Medco Health Solutions 8K Regulation FD Disclosure | MHS 30 Nov 06

Medco is a registered trademark of Medco Health Solutions, Inc.

Growing Today,

Innovating for a Greater

Tomorrow

Valerie C. Haertel

Vice President, Investor Relations

Analyst Day

November 30, 2006

Exhibit 99.1

11/28/2006 -

10:00pm

Forward-looking statements

This presentation contains “forward-looking statements”

as that term is defined in

the Private Securities Litigation Reform Act of 1995. These statements involve

risks and uncertainties that may cause results to differ materially from those set

forth in the statements. No forward-looking statement can be guaranteed, and

actual results may differ materially from those projected. We undertake no

obligation to publicly update any forward-looking statement, whether as a result

of new information, future events or otherwise. The forward-looking statements

are not historical facts, but rather are based on current expectations, estimates,

assumptions and projections about the business and future financial results of the

pharmacy benefit management (“PBM”) and specialty pharmacy industries, and

other legal, regulatory and economic developments. We use words

such as

“anticipates,”

“believes,”

“plans,”

“expects,”

“projects,”

“future,”

“intends,”

“may,”

“will,”

“should,”

“could,”

“estimates,”

“predicts,”

“potential,”

“continue”

and similar

expressions to identify these forward-looking statements. Our actual results could

differ materially from the results contemplated by these forward-looking

statements due to a number of factors.

11/28/2006 -

10:00pm

Forward-looking statements (cont’d)

These factors include:

Risks

associated

with

our

acquisition

Accredo

Health,

Incorporated

(“Accredo”),

including

integration

risks,

and

increase

credit

risk

resulting

from

the

payment

streams

associated

with

specialty

pharmacy

accounts

receivable

Governmental

investigations,

and

governmental,

qui

tam

and

other

liability

claims

asserted

against

us,

and

any

associated

mandatory

changes

our

business

practices

Competition

the

PBM

and

specialty

pharmacy

industries,

including

competition

from

health

plans

and

national

retail

pharmacies

Pressure

discounts

and

rebates

from

pharmaceutical

manufacturers

and

margins

the

PBM

industry

Our

ability

obtain

new

clients

and

the

possible

termination

of,

unfavorable

modification

to,

contracts

with

key

clients

Risks

and

uncertainties

regarding

the

implementation

and

ongoing

execution

the

Medicare

Part

prescription

drug

benefit

Possible

regulatory

industry

practice

changes

affecting

pricing,

rebates,

discounts

other

practices

pharmaceutical

manufacturers

Risks

associated

with

the

secure

storage

and

transmission

personal

health

information

and

other

confidential

data

Developments

the

healthcare

industry,

including

the

effect

increases

overall

healthcare

costs,

changes

drug

utilization

and

cost

patterns

and

the

introduction

new

brand-name

and/or

generic

drugs

New

existing

governmental

regulations

legislation

and

changes

in,

the

failure

comply

with,

governmental

regulations

legislation

The

possibility

material

non-cash

charge

income

our

recorded

intangible

assets

are

impaired

require

accelerated

amortization

from

change

the

remaining

useful

life

Risks

associated

with

our

indebtedness

and

debt

service

obligations

General

economic

and

business

conditions

The foregoing list of factors is not exhaustive. You should carefully consider the foregoing

factors and the other uncertainties and potential events described in our Annual Report on

Form 10-K and other documents filed from time to time with the Securities and Exchange

Commission (“SEC”).

11/28/2006 -

10:00pm

Medco Analyst Day Agenda

Growing Today, Innovating for a Greater Tomorrow

Break

9:50 –

10:05

Registration & Continental Breakfast

7:30 –

8:00

V. Haertel

Welcome

8:00 –

8:05

D. Snow

Growing Today, Innovating for a Greater Tomorrow

8:05 –

9:20

J. Reed

Growing the Bottom Line

9:20 –

9:50

T. Wentworth

Growing Specialty Pharmacy

10:05 –

10:35

L. Kornwasser

Optimizing Prescriptions

10:35 –

11:05

Optional Willingboro Tour

1:15 –

5:45

Adjournment

1:00

D. Snow

Closing Remarks

12:45 –

1:00

Lunch / Q&A

11:35 –

12:45

B. Griffin

Growing in the Marketplace

11:05 -

11:35

11/28/2006 -

10:00pm

Growing Today

Innovating for a Greater Tomorrow

Growing

Today,

Innovating

for a Greater

Tomorrow

Growing

the Bottom

Line

Growing

Specialty

Pharmacy

Growing

in the

Marketplace

Optimizing

Prescriptions

Medco is a registered trademark of Medco Health Solutions, Inc.

