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PHARMACY.SMARTER.
Clients and members are at the center
of everything we do.
2014 Annual Report

Table of contents

  • Page 1
    PHARMACY.SMARTER. Clients and members are at the center of everything we do. 2014 Annual Report

  • Page 2
    .... Headquartered in St. Louis, Express Scripts provides integrated pharmacy benefit management services, including network-pharmacy claims processing, home delivery, specialty benefit management, benefit-design consultation, drug utilization review, formulary management, and medical and drug data...

  • Page 3
    ...of prescription drugs safer and more affordable. When our clients face challenges to sustaining the pharmacy benefit, we stand with them and strive to develop novel solutions aligned with their best interest. In 2014, a new curative drug became available to hepatitis C patients, but it cost $1,000...

  • Page 4
    ... to revolutionize the pharmacy benefit, there is so much more we can do. As I look at what we have built, and see the needs of the marketplace, it is clear Express Scripts is the best choice to manage America's pharmacy benefits. George Paz Chairman and CEO Express Scripts 2014 Annual Report 2

  • Page 5
    ... Queller Senior Vice President Sales & Account Management Glen Stettin, MD Senior Vice President Clinical Research & New Solutions Sara Wade Senior Vice President & Chief Human Resources Officer Gary Wimberly Senior Vice President & Chief Information Officer 3 Express Scripts 2014 Annual Report

  • Page 6
    ... Our Common Stock; (2) S&P 500 Index; (3) S&P 500 Health Care Index. $260 Express Scripts $200 S&P 500 Index $140 S&P 500 - Healthcare $0 2009 2010 2011 2012 2013 2014 Years Ending Total Return to Stockholders (Dividends reinvested) Base Period Company/Index Dec 09 Express Scripts 100 S&P 500...

  • Page 7
    ... TO . Commission File Number: 1-35490 EXPRESS SCRIPTS HOLDING COMPANY (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) One Express Way, St. Louis, MO (Address of principal executive offices) 45-2884094 (I.R.S. Employer...

  • Page 8
    .... PBM companies combine retail pharmacy claims processing and network management, formulary management, utilization management and home delivery pharmacy services to develop an integrated product offering to manage the prescription drug benefit for payors. Some PBMs also offer specialty medication...

  • Page 9
    ... specialty pharmacy services. Revenues from the delivery of prescription drugs to our members represented 98.4% of revenues in 2014, 98.8% in 2013 and 99.0% in 2012. Revenues from services, such as the fees associated with the administration of retail pharmacy networks contracted by certain clients...

  • Page 10
    ..., a network of employed and contracted in-home nursing services, reimbursement and patient assistance programs, and bio-pharma services. Our subsidiary Freedom Fertility ("FreedomFP") is the nation's leading specialty pharmacy focused on the needs of fertility patients and providers. Through...

  • Page 11
    ... appropriate, moving drug coverage from medical to pharmacy benefit and to lower-cost sites of care. Retail Network Pharmacy Administration. We contract with retail pharmacies to provide prescription drugs to members of the pharmacy benefit plans we manage. In the United States, Puerto Rico...

  • Page 12
    ... contracts for the purchase and sale of goods and services. Consumer Health and Drug Information. Express Scripts empowers member decision-making through online and mobile tools that help guide members in making informed drug, pharmacy and health choices. Express Scripts' digital solutions provide...

  • Page 13
    ... ESI entered into a 10-year contract under which we provide pharmacy benefits management services to members of the affiliated health plans of Anthem. Subsequent to this acquisition, we integrated NextRx's PBM clients into our existing systems and operations. 7 11 Express Scripts 2014 Annual Report

  • Page 14
    ... 31, 2014, our United States PBM segment operated six high-volume automated dispensing home delivery pharmacies, one non-automated dispensing home delivery pharmacy, several non-dispensing order processing centers, numerous patient contact centers, specialty drug pharmacies and fertility pharmacies...

