Express Scripts Holding Company (NASDAQ: ESRX) has been recently told by anthem management that anthem intends to move its business when the company’s current contract with anthem expires on Dec 31st, 2019. ESRX is losing its largest client, Anthem Inc., after the allegations that Express Scripts overcharged the health insurer. Although Anthem has not provided a formal notice that it intends to end the relationship, ESRX has said the contract is unlikely to be extended.
However, to preserve the relationship, Express Scripts Holding Company has offered Anthem $3 billion in price breaks between now and the end of the contract, for which Anthem did not show interest in those concessions. Anthem had sued ESRX, a pharmacy benefit manager based in north St. Louis County, last year over overpricing allegations. ESRX has maintained that Anthem agreed to be paid a large sum at the beginning of the 10-year contract for less favorable pricing terms later. In March, a judge dismissed two of six counterclaims ESRX made against Anthem. When Anthem would leave after 2019, Express Scripts will lose more than 20 million members, leaving it with about 65 million. It will lose the title of the nation’s largest pharmacy benefits manager and become No. 2 behind CVS Health.
Meanwhile, Express Scripts Holding Company in the first quarter of FY 17 has reported the adjusted earnings per share of $1.33, beating the analysts’ estimates for the adjusted earnings per share of $1.32. ESRX in 1Q 2017 has posted the revenue of $24.65 billion as compared to the $24.79 billion last year. ESRX has also raised its full-year 2017 profit guidance and expects a 9 percent increase in the adjusted earnings per share. The adjusted earnings per diluted share for 2017 is expected to be in a range of $6.90 to $7.04, while the analysts’ expect the earnings per share of $6.93.
For the second quarter of FY 17, Express Scripts Holding Company expects the adjusted earnings per share $1.70 to $1.74, while the analysts’ are expecting the earnings per share of $1.68. The company also expects the total adjusted claims for Q2 of 2017 to be in the range of 343 million to 353 million.
Express Scripts Holding Company stock has fallen 8.57% in the last one year (source: Google Finance) and lost over 11.5% in the pre-market session today (as of 8:27AM EDT on April 25th, 2017; Source: Google finance).