Growing Today, Innovating

for a Greater Tomorrow

David B. Snow, Jr.

Chairman & Chief Executive Officer

Analyst Day

November 30, 2006

Medco: growth and innovation

Industry issues: a historical perspective

2007 and beyond: innovation and specialization

Growth trends and drivers through 2006

Industry growth and Medco’s position

Perceived issues

A historical perspective –

2003

Shareholder return of 44.9%

GAAP EPS $1.57

18% net income growth

GAO report validates value of

model

PBMs

are just “middlemen”

Nearly $10 billion in renewals

Legal overhang –

consequence to retention

Transparent model 54%

rebates retained, yet EBITDA

per adj

Rx 21%

Disproportionate dependence

on rebates

2003 Medco results

2003 fears

Perceived issues

A historical perspective –

2004

$21 billion in renewals

Legal overhang –

consequence on retention

Shareholder return of 23.1%

GAAP EPS $1.75, 11.5%

Growth prospects

Transparent model, 44%

rebates retained, yet EBITDA

per adj

Rx 22%

Transparency will harm the

model and reduce margins

2004 Medco results

2004 fears

2006 Me

Perceived issues

A historical perspective –

2005

Shareholder return of 22.4%

GAAP EPS $2.05, 17.1%

25% net income growth

$3+ billion new business

$10 billion in renewals

Medco achieves mail order

penetration of 36.6%

90 days at retail would

harm PBMs

Maine court declared PBMs

NOT fiduciaries

–

Legislation effective to those

sited in ME (Medco has none)

Maine legislation

Mercer, Towers-Perrin, AON

Employer coalitions & health

plan carve-ins

2005 Medco results

2005 fears

Fear 1

Wal-Mart’s $4 generic drug plan is going to

negatively impact Medco’s business

Perceived issues du jour –

2006

Reality

Wal-Mart's program limited to 143 drugs

Primarily older, low market share and already

low-cost generics

Represent approximately 7% of overall drug

spend

Medco has not seen any material impact to

mail-order volume or margins

Fear 2

The outcome of the FirstData

Bank AWP settlement

is going to harm Medco margins

Perceived issues du jour –

2006

Reality

As early as 2001, Medco anticipated future

changes to this benchmark pricing

methodology, contracting with our clients to

hold both parties economically neutral in the

event of a methodology change

As proposed, the Caremark/CVS merger offers no

premium to Caremark –

how does that reflect on

the future of the PBM industry?

Perceived issues du jour –

2006

Reality

Medco remains highly confident in the strength

of our model and in our long-term growth

prospects

2006 guidance raised and narrowed to $2.33 to

$2.36*, growth of 27 to 28% over pro forma

2005 EPS

2007 guidance of GAAP diluted EPS range of

$2.76 to $2.83, growth of 17 to 21% over 2006

guidance*

Fear 3

* Excludes first quarter 2006 legal settlements charge

Democratic control of Congress may not be

conducive to growth in the PBM industry

Perceived issues du jour –

2006

Reality

Medicare Part D is a success

Focus is on manufacturers, not PBMs

Democrats generally bullish on generics and

defining biogenerics

Federal checks and balances remain,

mitigating extreme change

Fear 4

Pharmacy –

the fastest growing

component of the health care industry

Aging of America

2010,

seniors

aged

55-64

will

increase

nearly

50%

Seniors consume 3 times the average drug spend of younger

consumers (more than 30 Rx’s each)

Drug spend

inflation

& the need

to control costs

CMS projects drug spend to increase by 8% annually through 2010,

Expected

drive

top

line

growth

and

demand

for

PBM

services

Specialty

pharmaceutical

growth

Fastest

growing

component

expected

reach

$78

billion

2008

95% growth over past 5-year period

Expected CAGR of 34.1% from 1995-2010

Continued shift

to generics

More than 60 brand-name medications (combined sales of approx.

