Express Scripts 2013 Annual Report Download - page 75

75 Express Scripts 2013 Annual Report
Sale of EAV. On December 4, 2012, we completed the sale of our EAV line of business, which primarily provided
home delivery pharmacy services in Germany. During the fourth quarter of 2012, we recognized a gain on the sale of this
business, net of the sale of its assets, which totaled $3.7 million. The gain is included in the “Net loss from discontinued
operations, net of tax” line item in the accompanying consolidated statement of operations for the year ended December 31,
2012. Prior to being classified as a discontinued operation, EAV was included in our Other Business Operations segment.
In 2012, the Company determined it was necessary to reassess carrying values of EAV’s assets and liabilities based
on a change in business environment related to an adverse court ruling by the German high court in August 2012 and the
expected disposal of EAV as a result of the ruling (Level 2). Based on the assessment, we recorded impairment charges
associated with this line of business totaling $11.5 million to reflect the write-down of $2.0 million of goodwill and $9.5
million of intangible assets. These charges are included in the “Net loss from discontinued operations, net of tax” line item in
the accompanying consolidated statement of operations for the year ended December 31, 2012.
Sale of Liberty. On December 3, 2012, we completed the sale of our Liberty line of business, which is included
within our Other Business Operations segment. Liberty sells diabetes testing supplies and is located in Port St. Lucie, Florida.
Following the sale, Express Scripts will work as a back-end pharmacy supplier for portions of the Liberty business for a
minimum of two years. Therefore, the Company retains certain cash flows associated with Liberty following the sale which
preclude classification of this business as a discontinued operation. During the fourth quarter of 2012, we recognized a gain on
the sale of this business, net of the sale of its assets, which totaled $0.5 million. The gain is included in the SG&A line item in
the accompanying consolidated statement of operations for the year ended December 31, 2012.
In 2012, as a result of our plan to dispose of Liberty, an impairment charge totaling $23.0 million was recorded
against intangible assets. The fair value was determined utilizing the contracted sales price of the business (Level 2). This
charge is included in the SG&A line item in the accompanying consolidated statement of operations for the year ended
December 31, 2012. The write-down was comprised of impairments to customer relationships with a carrying value of $24.2
million and trade names with a carrying value of $6.6 million.
From the date of Merger through the date of disposal, Liberty’s revenue totaled $323.9 million and operating loss
totaled $32.3 million. As Liberty was sold in 2012, no associated assets or liabilities were held as of December 31, 2012.
Sale of CYC. On September 14, 2012, we completed the sale of our CYC line of business, which is included within
our Other Business Operations segment. Upon completion of the sale, we recognized a gain on the sale of this business, net of
the sale of its assets, which totaled $14.3 million. The gain is included in the SG&A line item in the accompanying consolidated
statement of operations for the year ended December 31, 2012. During the first quarter of 2013, certain working capital
balances were settled, resulting in a $3.5 million gain. The gain is included in the SG&A line item in the accompanying
consolidated statement of operations for the year ended December 31, 2013.
We determined that the results of operations for CYC for 2012 and 2011 were immaterial to both consolidated and
segment results of operations, and we have therefore not presented these results separately as discontinued operations for the
current or prior periods. Operating income (loss), including the gain associated with the sale, totaled $14.7 million and less than
$(0.1) million for the years ended December 31, 2012 and 2011, respectively. Total assets for CYC as of December 31, 2011
were $36.9 million. The majority of these assets represented goodwill of $12.0 million and cash of $14.9 million. As these
amounts represented less than 0.1% of total consolidated assets, the assets were not classified as held for sale within the
consolidated balance sheet.
Held for sale classification of Europe. During the fourth quarter of 2012, we determined that our operations in
Europe, which were included within our Other Business Operations segment, were not core to our future operations and
committed to a plan to dispose of this business. As a result, this business was classified as discontinued as of December 31,
2012. Our European operations primarily consisted of clinical and specialty pharmacy management services. It is expected that
our European operations will be shut down in the first half of 2014.