	$54.08 - $64.25	$ 62.94	6%	4309072
George Soros	2012-09-30	Add 61.91%	0.84%	$54.08 - $64.25	$ 62.94	6%	2168000
Leon Cooperman	2012-09-30	Add 8.33%	0.18%	$54.08 - $64.25	$ 62.94	6%	1939600
Joel Greenblatt	2012-09-30	Sold Out	0.05%	$54.08 - $64.25	$ 62.94	6%	0
Ray Dalio	2012-09-30	New Buy	0.04%	$54.08 - $64.25	$ 62.94	6%	49688
Richard Perry	2012-06-30	Reduce -35.09%	4.49%	$50.59 - $58.58	$ 62.94	16%	3200000
Leon Cooperman	2012-06-30	New Buy	2.3%	$50.59 - $58.58	$ 62.94	16%	1790500
Daniel Loeb	2012-06-30	Sold Out	2%	$50.59 - $58.58	$ 62.94	16%	0
Lee Ainslie	2012-06-30	Sold Out	1.6%	$50.59 - $58.58	$ 62.94	16%	0
George Soros	2012-06-30	Add 39.48%	0.31%	$50.59 - $58.58	$ 62.94	16%	1339000
John Burbank	2012-06-30	Sold Out	0.09%	$50.59 - $58.58	$ 62.94	16%	0
Ray Dalio	2012-06-30	Sold Out	0.09%	$50.59 - $58.58	$ 62.94	16%	0
John Keeley	2012-06-30	New Buy	0.05%	$50.59 - $58.58	$ 62.94	16%	39098
Joel Greenblatt	2012-06-30	Reduce -24.25%	0.02%	$50.59 - $58.58	$ 62.94	16%	12669
Mario Gabelli	2012-06-30	Add 22.35%		$50.59 - $58.58	$ 62.94	16%	22534
Ruane Cunniff	2012-06-30	New Buy		$50.59 - $58.58	$ 62.94	16%	5757
Jean-Marie Eveillard	2012-06-30	New Buy		$50.59 - $58.58	$ 62.94	16%	1168

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Guru Investment Theses on Express Scripts

Wedgewood Partners Comments on Express Scripts - Apr 10, 2013

Although we have been investors in Express Scripts Holding Company (Express Scripts) (ESRX) since 2007, it was not always a "holding company." Express Scripts is the largest pharmacy benefits manager (PBM) in the country, managing nearly one third of all prescriptions written in the U.S. The Company recently (second quarter of 2012) rose to this market position after successfully closing the acquisition of Medco Health Solutions (Medco), effectively doubling the volume of prescriptions previously handled. Express Scripts' primary value proposition is to drive lower absolute and relative drug spend by injecting itself into almost every step of a clients' drug prescription process -‐ from patient evaluation and distribution channels, to adherence. The Company's unparalleled scale and unique focus on the behavioral and clinical aspects of the drug prescription process enables them to effectively deliver an "open architecture" drug benefit which maximizes the opportunity for clients to eliminate spending waste. The Company's clients include managed care organizations, health insurers; mid-‐to-‐large employers and unions, all of whom are constantly bombarded by double-‐digit medical care cost inflation.

In our view, Express Scripts' unmatched scale and unique approach are what will continue to reinforce its competitive profile for years to come. For example, throughout 2011 and part of 2012, one of Express Scripts' pharmacy network members, Walgreens, purportedly tried to raise prices on prescriptions, without adding any incremental value -‐ which would have mitigated savings from cheaper, generic drugs coming to market over the next few years. Express Scripts saw these terms as unacceptable, and boldly removed Walgreens from its pharmacy network, yet clients still had access to another 50,000, lower-‐priced pharmacy alternatives -‐ from CVS and Rite Aide, to thousands of independent pharmacies. So Express Scripts' clients were able to make a wholesale move to these new pharmacies, with minimal disruption. Needless to say, the effect on Walgreens was not as subtle, almost 10% of its fiscal 2012 earnings per share were quickly lost as millions of prescriptions were shifted to cheaper competing pharmacies. Ultimately, Express Scripts re-‐admitted the retailer back into its network in mid-‐2012, presumably with economics that were more beneficial to clients. While this "narrow network" approach is not a new concept, it had never been done to this scale, but Express Scripts was able to be effective while excluding the largest pharmacy chain in the U.S., a testament to the Company's scale and competitive leadership.

As Express Scripts reaches critical mass in terms of prescriptions, we believe there is still room for attractive growth in profitability through further waste reduction and optimization of client behavior. Express Scripts' research estimates show that there is over $400 billion in pharmacy-‐related waste every year. If the Company can continue to execute on its competitive advantage, we expect the Company to increasingly drive out more of this waste, and in turn, increase its profitability spread on each prescription (EBITDA/Rx).

In the interim, we expect Express Scripts will continue to be a prolific generator of free cash flow. Aside from information technology and a handful of automated drug distribution centers, there are few, large capital expenditure calls on the Company's operating cash flows. That said, in order to finance the Medco deal, Express Scripts issued debt -‐ with about $13 billion (net of cash) currently on the balance sheet. We expect that they will be able to generate between $4 billion to $5 billion in free cash flow over the next twelve months – and increasing each year for the next several years. With about $6 billion in debt due by the end of 2015, and $2.8 billion cash currently on the balance sheet, Express Scripts should have ample financial firepower to reinvest in the business, pay down debt and provide share buy-‐back support over the next few years. The Company ended the quarter at a market cap below $50 billion, when squared against our free cash flow estimates, results in a yield of about 10% which, relative to competing investment opportunities and given Express Scripts' opportunity set, we earnestly believe represents an excellent investment opportunity.