  • Page 15
    ...ability to contract with retail pharmacies to ensure our retail pharmacy networks meet the needs of our clients and their members, the ability to negotiate discounts on prescription drugs with drug manufacturers, the ability to navigate the complexities of governmental reimbursed business, including...

  • Page 16
    ... investigations and multi-state settlements relating to financial incentives provided by drug manufacturers to pharmacies in connection with "product conversion" programs. There are other anti-kickback laws that may be applicable, such as the Public Contracts Anti-kickback Act, the ERISA Health Plan...

  • Page 17
    ... also govern the Public Exchanges, PBMs and many of our health plan clients, we may be obligated to pay retail pharmacy providers within established time periods that may be shorter than existing contracted terms and/or via electronic transfer instead of by check. Changes that require faster payment...

  • Page 18
    ...") paid by retail community pharmacies or by wholesalers for certain innovator drugs distributed to retail community pharmacies, or (b) the difference between AMP and the "best price" available to essentially any customer other than the Medicaid program and 12 Express Scripts 2014 Annual Report 16

  • Page 19
    .... Fee-for-service prescription drug plans generally are not subject to financial regulation by the states. However, if a PBM offers to provide prescription drug coverage on a capitated basis or otherwise accepts material financial risk in providing the benefit, various state and federal laws may...

  • Page 20
    ... "THERAPEUTIC RESOURCE CENTER®" with the United States Patent and Trademark Office. Our rights to these marks will continue so long as we comply with the usage, renewal filings and other legal requirements relating to the usage and renewal of service marks. 14 Express Scripts 2014 Annual Report 18

  • Page 21
    ... Vice President, Operations Senior Vice President and Chief Medical Officer Senior Vice President, Supply Chain Senior Vice President, Sales and Account Management Senior Vice President, Clinical Research and New Solutions Senior Vice President and Chief Human Resources Officer Senior Vice President...

  • Page 22
    ... as Vice President, Controller from September 2007 to October 2011. Patriot Coal Corporation filed a Chapter 11 bankruptcy petition in July 2012 and emerged in December 2013. Available Information We make available through our website (www.express-scripts.com) access to our annual report on Form 10...

  • Page 23
    ... in order to comply or to make significant changes to our business operations changes to the healthcare industry designed to manage healthcare costs or alter healthcare financing practices or changes to government policies in general uncertainties regarding the implementation of Health Reform Laws...

  • Page 24
    ... products and services while sharing a greater portion of the formulary fees and related revenues received from pharmaceutical manufacturers with clients. We cannot assume positive trends such as lower drug purchasing costs, increased generic usage, drug price inflation, increased rebates, favorable...

  • Page 25
    ...claims made in connection with health benefit programs ERISA and related regulations, which regulate many aspects of healthcare plan arrangements state legislation regulating PBMs or imposing fiduciary status on PBMs consumer protection and unfair trade practice laws and regulations network pharmacy...

  • Page 26
    ...our clients, employers and benefit providers, pharmaceutical manufacturers, healthcare providers and others with whom we do business, including PBM disclosure requirements in the context of Medicare Part D and the Health Insurance Exchanges new federal regulations applicable to health plans offered...

  • Page 27
    ... could, temporarily or indefinitely, significantly reduce, or partially or totally eliminate our ability to process and dispense prescriptions and provide products and services to our clients and members. Any such service disruption at these facilities or to 21 25 Express Scripts 2014 Annual Report

  • Page 28
    ...process and dispense prescriptions and provide products and services to our clients and members, which could have a material adverse effect on our business and results of operations. A substantial portion of our business is concentrated in certain significant client contracts. Our failure to execute...

  • Page 29
    ...fees and costs related to executing our integration plans. A failure or significant delay in the integration process could have a material adverse effect on our client service or our business and results of operations. In addition, such transactions may yield higher operating costs, greater customer...

  • Page 30
    ... for drugs we purchase to be dispensed from our home delivery pharmacies rebates based on distributions of drugs from our home delivery pharmacies and through pharmacies in our retail networks administrative fees for managing rebate programs, including the development and maintenance of formularies...