$51

billion)

scheduled

become

available

generics

from

2006-2011

Mail service growth

Prescription volume at mail accounts for more than 17% of all U.S.

prescription drug sales, and continues to grow

Medicare Part D

Market opportunity for PBMs has more than doubled with Medicare

Part D

U.S. Census Bureau Population Projections Bureau, Release Date January 13, 2000.

CMS Feb 2006.

Banc of America, Sept 14, 2005.

Medco estimates.

Medco Health Solutions:

Leading Pharmacy Benefit Manager

Industry Leading Drug Trend Management

Leading Internet Pharmacy

Largest Specialty Pharmacy

Largest Mail Order Pharmacy

Largest Drug Spend Under Management

Fortune 100 company

with estimated annualized

2006 revenues of ~$42 Billion

Our 5 year strategy

2003 through 2007

$1.50

$1.83

$1.89

$2.13

$1.30

$1.50

$1.70

$1.90

$2.10

$2.30

2003

2004

2005

9 mos 2006*

Our long-term growth trends

EBITDA per adjusted script

* Excludes first quarter 2006 legal settlements charge

Q3 2006 EBITDA per adj

Rx = $2.30

Our long-term growth trends

Earnings per share

$1.40

$1.60

$1.80

$2.00

$2.20

$2.40

$2.60

$2.80

$3.00

2003

2004

2005

2006E*

2007E

* Excludes first quarter 2006 legal settlements charge

$1.57

$1.75

$2.05

$2.33 -

$2.36

$2.76 -

$2.83

Grow Medicare Part D

Medco drivers for long-term

growth and profitability

Grow specialty pharmacy

Grow mail

Grow generics

Innovate for a greater tomorrow

Grow net-new sales

Generic dispensing rate (GDR)

43.8%

46.3%

51.5%

54.5%

43%

45%

47%

49%

51%

53%

55%

57%

2003

2004

2005

9 mos 2006

Medco drivers for long-term

growth and profitability

Grow generic dispensing rate

On average, every point increase in GDR = approximately $25MM (pre-tax)

Medco drivers for long-term

growth and profitability

78.1

87.7

87.3

2003

2004

2005

2006E

2007E

10 million FEHBP Rx’s

Mail Rx Growth

Grow mail

Medco drivers for long-term

growth and profitability

Specialty pharmacy lives

(MM)

Grow specialty pharmacy

1.8

2.6

3.6

5.5

6.0

2003

2004

2005

2006E

2007E

Specialty pharmacy revenue

($B)

4.3

20.6

38.5

42.5

2003

2004

2005

9 mos

2006

Medco drivers for long-term

growth and profitability

Renewals

($B)

Grow net-new sales

New named business

($B)

9.7

21.0

10.0

6.3

6.9

2003

2004

2005

2006E

2007 to

date

* Includes estimated calendarization, growth & erosion.