From Wedgewood Partners’ first quarter 2013 investor letter.

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		vs industry	vs history
P/E(ttm)	36.20	ESRX's P/E(ttm) is ranked lower than 63% of the 27 Companies in the Global Health Care Plans industry. ( Industry Median: 12.90 vs. ESRX: 36.20 )	ESRX' s 10-Year P/E(ttm) Range Min: 8.11 Max: 43.36 Current: 36.2 8.11 43.36
P/B	2.20	ESRX's P/B is ranked lower than 71% of the 31 Companies in the Global Health Care Plans industry. ( Industry Median: 1.61 vs. ESRX: 2.20 )	ESRX' s 10-Year P/B Range Min: 1.88 Max: 32.57 Current: 2.2 1.88 32.57
P/S	0.49	ESRX's P/S is ranked lower than 56% of the 32 Companies in the Global Health Care Plans industry. ( Industry Median: 0.38 vs. ESRX: 0.49 )	ESRX' s 10-Year P/S Range Min: 0.28 Max: 1.07 Current: 0.49 0.28 1.07
PFCF	10.70	ESRX's PFCF is ranked higher than 71% of the 24 Companies in the Global Health Care Plans industry. ( Industry Median: 11.10 vs. ESRX: 10.70 )	ESRX' s 10-Year PFCF Range Min: 8.84 Max: 25.86 Current: 10.7 8.84 25.86
EV-to-EBIT	20.8	ESRX's EV-to-EBIT is ranked lower than 67% of the 27 Companies in the Global Health Care Plans industry. ( Industry Median: 10.02 vs. ESRX: 20.8 )	ESRX' s 10-Year EV-to-EBIT Range Min: 8.9 Max: 30.1 Current: 20.8 8.9 30.1
PEG	1.5	ESRX's PEG is ranked lower than 56% of the 16 Companies in the Global Health Care Plans industry. ( Industry Median: 0.62 vs. ESRX: 1.5 )	ESRX' s 10-Year PEG Range Min: 0.43 Max: 1.65 Current: 1.5 0.43 1.65
Shiller P/E	33	ESRX's Shiller P/E is ranked lower than 100% of the Companies in the Global Health Care Plans industry. ( Industry Median: vs. ESRX: 33 )	ESRX' s 10-Year Shiller P/E Range Min: 22.6 Max: 67.21 Current: 33 22.6 67.21

		vs industry	vs history
Price/Net Current Asset Value	10.5	ESRX's Price/Net Current Asset Value is ranked higher than 65% of the 23 Companies in the Global Health Care Plans industry. ( Industry Median: 15.00 vs. ESRX: 10.5 )	ESRX' s 10-Year Price/Net Current Asset Value Range Min: 4.7 Max: 20 Current: 10.5 4.7 20
Price/DCF (Projected)	1	ESRX's Price/DCF (Projected) is ranked higher than 50% of the 22 Companies in the Global Health Care Plans industry. ( Industry Median: 0.70 vs. ESRX: 1 )	ESRX' s 10-Year Price/DCF (Projected) Range Min: 0.9 Max: 3.2 Current: 1 0.9 3.2
Price/Median PS Value	0.9	ESRX's Price/Median PS Value is ranked higher than 53% of the 30 Companies in the Global Health Care Plans industry. ( Industry Median: 0.90 vs. ESRX: 0.9 )	ESRX' s 10-Year Price/Median PS Value Range Min: 0.6 Max: 2 Current: 0.9 0.6 2
Price/Peter Lynch Fair Value	1.5	ESRX's Price/Peter Lynch Fair Value is ranked higher than 53% of the 15 Companies in the Global Health Care Plans industry. ( Industry Median: 0.60 vs. ESRX: 1.5 )	ESRX' s 10-Year Price/Peter Lynch Fair Value Range Min: 0.7 Max: 1.5 Current: 1.5 0.7 1.5
Earnings Yield (Greenblatt)	4.80	ESRX's Earnings Yield (Greenblatt) is ranked higher than 50% of the 32 Companies in the Global Health Care Plans industry. ( Industry Median: 8.50 vs. ESRX: 4.80 )	ESRX' s 10-Year Earnings Yield (Greenblatt) Range Min: 3.3 Max: 11.3 Current: 4.8 3.3 11.3
Forward Rate of Return (Yacktman)	27.62	ESRX's Forward Rate of Return (Yacktman) is ranked higher than 94% of the 32 Companies in the Global Health Care Plans industry. ( Industry Median: 2.26 vs. ESRX: 27.62 )	ESRX' s 10-Year Forward Rate of Return (Yacktman) Range Min: 22.6 Max: 36.7 Current: 27.62 22.6 36.7

Industry:	Health Care Plans
Compare:	UNH, WLP, HUM, AET, CI
Traded in other countries:	4XS.Germany

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Financial Strength : 7/10

Profitability & Growth : 8/10

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ESRX Guru Trades in Q2 2012

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Guru Investment Theses on Express Scripts

Wedgewood Partners Comments on Express Scripts - Apr 10, 2013

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