  • Page 31
    Changes in drug pricing or industry pricing benchmarks could materially impact our financial performance. Contracts in the prescription drug industry, including our contracts with retail pharmacy networks and with PBM and specialty pharmacy clients, generally use "average wholesale price" or "AWP," ...

  • Page 32
    ... St. Louis, Missouri facility houses our corporate headquarters and accommodates our executive and corporate Our PBM home delivery pharmacy operations consist of twelve order processing pharmacies located throughout the United States, as well as seven contact centers and eight mail order dispensing...

  • Page 33
    ... a class of all pharmacies and pharmacists that contracted with Medco and California pharmacies that indirectly purchased prescription drugs from Merck. Plaintiffs assert claims for violation of the Sherman Act, California antitrust law and California law 27 31 Express Scripts 2014 Annual Report

  • Page 34
    ... claims for payment for prescription drugs dispensed to federal healthcare beneficiaries, which allegedly resulted in the submission to the government of false claims for payment. The complaint seeks monetary damages, as well as costs and expenses. In April 2013, ESI and Medco filed a motion...

  • Page 35
    ... asset purchase agreement and authorizing the sale. The auction of Debtors' assets occurred in November 2014. Jason Berk v. Express Scripts, Inc. and Express Scripts Pharmacy, Inc. (United States District Court for the District of Minnesota, Case No. 0:14-cv-01008) (filed April 8, 2014). A complaint...

  • Page 36
    ...to Medco's internal investigation of its business dealings with ARVCO and certain other related matters. The Company intends to cooperate with the inquiry and is not able to predict with certainty the timing or outcome of this matter. Investigations under the federal and most state False Claims Acts...

  • Page 37
    ... were made pursuant to the share repurchase program originally announced and executed during 2013 (the "Share Repurchase Program"). In each of March 2014 and December 2014, the Board of Directors of Express Scripts approved an increase in the authorized number of shares that may be repurchased under...

  • Page 38
    ...Marketing Group ("PMG"). (in millions, except per share data) 2014 2013 2012 (1) 2011 2010 Statement of Operations Data (for the Year Ended December 31): Revenues(2) Cost of revenues Gross profit Selling, general and administrative Operating...1,181.2 $ 32 Express Scripts 2014 Annual Report 36

  • Page 39
    ... data) 2014 2013 2012 (1) 2011 2010 Balance Sheet Data (as of December 31): Cash and cash equivalents Working capital (deficit) Total assets Debt: Short-term debt Long-term debt Capital lease obligation Stockholders' equity Network claims-continuing operations(5)(6) Home delivery, specialty...

  • Page 40
    ...Scripts per adjusted claim, are affected by the changes in claim volumes between network and home delivery, specialty and other, the relative representation of brand-name, generic and specialty pharmacy drugs, as well as the level of efficiency in the business. 34 Express Scripts 2014 Annual Report...

  • Page 41
    ... Other Business Operations. Our integrated PBM services include clinical solutions to improve health outcomes, specialized pharmacy care, home delivery pharmacy services, specialty pharmacy services, fertility services to providers and patients, retail network pharmacy administration, benefit design...

  • Page 42
    ...2012. A transition agreement was in place throughout 2013, during which time patients moved in tranches off of the Medco platform. Due to this transition of UnitedHealth Group, claims volume and related revenues and cost of revenues decreased throughout 2013. 36 Express Scripts 2014 Annual Report...

  • Page 43
    ... 2, 2012. (2) Includes retail pharmacy co-payments of $10,272.7, $12,620.3 and $11,668.6 for the years ended December 31, 2014, 2013 and 2012, respectively. (3) Includes home delivery and specialty claims including drugs we distribute to other PBMs' clients under limited distribution contracts with...

  • Page 44
    ... network generic fill rate increased to 81.6% of total network claims in 2013 as compared to 79.4% in 2012. Home delivery and specialty revenues increased $4,763.5 million, or 14.5%, in 2013 from 2012. Due to the timing of the Merger, 2012 revenues and associated claims do not include Medco results...