1.9

0.9

3.0

3.7

1.2

2003

2004

2005

2006E

2007 to

date

Medco drivers for long-term

growth and profitability

Employer retiree

base revenues

Medicare

revenues

Total Medicare-

eligible revenues

$2.6 B

$12.4 B

$15.0 B

Medco co-logo

partner enrollees

900,000+ to date

Medco PDP

100,000 members

Medicare 2007 revenues

Grow Medicare Part D

$0.20–$0.26 per share

incremental growth for 2007

Medco drivers for long-term profitability

Therapeutic

Resource

Centers

My Rx Choices

Optimal Health

New Therapeutic Resource Centers

Innovate for a greater tomorrow

Not all members are created equal

Well

Wrinkles,

Baldness,

Impotence,

Contraception,

Vitamins

Acute

Colds & Flu,

Strep Throat,

Ear Infection,

Headache,

Sprains

Chronic

Heart Disease,

Diabetes,

Arthritis,

High Blood Pressure,

High Cholesterol,

Dementia,

Chronic Back Pain

Complex

Multiple Chronic

Conditions such as Heart

Failure and Diabetes,

Cancer,

AIDS,

Metabolic Syndrome

Individuals have different needs, different cost

Therapeutic

Resource

Centers

Engage those who spend the money

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

% Members

% Rx Cost

46%

17%

34%

16%

80%

Complex

Chronic

Acute

Well

Chronic and complex patients

are the high cost groups

11%

60%

10%

19%

% Medical Cost

$8,466

$2,819

$1,263

$1,212

Plan Medical

Cost/Eligible

46%

17%

34%

% Book of Business

$691

$317

$47

Member Rx

Copay/Eligible

$3,980

$1,046

$103

$13

Plan Rx Cost/Eligible

16%

80%

% Rx Cost

Complex

Chronic

Acute

Well

Issues

Source: Medco data

Effective member engagement model

Teachable

Moments

Teachable

Moments

Trusted

Advisor

Incentives

Our pharmacists have the teachable

moments and trusted advisor role

100

120

All

Top 15%

Top 10%

Top 5%

Top 3%

Top 1%

Top 0.5%

Pharmacist

Doctor

Risk Severity

Source: Medco data

Pharmacists #1

for honesty and ethics

for 9 straight years

Source: Gallup

Pharmacists

Patients

Physicians

General

Pharmacy Site

General

Pharmacy Site

General

Pharmacy Site

General

Pharmacy Site

General

Pharmacy Site

General

Pharmacy Site

General

Pharmacy Site

Historic approach

Specially Trained Pharmacists

Patients

Physicians

New state –

Therapeutic Resource Centers

Healthcare

Value

Map

Accredo

Rare & Specialty

Columbus

Hematology/Oncology

Cardiovascular

•Hypertension

N. Versailles

Specially Trained Pharmacists

Patients

Physicians

New state –

Therapeutic Resource Centers

Healthcare

Value

Map

Fairfield

•

High Risk

Diabetes

Texas

Neurology/Psychiatry

Diabetes

Gastrointestinal

Cardiovascular

•High Risk

Tampa

Cardiovascular

•High Cholesterol

Spokane

Pulmonary

Rare &

Specialty

0.19 MM

Patients

42 Sites

Hematology

Oncology

0.6 MM

Patients

Columbus OH

Diabetes

2.5MM

Patients

Fairfield OH

Ft Worth TX

Cardio-

vascular

9.1 MM

Patients

Tampa FL

Columbus OH

N.Versailles PA

Pulmonary

2.5 MM

Patients

Spokane WA

Neurology

Psychiatry

6.2 MM

Patients

Ft Worth TX

Gastro-

intestinal

1 MM

Patients

Ft Worth TX

Creating value from

Therapeutic Resource Centers

Remaining Retail

Pharmacy

Conversion

Opportunity

Current Mail

Penetration

Remaining

Pharmacy

Opportunity

Chronic medication Rx’s*

Specialty channel

Current

Penetration

42%

58%

63%

37%

For each 1% increase in mail penetration or generic

dispensing rates, Medco can earn $15-25MM in

incremental margin depending on brand and generic

mix and our clients save multiples of that

For each 1% increase in specialty spend through

our preferred channel, Medco can earn $5-8MM in

incremental

margin,

while

lowering

clients’

total

cost of care

* Aligned prescriptions

Each center will drive for drug mix,

channel optimization, AND safety

Rare & Specialty

Hematology

Oncology

Diabetes

Cardiovascular

Pulmonary

Neurology

Psychiatry

Gastrointestinal

Retail patients

Mail patients

0.19MM

0.6MM

2.5MM

9.1MM

2.5MM

6.2MM

1.0MM

Therapeutic Resource Centers:

A sustainable brandable

difference

Requires significant volume by practice area

Requires distinct front end and back end pharmacy operations

Requires single IT platform, using real time data

Requires ability to price and display hundreds of millions

of therapeutic options in a compressed timeframe

Requires multi-year, major capital investment

–

100% of our capital goes to creating new sources of value

14 patents, 39 patents pending

3 years of development

The specialized pharmacies are launching

and will be fully implemented in 2007

Implementation

Business Planning & Development

HEM-ONC 19% –OH

PULMONARY 11% –

CV-HIGH RISK 15% –

CV-HYPERTENSION 18% –

Specialist

Training Curriculum

NEURO-PSYCH 28% –

DIABETES 24% –

GASTROINTESTINAL 26% –

Integrated Contact Mgmt

CV-LIPIDS 31% –

DIABETES 21% –

Medco Analytic Engine

Stratification

Rx Order Routing

2007

2006

2005

2004

Optimal Health

& the Healthways

alliance

Physician

Patient

Maintain

Wellness

Manage

Conditions

High Risk

Care Support

Safety

Plan

Policies

Savings

Enrollment

Medco Member Engagement Program

Specialist Pharmacist

At The Center

Pharmacy

Health

Health Coach

Through Optimal Health

$40B

$160B

Optimal

Health

Today’s chasing model without enrollment

Time (Years)

100%

66%

33%

Members sent general information

Member fills script

PBMs react to script with “Chasing Programs”

Pharmacists contact physicians on company’s behalf

Lower member engagement. Lower savings.

My Rx

Choices

+ Faster

+ Greater

My Rx Choices will generate

faster, greater savings

Member enrolls

into choices via My Rx Choices

Member authorizes

Medco to change prescriptions

Specialist pharmacists engage physicians on member’s behalf

Specialist pharmacists identifies “at risk”

patients for Optimal Health

Faster savings. Increased member engagement.

Time (Years)

100%

66%

33%

My Rx Choices simplifies decision making

Options

Maintenance

Drugs

Alternative

Per Drug

Channels

The

Member’s

Best Choice

All options pre-evaluated

All drugs price compared

Lowest cost options displayed

Choose with single click

Physician assistance

All options pre-evaluated

All drugs price compared

Lowest cost options displayed

Choose with single click

Physician assistance

Unaware of choices

Minimal cost information

No assistance

Unaware of choices

Minimal cost information

No assistance

Average Chronic/Complex Patient

My Rx Choices has launched

Beta Test

Launched October 2006

Available for 5MM lives

Encouraging results: 16-23% conversion

Book of Business Rollout

Rollout April, 2007

High client and prospect interest

Targeting 11MM lives

Creating value through My Rx Choices

0.5

1.5

2.5

3.5

4.5

National

Key

Health Plans

Systemed

Opportunity to enroll

10.9MM lives into

My Rx Choices in 2007

Margin of $15MM through

improved generic

dispensing and mail

penetration rates and our

clients save multiples of

that

Potential Enrollees by Customer

Group for 2007

(in millions)

First Year Projections

Optimizing member engagement

What does this mean for the future?

Greater client drug savings

Greater client medical savings

Greater member savings

Improved clinical outcomes for members

Medco margin expansion

Growing Today

Innovating for a Greater Tomorrow

Growing

Today,

Innovating

for a Greater

Tomorrow

Growing

the Bottom

Line

Growing

Specialty

Pharmacy

Growing

in the

Marketplace

Optimizing

Prescriptions

Medco is a registered trademark of Medco Health Solutions, Inc.

Growing the Bottom Line

JoAnn Reed

Senior Vice President, Finance &

Chief Financial Officer

Analyst Day

November 30, 2006

Growing the bottom line

Industry issues

2007 Guidance

Opportunity for growth in 2007

Third-quarter 2006 financial performance

Of the 143 drugs available under the Wal-Mart program,

Medco dispensed more than 8,000 mail prescriptions to

the Tampa area over the last 14 weeks

Represents approximately 7% of the drug spend in Tampa

Medco’s mail share and generic dispensing rates for these

drugs in the Tampa Bay area over the last 14 weeks have

improved, resulting in increased mail margin

Medco’s clients and members benefited from the

program since our typical retail pricing is the “lower of”

