Express Scripts Holding Company (ESRX: NASDAQ)
Shares of Express Scripts reported earnings after the close on Monday April 24, 2017. The company is the largest Pharmacy benefit manager in the United States.
Shares immediately plummeted after earnings announcement and other company comments were made public. However it doesn’t appear that shares fell stricted due to earnings as numbers came in at $1.33 which was a penny higher than expectations.
What did make the shares drop so heavily was the fact that it seems as though the company will be losing its largest customer- Anthem. It seems Anthem is responsible for almost 20% (about $15 billion) of Express Scripts Revenue. Shares fell to a level of $57.20 in the after-hours session closing down $10.05 for almost 15%.
As a health insurer, Anthem contracts with pharmacy benefit managers like Express Scripts to help negotiate lower prices for prescription drugs. Anthem accused Express Scripts of not passing along those savings, claiming Express Scripts overcharged the insurer by billions of dollars. The ending of the contract comes after Anthem last year sued Express Scripts over the issue.
Express Scripts Statement
“Although conversations have been ongoing, the Company was recently told by Anthem management that Anthem intends to move its business when the Company’s current contract with Anthem expires on December 31, 2019, and that Anthem is not interested in continuing discussions regarding pricing concessions for 2017-2019 or in receiving the Company’s proposed pricing for the period beyond 2019,” -BusinessInsider
The After-Hours 1 Minute Chart
In the above price chart of the after-hours session we see how the share price plummeted down just after 4pm; tried to stabilize around the $60 level for a little while; then began its precipitous price drop to the $57.00 level.
Express Scripts Holding Company operates as a pharmacy benefit management (PBM) company in the United States, Canada, and Europe. It operates in two segments, PBM and Other Business Operations. The PBM segment offers clinical solutions, specialized pharmacy care, home delivery and specialty pharmacy, retail network pharmacy administration, benefit design consultation, drug utilization review, drug formulary management, administration of a group purchasing organization, and consumer health and drug information services. This segment also provides Medicare, Medicaid, and health insurance marketplace products; and Express Scripts SafeGuardRxSM, a suite of solutions targeting the medication classes that pose a budgetary threat to its clients. The Other Business Operations segment distributes pharmaceuticals and medical supplies, including injectable and infusible pharmaceuticals and medications to treat specialty and rare/orphan diseases. This segment also provides consulting services, such as design, implementation, and project management for pharmaceutical and biotechnology manufacturers to collect scientific evidence to guide the use of medicines. The company serves care organizations, health insurers, third-party administrators, employers, union-sponsored benefit plans, workers compensation plans, government health programs, providers, clinics, hospitals, and others. As of December 31, 2016, it operated four automated dispensing home delivery pharmacies; one non-automated dispensing home delivery pharmacy; and one non-dispensing home delivery pharmacy, as well as various non-dispensing order processing and patient contact centers, specialty drug pharmacies, and fertility pharmacies. The company was formerly known as Aristotle Holding, Inc. and changed its name to Express Scripts Holding Company in April 2012. Express Scripts Holding Company was founded in 1986 and is headquartered in Saint Louis, Missouri.