  • Page 45
    ... delivery, specialty and other claims including drugs distributed through patient assistance programs and the sale of diabetes testing supplies. (3) Total adjusted claims reflect home delivery claims multiplied by 3, as home delivery claims typically cover a time period 3 times longer than network...

  • Page 46
    ... and Capital Resources." PROVISION FOR INCOME TAXES Our effective tax rate from continuing operations attributable to Express Scripts was 33.6% for the year ended December 31, 2014, compared to 36.4% and 38.1% for 2013 and 2012, respectively. During 2014, we recognized a net discrete benefit of $113...

  • Page 47
    ... 31, 2014 include $65.2 million related to new data centers, $68.2 million related to a new high volume pharmacy fulfillment facility and $15.0 million related to a new office facility. We intend to continue to invest in infrastructure and technology, which we believe will provide efficiencies in...

  • Page 48
    ..., former ESI stockholders owned approximately 59% of Express Scripts and former Medco stockholders owned approximately 41% of Express Scripts. Per the terms of the Merger Agreement, upon consummation of the Merger on April 2, 2012, each share of Medco common stock was converted into (i) the right to...

  • Page 49
    ...STOCK REPURCHASE PROGRAM In each of March 2014 and December 2014, the Board of Directors of Express Scripts approved an increase in the authorized number of shares that may be purchased under the share repurchase program (the "Share Repurchase Program"), originally announced and executed during 2013...

  • Page 50
    .... IMPACT OF INFLATION Changes in prices charged by manufacturers and wholesalers for pharmaceuticals affect our revenues and cost of revenues. Most of our contracts provide we bill clients based on a generally recognized price index for pharmaceuticals. 44 Express Scripts 2014 Annual Report 48

  • Page 51
    ... annual impairment test. As of December 31, 2014, the Company does not believe any reporting units are at risk of failing Step 1. An impairment charge of $32.9 million was recorded in 2013 based on the contracted sales price of the business (Level 2) associated with our acute infusion therapies line...

  • Page 52
    ... history with the PBM industry. Therefore, changes to assumptions used in the development of these accruals can affect net income in a given period. In addition, changes in the legal environment and the number and nature of claims could impact our estimate. 46 Express Scripts 2014 Annual Report 50

  • Page 53
    ... by CMS in cases of low-income membership. Our cost of revenues includes the cost of drugs dispensed by our home delivery pharmacies or retail network for members covered under our Medicare Part D PDP product offerings and is recorded at cost as incurred. 47 51 Express Scripts 2014 Annual Report

  • Page 54
    SPECIALTY DRUG REVENUES We operate specialty pharmacies that dispense medications for the treatment of complex and potentially life threatening diseases. Many of the products are covered under a medical benefit which results in a more complicated adjudication process and coverage review, often ...

  • Page 55
    Item 8 - Consolidated Financial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Express Scripts Holding Company: In our opinion, the consolidated financial statements listed in the index appearing under Item 15a...

  • Page 56
    EXPRESS SCRIPTS HOLDING COMPANY CONSOLIDATED BALANCE SHEET December 31, (in millions) 2014 2013 Assets Current assets: Cash and cash equivalents Restricted cash and investments Receivables, net Inventories Deferred taxes Prepaid expenses and other current assets Current assets of ...

  • Page 57
    EXPRESS SCRIPTS HOLDING COMPANY CONSOLIDATED STATEMENT OF OPERATIONS Year Ended December 31, (in millions, except per share data) 2014 2013 2012 Revenues(1) Cost of revenues(1) Gross profit Selling, general and administrative Operating income Other (expense) income: Equity income from joint venture...

