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Banc of America Health Care Conference 2005. May 19, 2005. Forward-Looking Statements.

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forward looking statements
Forward-Looking Statements

Statements included in this presentation or in the oral comments made as part of this presentation may contain forward-looking statements, including but not limited to statements of the Company’s plans, objectives, expectations or intentions, that involve risk and uncertainties.

The Company’s actual results may differ significantly from those projected or suggested in any forward-looking statement due to a variety of factors, which are discussed in detail in the Company’s filings with the Securities and Exchange Commission.

our interests are aligned with clients and patients

Our Interests are Aligned with Clients and Patients:

To make the use of prescription drugs safer and more affordable

alignment formulary management

More Number of Drugs Fewer

Alignment –Formulary Management

Therapy Class

We Provide Flexible Management of

the Supply Chain

1. Select number of drugs in therapy class

# of

drugs

# of

drugs

# of

drugs

# of

drugs

alignment formulary management1

More Number of Drugs Fewer

Benefit Options

Alignment –Formulary Management

Therapy Class

We Provide Flexible Management of

the Supply Chain

1. Select number of drugs in therapy class

2. Determine formulary control

# of

drugs

# of

drugs

# of

drugs

# of

drugs

Open

Differential

Co-pay

Closed

alignment formulary management2

More Number of Drugs Fewer

Benefit Options

Alignment –Formulary Management

Therapy Class

We Provide Flexible Management of

the Supply Chain

1. Select number of drugs in therapy class

2. Determine formulary control

3. Drive towards lowest overall cost

# of

drugs

# of

drugs

# of

drugs

# of

drugs

Open

Differential

Co-pay

Lowest

Overall

Cost

Closed

alignment retail network management

Impact on Client

Impact on Client

Impact on Patient

Impact on Patient

Impact on ESI

Impact on ESI

Lower drug cost

Lower drug cost

Lower co payment

Lower co payment

Higher Profit/Rx

Higher Profit/Rx

More choice

More choice

More Flexibility

Alignment - Retail Network Management

Greater Management

alignment clinical programs
Alignment – Clinical Programs

Plan Designs Encourage Greater Use of

Generics and Preferred Low-cost Brands

Clients using step therapy realize on average a

2 percentage point increase in generic utilization

alignment home delivery
Alignment – Home Delivery

We Offer Highly Efficient, Cost-effective

Home Delivery

alignment growing demand for mail
Alignment – Growing Demand for Mail

Increased home delivery penetration

* Represents network claims plus 3 times home delivery claims –home delivery claims are 90 days vs. 30 days in the network.

Excludes UHC claims

Home Delivery Helps Manage the Cost of Maintenance Drugs

alignment generic utilization
Alignment – Generic Utilization

Express Scripts Leads in Generic Utilization

Source: From public filings

alignment growing generic opportunity
Alignment – Growing Generic Opportunity

Represents

over 20%

of 2004

branded

drug sales

ESI Analysis

Our Clients and Members Will Benefit From a Growing Generic Opportunity

alignment specialty pharmacy

Oncology

$12.6

36%

HIV/AIDS

3.4

10%

Renal

3.2

9%

Hemophilia

1.6

5%

Hepatitis C

1.6

5%

Transplant

1.5

4%

Multiple sclerosis

1.5

4%

Rheumatoid arthritis

1.5

4%

RSV prophylaxis

0.6

2%

Infertility

0.5

1%

Growth Hormone

0.5

1%

Other

3.5

19%

Total

$35

100%

Alignment – Specialty Pharmacy

Billions

Specialty Market

2004

Source: ESI Analysis

Clients are Seeking Solutions for High-cost Specialty Drugs

curascript penetration into express scripts
CuraScript Penetration intoExpress Scripts

100

90

80

70

60

50

40

30

20

10

0

82%

73%

70%

69%

66%

Retail

Percentage of Plan Costs

CuraScript

25%

20%

17%

Mail

16%

14%

9%

2%

13%

13%

11%

Q1 2004

Q2 2004

Q3 2004

Q4 2004

Q1 2005

CuraScript Continues to Capture an Increased

Share of Our Client’s Specialty Spend

what are the savings
What Are the Savings?

Retail, Clinical.

Formulary

And Rebate

Savings 24%

Paid by

Cash Customer

at Pharmacy

Retail Pharmacy Cash Price

Mail Savings 6%

Express Scripts Client Savings

Express Scripts Client Costs

C

O

S

T

Paid by

Express Scripts

Clients

Total Savings 30%

Availability of Proven PBM Cost Management Tools

Will Produce 20%–25% Savings (CBO)

alignment a win win win proposition

Increased Savings

Opportunities:

Client

Member

Increased

Profit

Opportunities:

Express Scripts

Moving to preferred brands, mail and generics

Moving to preferred brands, mail and generics

Moving to preferred brands, mail and generics

Retail Non-pref. Brand

Retail Pref. Brand

Mail Pharmacy

Generics

Alignment – A Win-Win-Win Proposition

We make money by saving clients and members money

pbm s are part of the solution for medicare

Average Annual Drug Spend

Among Medicare Population

Source: Actuarial Research Corporation

PBM’s Are Part of the Solution for Medicare
  • ESI is well positioned for 2006
  • Our 2006 offensive strategy is to help our managed care and carrier clients profitably grow their MA-PDs and PDPs
  • We are building the foundation for 2007

The Medicare Prescription Drug Act will shape

the direction of our industry for years to come

benefits of eprescribing
Benefits of ePrescribing

Medicare Part D Will Advance Important Initiatives Including e- Prescribing

we deliver against client and patient expectations

We Deliver Against Client and Patient Expectations:

To make the use of prescription drugs safer and more affordable

client patient focus
Client/Patient Focus

Why Express Scripts?

  • Alignment With Clients
  • Generics
  • Specialty

By membership

Health Plan Sponsors Recognize Express Scripts Single

Focus on Making Prescription Drugs More Affordable

2006 upsell pipeline is strong
2006 Upsell Pipeline is Strong

10,000

  • Significant potential to continue to manage client trends in key product categories
  • New products continue

to be developed and

rolled out

  • Strong track record of success

Sold

Weighted Pipeline

9,000

8,000

7,000

6,000

('000 Lives)

5,000

4,000

3,000

2,000

1,000

0

Home Delivery

Three Tier

Generic Enforcement

Specialty/CuraScript

New Clinical Products

Narrowing Formularies

client satisfaction steadily improving
Client Satisfaction Steadily Improving
  • Service and satisfaction metrics have increased consistently quarter over quarter since 2003 with an early spike in 2005

100%

95%

2003

90%

2004

85%

80%

1q05

75%

70%

65%

60%

ESI Performance

Exceed

Likelihood to

Likelihood to

Expectations

Recommend

Renew

our financial results

Our Financial Results

Express Scripts has demonstrated a proven track record

financial overview
Financial Overview

Q1 2005 Highlights

  • 1Q EPS $1.14 — up 28% from last year
  • Cash flow from operations of $138.1 million versus $97.8 million last year
  • Record adjusted claims of 142 million, up 16% from last year
  • Record generic utilization of 54% versus 49% last year
  • Gross profit per adjusted claim of $1.87 versus $1.77 last year (excluding non-recurring gain last year)
  • Increased 2005 EPS guidance
financial overview1
Financial Overview

Quality of Earnings

(1)

(3)

(2)

Reflects a $70-$75 million reduction in Q2 2003 due to one-time impact of implementing a new wholesale purchase agreement

Excludes a $0.10 per share charge for the early retirement of debt

Excludes a $0.20 charge to increase legal reserves for the cost of defense.

* Reflects a 12-month moving average of free cash flow (cash from operations less CapX)

components of eps growth 2004
Components of EPS Growth — 2004

6%

7%

8%

* Excluding $25 million charge to increase legal reserves for the cost of defense and $5.5 million termination payment received

financial overview2
Financial Overview

EBITDA* per adjusted claim

10.5% CAGR

Pricing can be lowered as clients tighten formulary compliance, increase home delivery, utilize generics and restrict retail networks. These changes result in lower prices to our clients and greater profits to Express Scripts.

* A reconciliation of EBITDA to net income and to net cash provided by operating activities can be found in the Investor Relations

section of Express Scripts’ Web site, www.express-scripts.com under Presentations.

** Excluding $25 million charge to increase legal reserves for the cost of defense and $5.5 million termination payment received.

gross profit sga ebitda per adj rx
Gross Profit/SGA/EBITDA per Adj. Rx

Future EBITDA per Adj. Rx Must Come From Gross Profit per Adj. Rx

  • * Excluding $25 million charge to increase legal reserves for the cost of

defense and $5.5 million termination payment received.

focus on return on invested capital roic
Focus on Return on Invested Capital (ROIC)

* Reflects operating income less tax divided by average invested capital, which consists of stockholder’s equity, plus interest

bearing liabilities plus long-term deferred income taxes, net.

** Excludes $25 million charge to increase legal reserves for the cost of defense and 5.5 million termination payment received

ROIC is our Preferred Performance Metric

w hy express scripts industry leading roic
Why Express Scripts? Industry-Leading ROIC

We Lead Our Peer Group in ROIC Performance

Source: Express Scripts Analysis

our financial goals
Our Financial Goals
  • 15% + EBITDA growth
  • Increase gross profit per claim
  • Maintain ROIC leadership

5%-7%

14%-16%

slide32

Why Express Scripts?A Strong Value Proposition

  • Our 'Golden Rule' of Alignment
  • The People To Grow the Business
  • Technologies Second to None
  • Operational and Service Excellence
slide33

Why Express Scripts?All the Right Growth Levers

  • New Sales
  • Upsells and Retention
  • Generics, Home Delivery and Specialty
  • Innovative Product Development
  • Strategic Deployment of Capital