the discounted AWP, MAC price, or the usual and

customary charge

Impact from Wal-Mart generic program

Mail penetration in Tampa area

increases

200

400

600

800

1,000

1,200

1,400

1,600

8/25

9/8

9/22

10/6

10/20

11/3

11/17

10%

12%

14%

16%

18%

20%

22%

MHS mail Rxs

Mail penetration

Tampa –

mail volume

Wal-Mart announcements

Wal-Mart sampling analysis

If a Medco-by-Mail member, who takes one or more of the

products on the limited Wal-Mart list, chooses to move all

prescriptions to Wal-Mart, the average cost would increase

$290

per patient per year based on current utilization

With 331 GCN’s*, the Wal-Mart list comprises only 2.9% of

the universe of 11,322 GCN’s

available

* ”Generic Code Number”

Average wholesale price (AWP)

What this means to Medco

Should this settle, bottom line impact will be immaterial

To date, Medco has 93% of its drug spend covered by

the contractual provision that holds both parties neutral

to methodology or pricing benchmark changes

By the time of potential implementation, the majority

of the remaining 7% will be covered by similar

contractual provisions

Since 2001, clients have benefited by additional

discounts and rebate sharing specifically on brand-name

products that, on average, have resulted in over 400

basis points of savings

Average manufacturer price (AMP)

Currently AMP is not a publicly available price file

Used for government contracting only

(i.e., Medicaid business)

AMP is simply another benchmark price; it is not the

acquisition cost

If AMP becomes a new standard, Medco’s contractual

provision would hold parties neutral to benchmark changes

Solid third-quarter financial results

+ 29.2%

+ 24.6%

$0.48

$0.57

$0.62

$0.71

GAAP diluted EPS

Diluted EPS adj. for intangibles

(2005 pro forma to include

stock option expense)

+ 4.5 pts

51.5%

56.0%

Generic dispensing rate

+ 28.2%

$463.1MM

5.0%

$593.5MM

5.7%

Gross margin

% of net revenues

+ 30.4%

$142.5MM

1.5%

$185.8MM

1.8%

Net

income

(2005

pro

forma

include

stock option expense)

% of net revenues

+ 3.3%

173.4MM

179.2MM

Total adjusted Rxs

$9.3B

3Q05

+ 12.2%

$10.5B

Net revenues

Growth

3Q06

3Q’06 shares outstanding increased 2.2MM shares to 298.7MM when compared to 296.5MM in 3Q’05. 3Q’06 includes

pre-tax stock option expense of $14.8MM. 3Q’05 pro forma equivalent stock option expense amounted to $23.7MM.

Generic dispensing rates (% Rxs)

continue on an upward trend

38%

43%

48%

53%

58%

63%

3Q04

4Q04

1Q05

2Q05

3Q05

4Q05

1Q06

2Q06

3Q06

Mail

Retail

Total

Capitalization

S&P: BBB

(stable outlook)

Moody’s: Baa3

(positive outlook)

Fitch: BBB+

(stable outlook)

2,460

Accounts receivable, net

1,617

Inventories, net

525

Current debt

$13,670

Total assets

5,117

Goodwill, net

2,578

Intangibles, net

752

Other assets

627

Property and equipment, net

$519

Cash and investments

7,549

Equity

6,121

Total liabilities

1,226

Other non-current liabilities

886

Long-term debt

$13,670

Total liabilities and equity

$3,484

Current liabilities

Balance sheet as of 9/30/06 ($MM)

Senior

unsecured ratings

EBITDA*/interest

expense:

16.3x

Debt/EBITDA*:

0.91x

Debt/total capital:

15.7%

Strong credit ratios

†

LTM = Last twelve months as of 9/30/06

* Excludes legal settlements charge

Investment

grade

115

337

235

999

614

909

274

251

322

235

125

132

2000

2001

2002

2003

2004

2005

9 mos

2006

Cash flow generation

Cash flow from operations

($MM)

$366

$659

$470

$1,124

$712

Capital expenditures

Free cash flow

$1,041

$822*

Note: Free cash flow = cash from operations –

capital expenditures

Pro forma presentation assuming SFAS 142 was in effect for all periods.