  • Page 58
    ... interest Comprehensive income attributable to Express Scripts See accompanying Notes to Consolidated Financial Statements $ 2,035.0 (9.6) 2,025.4 27.4 $ 1,872.7 (7.2) 1,865.5 28.1 $ 1,330.1 1.9 1,332.0 17.2 $ 1,998.0 $ 1,837.4 $ 1,314.8 52 Express Scripts 2014 Annual Report 56

  • Page 59
    ...unearned compensation under employee plans Exercise of stock options Tax benefit relating to employee stock compensation Distributions to non-controlling interest Balance at December 31, 2013 Net income Other comprehensive loss Treasury stock acquired Common stock issued under employee plans, net of...

  • Page 60
    ... stock acquired Repayment of long-term debt Proceeds from long-term debt, net of discounts Net proceeds from employee stock plans Excess tax benefit relating to employee stock-based compensation Distributions paid to non-controlling interest Deferred financing fees Repayment of revolving credit line...

  • Page 61
    ... Other Business Operations. Our integrated PBM services include clinical solutions to improve health outcomes, specialized pharmacy care, home delivery pharmacy services, specialty pharmacy services, fertility services to providers and patients, retail network pharmacy administration, benefit design...

  • Page 62
    ... $25.3 million and $18.7 million at December 31, 2014 and 2013, respectively. We maintain our trading securities to offset changes in certain liabilities related to our deferred compensation plan described in Note 10 - Employee benefit plans and stock-based 56 Express Scripts 2014 Annual Report 60

  • Page 63
    ... are recorded at cost. Customer contracts and relationships are valued at fair market value when acquired using the income method. Customer contracts related to our 10-year contract with Anthem (formerly known as WellPoint) under which we provide pharmacy benefit management services to Anthem and...

  • Page 64
    ... our home delivery and specialty pharmacies, processing claims for prescriptions filled by retail pharmacies in our networks, and providing services to drug manufacturers, including administration of discount programs (see also "Rebate accounting" below). Revenues from dispensing prescriptions from...

  • Page 65
    ... fees earned for the administration of this program, performed in conjunction with claims processing and home delivery services provided to clients, are recorded as a reduction of cost of revenues and the portion of the rebate and administrative fees payable to customers is treated as a reduction...

  • Page 66
    Our cost of revenues includes the cost of drugs dispensed by our home delivery pharmacies or retail network for members covered under our Medicare Part D PDP product offerings. These amounts are recorded at cost as incurred. We receive a catastrophic reinsurance subsidy from CMS for approximately 80...

  • Page 67
    ..., 2013 and 2012, respectively. New accounting guidance. In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers which supersedes ASC 605, Revenue Recognition. The new standard requires companies...

  • Page 68
    ... value, which approximates the carrying value, of our term facility (Level 2) (as defined in Note 7 Financing) was estimated using the current rates offered to us for debt with similar maturity. The carrying values, net of unamortized discounts and premiums, and the fair values of our senior notes...

  • Page 69
    ...the closing prices of ESI common stock on the Nasdaq for each of the 15 consecutive trading days ending with the fourth complete trading day prior to the completion of the Merger. following: (in millions) Based on the opening price of Express Scripts' stock on April 2, 2012, the purchase price was...

  • Page 70
    ... for the years ended December 31, 2014, 2013 and 2012, respectively. Our investment in Surescripts (approximately $40.3 million and $30.2 million as of December 31, 2014 and 2013, respectively) is recorded in other assets in our consolidated balance sheet. 64 Express Scripts 2014 Annual Report 68

  • Page 71
    ...related to specialty services for pre-market trials located in Wayne, Pennsylvania and recognized a gain on the sale of this business which totaled $22.1 million. In July 2013, we sold the portion of our UBC business related to providing health economics, outcomes research, data analytics and market...

  • Page 72
    ... 31, 2012. Sale of Liberty. In December 2012, we sold our Liberty line of business, which was 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 worked as a back-end pharmacy...

