Express Scripts 2009 Annual Report Download - page 51

Express Scripts 2009 Annual Report
R
E
SU
LT
S
O
F
O
PERATI
ONS
W
e changed our reportable segments to PBM and EM during the first quarter of 2009 (see Note 14).
W
e
ma
int
a
i
n
a PBM segment,
c
onsisting of our domestic and
C
anadian PBM operation
s
,
and specialty p
h
armacy operation
s
,
and a
n
EM
s
egment, which consist
s
o
f distribution of pharmaceuticals and medical supplies to providers and clinics, distribution of
s
ample u
n
i
ts to physicians and verification of practitioner licensure, fertility services to providers and patients, an
d
h
ealthcare administration and implementation of consume
r
-
d
ir
ec
t
ed
h
e
alth
c
ar
e
so
l
u
ti
o
n
s
.
All
s
egment information and
d
i
sc
l
osu
r
es
ha
ve
bee
n r
ec
la
s
sified for all periods presented to reflect the new segment structure
.
PBM
O
PERATI
NG
I
NCO
M
E
Year Ended December 31
,
(
in millions
)
20
0
9
(
1
)
20
0
8
(2
)
20
0
7
(
3
)
Pr
oduc
t r
eve
n
ue
N
e
t
wo
rk
reve
n
ues
(
4
)
$
1
5,
019.
3
$
13
,
039.
9
$
13
,
023.3
Home delivery and specialty revenues 8
,
0
9
9
.
0
7
,
225.
7
6
,
996.
1
O
ther revenue
s
8
3.
9
5
4.
9
37.1
S
ervice revenue
s
2
6
4
.
7
250
.4
241
.4
T
o
tal PBM r
eve
n
ues
23
,
466.
9
20
,
570.
9
20
,
297.
9
C
ost o
f
PBM revenue
s
(
4
)
2
1
,
0
9
4.
2
18
,
595.1 18
,
592.
9
PBM gross profit 2
,3
7
2
.
7
1
,
975.8 1
,
705.
0
PBM SG&A expense
s
888
.
8
708.
7
6
45
.4
PBM operating incom
e
$
1
,
48
3
.
9
$
1
,
267.
1
$
1
,
059.
6
N
e
t
wo
rk
4
04
.
3379.
6
379.
9
Home delivery and specialt
y
4
1
.
8
4
1.
9
4
1.
9
O
the
r
2
.
8
2
.
8 3
.
1
T
o
tal PBM
c
laim
s
4
4
8.
9
4
24
.3
4
24.
9
Total adjusted PBM claims
(
5
)
5
30
.
3
5
05.
9
5
06
.5
(
1
)
Includes the acquisition of NextRx effective December 1
,
200
9
.
(
2
)
Includes the acquisition of MSC effective July 22, 2008
.
(
3
)
In
c
l
udes
t
he acquisition of CYC effective October 10, 2007
.
(
4
)
In
c
l
udes
re
t
ail pharmacy co
-
payment
s
of
$
3
,
132.1
,
$
3
,
153.
6
,
an
d
$
3
,
554.5 for the years ended December 31, 20
0
9
,
20
0
8
,
and 20
0
7
,
r
espectively.
(
5
)
PBM adjusted clai
m
s represent network claims, specialt
y
c
laim
s
an
d
m
ail claims, which are multiplied by 3, as mail claims are typically 90 da
y
c
laim
s
an
d
n
e
t
wo
rk and specialt
y
c
laims are generally 30 day claims.
PBM
R
E
SU
LT
S
O
F
O
PERATI
ONS
F
O
R THE YEAR E
N
DED DECEMBER 31
,
200
9
vs
.
2
00
8
N
e
t
wo
rk r
eve
n
ues
i
ncreased $1
,
9
79.4
m
illion
,
o
r
15
.2
%
,
in 20
0
9
ove
r 20
0
8
.
A
pproximately $1,097.
6
m
illi
o
n
o
f
t
he increase in revenue was due to the NextRx acquisitio
n
i
n December 200
9
.
In addition, approximately $864
.4
m
illi
on
w
a
s
due
t
o
t
h
e
new
co
ntra
c
t
w
ith th
e
D
o
D
effe
c
tive in November 2009
,
w
hi
c
h
c
hanged our method of accounting fo
r
reve
n
ue
s
u
n
de
r th
e
co
ntra
c
t
t
o a gross basi
s
.
Th
e
in
c
r
e
a
se
was partially offset by changes in mi
x
o
f generic versus brand
c
laim
s
.
A
s our generic penetration rate increased to
6
9.
6
%
o
f
ne
twork claims as compared to
6
7.
3
%
in 20
0
8
,
our revenues
c
orrespondingl
y
dec
r
e
a
sed
.
O
f th
e
$
873.
3
m
illion
,
o
r
12
.
1%
,
increas
e
i
n home deliver
y
and specialt
y
reve
n
ues
i
n
2
00
9
f
r
o
m 20
0
8
,
approximatel
y
$
363.3 million is due to
t
h
e
new
co
ntra
c
t
w
ith th
e
D
oD
effective in November 200
9
an
d
approximatel
y
$
258.
7
m
illi
o
n i
s
due to the acquisition of NextRx in December 200
9
i
n addition to price inflation
.
Th
e
in
c
r
e
a
se
w
a
s
partiall
y
o
ffset b
y
t
h
e
i
mpact
o
f higher generic penetratio
n
for home deliver
y
.
O
u
r
g
eneric penetration rat
e
i
n
c
r
e
a
sed
to
5
7.
7
%
o
f
to
t
al home delivery claims in 20
0
9
as compared to
5
6.6
%
in 20
0
8
.
H
o
me delivery generic fill rate is lower than the retail generic fill rate as fewer generic substitutions are available
among maintenance m
e
dications (e.g
.
,
t
herapies for chronic conditions) commonly dispensed from home deliver
y
pharmacies co
m
pared to acute medications which ar
e
primarily dispensed by pharmacies in our retail networks
.
49