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59
Express Scripts 2014 Annual Report
EXPRESS SCRIPTS HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
55
1. Summary of significant accounting policies
Organization and operations.Wearethelargestfull-servicepharmacybenefitmanagement(“PBM”)companyin
theUnitedStates,providinghealthcaremanagementandadministrationservicesonbehalfofclientsthatincludemanagedcare
organizations,healthinsurers,third-partyadministrators,employers,union-sponsoredbenefitplans,workers’compensation
plansandgovernmenthealthprograms.Wereportsegmentsonthebasisofproductsandservicesofferedandhavedetermined
wehavetworeportablesegments:PBMand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consultation,drugutilization
review,drugformularymanagement,Medicare,MedicaidandPublicExchangeofferings,administrationofagrouppurchasing
organizationandconsumerhealthanddruginformation.ThroughourOtherBusinessOperationssegment,weprovide
distributionservicesofpharmaceuticalsandmedicalsuppliestoproviders,clinicsandhospitalsandprovideconsultingservices
forpharmaceuticalmanufacturerstocollectscientificevidencetoguidethesafe,effectiveandaffordableuseofmedicines.
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segment.Segmentdisclosuresforallyearspresentedhavebeenrevisedfor
comparability(seeNote13-Segmentinformation).
Basis of presentation.Theconsolidatedfinancialstatementsincludeouraccountsandthoseofourwholly-owned
subsidiaries.Allsignificantintercompanyaccountsandtransactionshavebeeneliminated.Investmentsinaffiliatedcompanies
20%to50%ownedareaccountedforundertheequitymethod.Certainamountsinprioryearshavebeenreclassifiedto
conformtothecurrentyearpresentation.Thepreparationoftheconsolidatedfinancialstatementsconformstogenerally
acceptedaccountingprinciplesintheUnitedStatesandrequiresustomakeestimatesandassumptionsthataffectthereported
amountsofassetsandliabilitiesatthedateoftheconsolidatedfinancialstatementsandthereportedamountsofrevenuesand
expensesduringthereportingperiod.Actualamountscoulddifferfromthoseestimatesandassumptions.
Acquisitions. OnApril2,2012,ExpressScripts,Inc.(“ESI”)consummatedamerger(the“Merger”)withMedco
HealthSolutions,Inc.(“Medco”)andbothESIandMedcobecamewholly-ownedsubsidiariesofExpressScriptsHolding
Company(the“Company”or“ExpressScripts”).“We,”“our”or“us”referstoExpressScriptsHoldingCompanyandits
subsidiaries.Theconsolidatedfinancialstatements(andotherdata,suchasclaimsvolume)reflecttheresultsofoperationsand
financialpositionofESIforallperiodspriortoApril1,2012.ReferencestoamountsforperiodsaftertheclosingoftheMerger
onApril2,2012relatetoExpressScripts(seeNote3-Changesinbusiness).
Dispositions.In2012,wesoldourConnectYourCare(“CYC”)lineofbusiness.Duetoimmateriality,ithasnot
beenincludedindiscontinuedoperations.In2012,wesoldourPolyMedicaCorporation(“Liberty”)lineofbusiness.We
retainedcertaincashflowsassociatedwithLibertyfollowingthesalewhichprecludedclassificationofthisbusinessasa
discontinuedoperation.
In2012,wesoldourEuropaApotheekVenloB.V.(“EAV”)lineofbusiness.In2013,wesoldvariousportionsof
ourUnitedBioSource(“UBC”)lineofbusinessandouracuteinfusiontherapieslineofbusiness.In2014,ourEuropean
operationsweresubstantiallyshutdown.Theselinesofbusinesswereclassifiedasdiscontinuedoperations.
Theresultsofoperationsfortheseentitiesarereportedasdiscontinuedoperationsforallperiodspresentedinthe
accompanyingconsolidatedstatementofoperations.Forallperiodspresented,assetsandliabilitiesofthediscontinued
operationsaresegregatedintheaccompanyingconsolidatedbalancesheet.Additionally,forallperiodspresented,cashflowsof
ourdiscontinuedoperationsaresegregatedinouraccompanyingconsolidatedstatementofcashflows(seeNote4-
Dispositions).
Cash and cash equivalents.Cashandcashequivalentsincludecashonhandandinvestmentswithoriginal
maturitiesofthreemonthsorless.Wehavebankingrelationshipsresultingincertaincashdisbursementaccountsbeing
maintainedbybanksnotholdingourcashconcentrationaccounts.Asaresult,cashdisbursementaccountscarryingnegative
bookbalancesof$936.9millionand$684.4million(representingoutstandingchecksnotyetpresentedforpayment)havebeen
reclassifiedtoclaimsandrebatespayable,accountspayableandaccruedexpenses,asappropriate,atDecember31,2014and
2013,respectively.Thisreclassificationrestoresbalancestocashandcurrentliabilitiesforliabilitiestoourvendorswhichhave
notbeensettled.Nooverdraftorunsecuredshort-termloanexistsinrelationtothesenegativebalances.