  • Page 73
    ... operations was $15.8 million and $10.1 million at December 31, 2014 and 2013, respectively. During 2011, we ceased fulfilling prescriptions from our home delivery dispensing pharmacy in Bensalem, Pennsylvania. The related lease expired during 2014. 67 71 Express Scripts 2014 Annual Report

  • Page 74
    ....4 (22.5) (2.0) 29,280.9 $ $ (1) Goodwill associated with the Merger has been adjusted due to the finalization of the purchase price allocation during 2013. (2) Goodwill has been adjusted to correct certain deferred taxes related to prior acquisitions. 68 Express Scripts 2014 Annual Report 72

  • Page 75
    ... D PDP in September 2013. During 2014, we finalized the purchase price related to the customer contract, resulting in a reduction of the asset value by $2.2 million. This new intangible asset has a useful life of 10 years. The asset acquisition added approximately 87,000 covered Medicare lives to...

  • Page 76
    ... Merger (as described in Note 3 - Changes in business), to repay existing indebtedness and to pay related fees and expenses. Subsequent to consummation of the Merger on April 2, 2012, the revolving facility is available for general corporate purposes. The term 70 Express Scripts 2014 Annual Report...

  • Page 77
    ... termination date. The credit facilities require interest to be paid at LIBOR plus an agreed upon rate at the time of borrowing. SENIOR NOTES Following the consummation of the Merger on April 2, 2012, several series of senior notes issued by Medco are reported as debt obligations of Express Scripts...

  • Page 78
    ... and unconditionally (subject to certain customary release provisions, including sale, exchange, transfer or liquidation of the guarantor subsidiary) guaranteed on a senior unsecured basis by most of our current and future 100% owned domestic subsidiaries. 72 Express Scripts 2014 Annual Report 76

  • Page 79
    ... ratings to below investment grade. At December 31, 2014, we were in compliance with all covenants associated with our debt instruments, including the credit agreement and our senior notes. Following is a schedule of current maturities, excluding unamortized discounts and premiums, for our long-term...

  • Page 80
    ...tax rate recognized in discontinued operations was (115.1)% and (30.5)% for the years ended December 31, 2013 and 2012, respectively. Our income tax provision from discontinued operations was $28.7 million and $7.5 million for 2013 and 2012, respectively. 74 Express Scripts 2014 Annual Report 78

  • Page 81
    ... federal income tax returns, filed prior to the Merger. We also reached final settlement on various state examinations. The federal and state settlements resulted in a reduction to our unrecognized tax benefits of $60.1 million, of which an immaterial amount 75 79 Express Scripts 2014 Annual Report

  • Page 82
    ..., at cost, immediately prior to the Merger as a reduction to retained earnings and paid-in capital. In each of March 2014 and December 2014, the Board of Directors of Express Scripts approved an increase in the authorized number of shares that may be purchased under the share repurchase program (the...

  • Page 83
    ..., 2014 and 2013, respectively. Stock-based compensation plans in general. In 2011, ESI's Board of Directors adopted the ESI 2011 Long-Term Incentive Plan (the "2011 LTIP"), which provides for the grant of various equity awards with various terms to our officers, directors and key employees selected...

  • Page 84
    ... 31, 2014, 2013 and 2012 was $37.3 million, $60.0 million and $153.9 million, respectively. Effective upon the closing of the Merger, the Company assumed the sponsorship of the Medco Health Solutions, Inc. 2002 Stock Incentive Plan (the "2002 Stock Incentive Plan"), allowing Express Scripts to issue...

  • Page 85
    ... Express Scripts may grant stock options and SSRs to certain officers, directors and employees to purchase shares of Express Scripts Holding Company common stock at fair market value on the date of grant. The SSRs and stock options granted under the 2000 LTIP, 2011 LTIP and 2002 Stock Incentive Plan...

  • Page 86
    .... The investment objectives of the Company's qualified pension plan are designed to provide liquidity to meet benefit payments and expenses payable from the plan to offer a reasonable probability of achieving asset growth to reduce the underfunded status 80 Express Scripts 2014 Annual Report 84

  • Page 87
    ... the funded ratio of the plan at December 31, 2014, and are subject to change based on the funded ratio of the plan during the year. (2) Consists of common collective trusts that invest in common stock of S&P 500 companies and United States large-cap common stock. (3) Consists of a common collective...

