Express Scripts 2013 Annual Report Download - page 30

Express Scripts 2013 Annual Report 30
outcome. Further, while certain costs are covered by insurance, we may incur uninsured costs that are material to our financial
performance in the defense of such proceedings.
Commercial liability insurance coverage continues to be difficult to obtain for companies in our business sector, as
such insurance can cause unexpected volatility in premiums and/or retention requirements dictated by insurance carriers. We
have established certain self-insurance accruals to cover anticipated losses within our retained liability for previously reported
claims and the cost to defend these claims. However, there can be no assurance that such accruals will cover actual losses or
that general, professional, managed care errors and omissions, and/or other liability insurance coverage will be reasonably
available in the future or such insurance coverage, together with our self-insurance accruals, will be adequate to cover future
claims. A claim, or claims, in excess of our insurance coverage could have a material adverse effect on our business and results
of operations.
We face significant competition in attracting and retaining talented employees. Further, managing succession and retention for
our Chief Executive Officer and other key executives is critical to our success, and our failure to do so could have an adverse
impact on our future performance.
We believe that our ability to attract and retain a qualified and experienced workforce is essential to meet current
and future goals and objectives. There is no guarantee that we will be able to attract and retain such employees or that
competition among potential employers will not result in increased salaries or other benefits. An inability to retain existing
employees or attract additional employees could have a material adverse effect on our business and results of operations.
Our failure to adequately plan for succession of our Chief Executive Officer, senior management and other key
employees or the failure of key employees to successfully transition into new roles could have a material adverse effect on our
business and results of operations. While we have succession plans in place and employment arrangements with certain key
executives, these do not guarantee that the services of these executives will continue to be available to us.
Item 1B — Unresolved Staff Comments
There are no unresolved written comments that were received from the SEC Staff 180 days or more before the end
of our fiscal year relating to our periodic or current reports under the Securities Exchange Act of 1934.
Item 2 — Properties
We operate our PBM and Other Business Operations segments out of leased and owned facilities throughout the
United States and Canada. As of December 31, 2013, our PBM segment consisted of 62 owned or leased facilities throughout
the United States and three owned or leased facilities throughout Canada. For our Other Business Operations segment, as of
December 31, 2013, we owned or leased 50 facilities throughout the United States, and owned or leased five facilities in
Europe and Canada. Our existing facilities from continuing operations comprise approximately 6.1 million square feet in the
aggregate.
Our St. Louis, Missouri facility houses our corporate headquarters offices and accommodates our executive and
corporate functions.
Our PBM home delivery pharmacy operations consist of twelve order processing pharmacies that are located
throughout the United States, as well as seven contact centers and eight mail order dispensing pharmacies. We also have ten
Specialty Pharmacy home delivery pharmacies and 33 specialty branch pharmacies.
In the first quarter of 2011, we ceased fulfilling prescriptions from our home delivery dispensing pharmacy in
Bensalem, Pennsylvania. We are currently in the process of closing this facility, which is scheduled to be completed in 2014.
In 2013, we began construction of a new office facility in St. Louis, Missouri as well as a new high volume
pharmacy fulfillment facility in Florence, New Jersey. These new facilities are scheduled to be completed in 2014. We
anticipate total capital expenditures of approximately $15.0 million for the new office facility and total capital expenditures of
approximately $68.0 million for the new high volume pharmacy fulfillment facility.
We began improvement on two new data centers in Chicago, Illinois and Piscataway, New Jersey. Both locations
are scheduled to be completed in 2015 and we anticipate total capital expenditures of approximately $75.0 million.
We believe our facilities generally have been well maintained, are in good operating condition and have adequate
capacity to meet our current business needs.