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Express Scripts 2014 Annual Report
15. Condensed consolidating financial information
TheseniornotesissuedbytheCompany,ESIandMedcoarejointlyandseverallyandfullyandunconditionally
(subjecttocertaincustomaryreleaseprovisions,includingsale,exchange,transferorliquidationoftheguarantorsubsidiary)
guaranteedbycertainofour100%owneddomesticsubsidiaries,otherthancertainregulatedsubsidiaries,and,withrespectto
notesissuedbyESIandMedco,byus.Thefollowingcondensedconsolidatingfinancialinformationhasbeenpreparedin
accordancewiththerequirementsforpresentationofsuchinformation.Thecondensedconsolidatingfinancialinformation
presentedbelowisnotindicativeofwhatthefinancialposition,resultsofoperationsorcashflowswouldhavebeenhadeachof
theentitiesoperatedasanindependentcompanyduringtheperiodforvariousreasons,including,butnotlimitedto,
intercompanytransactionsandintegrationofsystems.
In2014,ourEuropeanoperationsweresubstantiallyshutdown.In2013,wesoldvariousportionsofourUBCline
ofbusinessandouracuteinfusiontherapieslineofbusiness.In2012,wesoldbothourEAVandLibertysubsidiaries.The
operationsofourEuropeanoperations,thevariousportionsofourUBClineofbusinessthatweresold,ouracuteinfusion
therapieslineofbusinessandourEAVlineofbusinessareincludedasdiscontinuedoperationsofthenon-guarantorsasofand
fortheyearsendedDecember31,2013and2012(throughtheirrespectivedatesofsale,asapplicable).Thefollowing
presentationreflectsthestructurethatexistsasofthemostrecentbalancesheetdateandincludescertainretrospectiverevisions
toconformpriorperiodstocurrentperiodpresentation(describedandpresentedinfurtherdetailbelow).Thecondensed
consolidatingfinancialinformationispresentedseparatelyfor:
(i) ExpressScripts(theParentCompany),theissuerofcertainguaranteedobligations;
(ii) ESI,guarantor,theissuerofadditionalguaranteedobligations;
(iii) Medco,guarantor,theissuerofadditionalguaranteedobligations;
(iv) Guarantorsubsidiaries,onacombinedbasis(butexcludingESIandMedco),asspecifiedintheindentures
relatedtoExpressScripts’,ESI’sandMedco’sobligationsunderthenotes;
(v) Non-guarantorsubsidiaries,onacombinedbasis;
(vi) Consolidatingentriesandeliminationsrepresentingadjustmentsto(a)eliminateintercompanytransactions
betweenoramongExpressScripts,ESI,Medco,theguarantorsubsidiariesandthenon-guarantorsubsidiaries,
(b)eliminatetheinvestmentsinoursubsidiariesand(c)recordconsolidatingentries;and
(vii)ExpressScriptsandsubsidiariesonaconsolidatedbasis.
Inthefirstquarterof2014,werevisedourcondensedconsolidatingstatementsofoperations.Correcting
adjustmentsweremadetothecondensedconsolidatingstatementofoperationsforthethreemonthsendedMarch31,2013to
reflectamountsrelatedtocertainintercompanyrevenuesandoperatingexpensespreviouslyreportedonanetbasisintheNon-
Guarantorscolumn.TheeffectoftheadjustmentisanincreaseinrevenueandoperatingexpensesintheNon-Guarantors
columnby$401.3millionforthethreemonthsendedMarch31,2013(andthesameeffectforallyeartodateperiodsduring
2013).TheadjustmentresultedincorrespondingoffsetsintheEliminationscolumnforeachperiod.Therewasnoimpacttonet
incomeineithertheNon-GuarantorscolumnortheEliminationscolumn.
In2014,wefinalizedtheresultsofatransferpricingstudyaswellasintercompanyagreements.Theseeventswere
retroactivetoJanuary1,2014.Theintercompanyagreementsresultedinintercompanyinterestexpensebeingallocatedfrom
ExpressScriptsHoldingCompanytoExpressScripts,Inc.andGuarantorsandexpensebeingallocatedbetweenGuarantors,
resultinginhigherExpressScripts,Inc.netincomeandlowerMedcoHealthSolutions,Inc.netincomeonthecondensed
consolidatingstatementsofoperationsfortheyearendedDecember31,2014.Theseeventshadnoimpactonourconsolidated
statementofoperations,consolidatedincomestatementorconsolidatedcashflows.
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