  • Page 88
    ... to be used in our Fair Lawn, New Jersey facility. The lease terminates in December 2016 and contains an option for the Company to purchase the equipment for one dollar at that time. As of December 31, 2014, the capitalized lease obligation was $28.4 million. 82 Express Scripts 2014 Annual Report 86

  • Page 89
    ...2014. Legal contingencies. In the ordinary course of business there have arisen various legal proceedings, investigations, government inquiries and claims pending against us or our subsidiaries, including, but not limited to, those relating to regulatory, commercial, employment and employee benefits...

  • Page 90
    ... of a bi-annual survey of retail drug prices. In March 2014, the Ninth Circuit Court of Appeals remanded the case to the district court for further proceedings. (i) Brady Enterprises, Inc., et al. v. Medco Health Solutions, Inc. (ii) North Jackson Pharmacy, Inc., et al. v. Express Scripts, Inc., et...

  • Page 91
    ... separately reported. During 2014, we reorganized our business related primarily to pharmaceutical and biotechnology client patient access programs, including patient assistance programs, reimbursement, alternate funding and compliance services from our PBM segment into our Other Business Operations...

  • Page 92
    ...' clients under limited distribution contracts with pharmaceutical manufacturers and FreedomFP claims. (4) Includes other revenues related to drugs distributed through patient assistance programs. (5) Includes the acquisition of Medco effective April 2, 2012. 86 Express Scripts 2014 Annual Report...

  • Page 93
    ... drugs by retail pharmacies in our retail pharmacy networks, revenues from the dispensing of prescription drugs from our home delivery pharmacies and revenues from the sale of certain fertility and specialty drugs. Other Business Operations product revenues consist of distribution services...

  • Page 94
    ... three months ended June 30, 2014 and 2013 include revenue of $129.4 million and $108.2 million, respectively, related to a large client. This revenue was realized in each of the second quarters of 2014 and 2013 due to the structure of the contract. (2) Includes retail pharmacy co-payments of $2,897...

  • Page 95
    ... transactions and integration of systems. In 2014, our European operations were substantially shut down. In 2013, we sold various portions of our UBC line of business and our acute infusion therapies line of business. In 2012, we sold both our EAV and Liberty subsidiaries. The operations of our...

  • Page 96
    Condensed Consolidating Balance Sheet Express Scripts Holding Company Express Scripts, Inc. Medco Health Solutions, Inc. NonGuarantors (in millions) Guarantors Eliminations Consolidated As of December 31, 2014 Cash and cash equivalents Restricted cash and investments Receivables, net Other ...

  • Page 97
    Condensed Consolidating Balance Sheet Express Scripts Holding Company Express Scripts, Inc. Medco Health Solutions, Inc. NonGuarantors (in millions) Guarantors Eliminations Consolidated As of December 31, 2013 Cash and cash equivalents Restricted cash and investments Receivables, net Other ...

  • Page 98
    Condensed Consolidating Statement of Operations Express Scripts Holding Company Express Scripts, Inc. Medco Health Solutions, Inc. NonGuarantors (in millions) Guarantors Eliminations Consolidated For the year ended December 31, 2014 Revenues Operating expenses Operating income Other (expense) ...

  • Page 99
    ... Company Express Scripts, Inc. Medco Health Solutions, Inc. NonGuarantors (in millions) Guarantors Eliminations Consolidated For the year ended December 31, 2012 Revenues Operating expenses Operating income (loss) Other (expense) income, net Income (loss) before income taxes Provision (benefit...

  • Page 100
    ... Express Scripts Holding Company Express Scripts, Inc. Medco Health Solutions, Inc. NonGuarantors (in millions) Guarantors Eliminations Consolidated For the year ended December 31, 2014 Net cash flows provided by (used in) operating activities Cash flows from investing activities: Purchases...

  • Page 101
    ... Express Scripts Holding Company Express Scripts, Inc. Medco Health Solutions, Inc. NonGuarantors (in millions) Guarantors Eliminations Consolidated For the year ended December 31, 2013 Net cash flows provided by (used in) operating activities Cash flows from investing activities: Purchases...

