Express Scripts 2014 Annual Report Download - page 45

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Express Scripts 2014 Annual Report
OTHER BUSINESS OPERATIONS OPERATING INCOME (LOSS)
Year Ended December 31,
(in millions) 2014 2013 2012(1)
Productrevenues $2,203.5 $2,052.0 $2,172.0
Servicerevenues 304.0 265.1 220.1
TotalOtherBusinessOperationsrevenues 2,507.5 2,317.1 2,392.1
CostofOtherBusinessOperationsrevenues 2,331.2 2,162.9 2,142.5
OtherBusinessOperationsgrossprofit 176.3 154.2 249.6
OtherBusinessOperationsSG&A 120.3 101.4 257.3
OtherBusinessOperationsoperatingincome(loss) $56.0 $52.8 $(7.7)
Claims
Homedelivery,specialtyandother—continuingoperations(2) 0.8 1.5 2.9
TotaladjustedOtherBusinessOperationsclaims—continuingoperations(3) 0.8 1.5 4.6
Homedelivery,specialtyandother—discontinuedoperations — — 4.9
TotaladjustedOtherBusinessOperationsclaims—discontinued
operations(2) — — 14.7
(1) IncludestheacquisitionofMedcoeffectiveApril2,2012.
(2) Includeshome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claims.
OTHER BUSINESS OPERATIONS RESULTS OF OPERATIONS
OtherBusinessOperationsoperatingincomeincreased$3.2millionin2014from2013.Thisincreaserelatestoan
increaseinvolumeacrossthelinesofbusinesswithinthesegment,partiallyoffsetbyadecreaseinclaimsrelatedtodrugs
distributedthroughpatientassistanceprograms,aswellasa$3.5milliongainassociatedwiththesettlementofworkingcapital
balancesforConnectYourCare(“CYC”)fortheyearendedDecember31,2013asdescribedinNote4-Dispositions.
OtherBusinessOperationsoperatingincomeincreased$60.5millionin2013from2012.Duetothetimingofthe
Merger,2012revenuesandassociatedclaimsdonotincludeMedcoresultsofoperationsfortheperiodbeginningJanuary1,
2012throughApril1,2012,comparedtoafullyearofoperationsfor2013.Duetothistiming,theincreaseinoperatingincome
isdueprimarilytotheacquisitionofMedcoandinclusionofitsresultsofoperationsfortheperiodJanuary1,2013through
April1,2013.Alsoattributingtotheincreaseinoperatingincomein2013arelossesincurredonbusinessesfortheyearended
December31,2012whichweresubstantiallyshutdownasofDecember31,2012.Inaddition,thisincreasein2013isdueto
impairmentchargesassociatedwiththeLibertybrand,lessthegainuponsale,nettingtoalossof$22.5millionfortheyear
endedDecember31,2012anda$3.5milliongainassociatedwiththesettlementofworkingcapitalbalancesforCYCforthe
yearendedDecember31,2013asdescribedinNote4-Dispositions.Theseincreasesin2013werepartiallyoffsetbya$14.3
milliongainassociatedwiththesaleofCYCfortheyearendedDecember31,2012asdescribedinNote4-Dispositions.
OTHER (EXPENSE) INCOME, NET
Netotherexpenseincreased$14.8million,or2.8%,in2014from2013.Thisincreaseisprimarilyduetothe
followingfactors:
• LowerequityincomefromSurescripts,ourjointventure,of$18.7millionfortheyearended2014compared
to$32.8millionfortheyearended2013.
• Redemptioncostsof$71.5millionincurredfortheearlyredemptionof$1,250.0millionaggregateprincipal
amountof3.500%seniornotesdue2016duringtheyearended2014.
• Redemptioncostsandwrite-offofdeferredfinancingfeesof$68.5millionincurredforearlyredemptionof
$1,000.0millionaggregateprincipalamountof6.250%seniornotesdue2014duringtheyearended2013.
• Theissuanceof$2,500.0millionofseniornotesinJune2014(definedbelow)andinterestincomeearneddue
toinvestmentsmadewiththeproceeds.
• Theredemptionof$900.0millionaggregateprincipalamountof2.750%seniornotesdue2014duringthe
yearended2014.
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