  • Page 102
    ... Express Scripts Holding Company Express Scripts, Inc. Medco Health Solutions, Inc. NonGuarantors (in millions) Guarantors Eliminations Consolidated For the year ended December 31, 2012 Net cash flows provided by (used in) operating activities Cash flows from investing activities: Purchases...

  • Page 103
    ... reports we file or submit under the Exchange Act are accumulated and communicated to the appropriate members of our management team, including our Chief Executive Officer and Interim Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Management's Report...

  • Page 104
    ... executive officer, principal financial officer, principal accounting officer, controller or persons performing similar functions (the "senior financial officers"). A copy of this code of business conduct and ethics is posted on the investor information section of our website at www.express-scripts...

  • Page 105
    ... agrees to furnish to the SEC, upon request, copies of any longterm debt instruments that authorize an amount of securities constituting 10% or less of the total assets of Express Scripts Holding Company and its subsidiaries on a consolidated basis. 99 103 Express Scripts 2014 Annual Report

  • Page 106
    ... undersigned, thereunto duly authorized. EXPRESS SCRIPTS HOLDING COMPANY February 23, 2015 By: /s/ George Paz George Paz Chairman and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of...

  • Page 107
    ...EXPRESS SCRIPTS HOLDING COMPANY Schedule II - Valuation and Qualifying Accounts and Reserves of Continuing Operations Years Ended December 31, 2014, 2013 and 2012 Col. B Balance at Beginning of Period Charges to Costs... amounts, net of any recoveries. 101 105 Express Scripts 2014 Annual Report

  • Page 108
    INDEX TO EXHIBITS (Express Scripts Holding Company - Commission File Number 1-35490) Exhibit No. Title 2.1(1) Agreement and Plan of Merger, dated as of July 20, 2011, by and among Express Scripts, Inc., Medco Health Solutions, Inc., Express Scripts Holding Company (formerly Aristotle Holding, Inc...

  • Page 109
    ..., dated as of October 21, 2013, among Express Scripts, Inc., United BioSource Holdings, Inc., Express Scripts Pharmacy, Inc. and Union Bank, N.A., as Trustee, incorporated by reference to Exhibit 4.18 to Express Scripts Holding Company's Annual Report to Form 10-K filed February 20, 2014. Eleventh...

  • Page 110
    ... Pharmacy, Inc. and Wells Fargo Bank, National Association, as Trustee, incorporated by reference to Exhibit 4.29 to Express Scripts Holding Company's Annual Report to Form 10-K filed February 20, 2014. Eleventh Supplemental Indenture, dated as of June 5, 2014, among the Company, the Subsidiary...

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    ... Medco Health Solutions, Inc., incorporated by reference to Exhibit 10.4 to Medco Health Solutions, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 27, 2003, File No. 001-31312. Executive Employment Agreement dated as of January 13, 2014, between Express Scripts Holding Company...

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    ... members of Express Scripts Holding Company's board of directors and each of its executive officers, incorporated by reference to Exhibit 10.1 to Express Scripts Holding Company's Current Report on Form 8-K filed March 5, 2014. Form of Executive Employment Agreement with certain executive officers...

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    Intentionally left blank 111 Express Scripts 2014 Annual Report

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    Intentionally left blank Express Scripts 2014 Annual Report 112

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    ... by the Investor Relations department upon request. Investor Relations Contact 314.810.3115 [email protected] Board of Directors Gary G. Benanav1,4 Director Retired Vice Chairman, New York Life Insurance Company Retired Chairman and Chief Executive Officer, New York Life...

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    ...Stewardship Council® (FSC®). The cover and financial pages are printed on paper stock that has 10% post-consumer waste content. Express Scripts One Express Way St. Louis, MO 63121 Express-Scripts.com/Corporate © 2015 Express Scripts Holding Company. All Rights Reserved. 15EME27850 UFCW888 ®