*Over $460MM was collected from our clients

the Monday after our 3Q06 fiscal quarter ended

$362

Medco opportunity for growth

Progress and expectations for 2007

Sales growth

–

Addition of $1.2B in new 2007 business, to-date

Generics growth

–

Nearly $7.1B in drugs coming off patent in 2007

–

Incremental contribution of $0.06–$0.08 per share

Mail impact

–

5.6% increase in 2007 to approximately 95MM

Medicare Part D impact

–

Incremental growth of $0.20–$0.26 per share

Accredo Health Group impact

–

Contribution of $0.23–$0.26 per share

Efficient use of cash

–

Share repurchase up to 12.5MM shares

Medco: Net positive sales in 2006

($1.8 B)

Erosion & calendarization

($0.8 B)

Lost sales

($1.0 B)

$5.1 B

Calendarization

$0.8 B

Growth in existing clients

$2.1 B

New sales (Commercial, ASO, Medicare PDP)

$2.2 B

$3.3B net new, to date

$0.4B net new, to date

Medco: Net positive sales in 2007

to date

($1.8 B)

Erosion & calendarization

($0.6 B)

Lost sales

($1.2 B)

$2.2 B

Growth & calendarization

$1.0 B

New sales

(Commercial & ASO only)

$1.2 B

New sales mail penetration rate of 40%

Lost sales mail penetration rate of 20%

Fiscal year impact of 2006

generic introductions

* Includes Plavix, $2.7B annual US spend.

†

Excludes Plavix

Source: U.S. Drug spend estimates are based on IMS Health data for 2005, compounded amounts prorated

for mid-term expirations. Brand drug expirations based on expected patent expiration dates current as of

October 2006. Changes may occur due to litigation, patent challenges, etc.

Off-patent compounding effect

($B)

6.5

3.7

7.1

4.0

11.4

2006

2007

2008

$6.5

$15.1

†

$22.5

†

Zocor & Zoloft off-patent

compounding effect ($B)

2006

2007

Zocor

: 1.7

Zoloft

: 1.3

Zoloft

: 2.7

Zocor

: 3.4

$3.0

$6.1

2007 generic pipeline

10/07

162 MM

Prilosec

7/07

365 MM

Paxil CR

Acute

$2,541 MM

Subtotal

2/07

72 MM

Cipro XR

Total

Subtotal

Chronic

$7,071 MM

$4,530 MM

5/07

2,104 MM

Ambien

10/07

23 MM

Precose

10/07

912 MM

Coreg

1/07

1,266 MM

Toprol XL

$2,167 MM

10/07

Norvasc

Source: Medco and IMS data

Of the nearly $7.1B in anticipated brand expirations in 2007, $4.5B

present mail opportunity

$0.06–$0.08 per share for 2007 generic pipeline incremental contribution

2007 generic pipeline

$30 –

$40MM

Margin opportunity

$408MM

Portion on Medco formulary

$2.1B

Fiscal year impact

$416MM

Medco’s average share ~ 20%

$4.5B

Total annual branded

drug spend –

chronic

2007

Results in $150–$200MM client savings

Historical generic discount levels over

last two years for generic introductions

10%

20%

30%

40%

50%

60%

70%

Single source

authorized

generic

3 generics

>3 generics

Brand drug pricing comparison

$125

$130

$135

$140

$145

$150

$155

$160

$165

CVS.com

Walgreens.com

Wal-Mart

Medco

$70

$75

$80

$85

$90

$95

CVS.com

Walgreens.com

Wal-Mart

Medco

$65

$70

$75

$80

$85

$90

$95

CVS.com

Walgreens.com

Wal-Mart

Medco

$10

$20

$30

$40

$50

$60

$70

CVS.com

Walgreens.com

Wal-Mart

Medco

Source: Wall Street Journal: Based on comparable script quantity

Zocor (Simvastatin)

Zoloft (Sertaline)

Flonase (Fluticasone)

Zithromax (Azithromycin)

Generic drug pricing comparison

$20

$40

$60

$80

$100

$120

$140

$160

CVS.com

Walgreens.com

Wal-Mart

Medco

$10

$20

$30

$40

$50

$60

$70

$80

$90

CVS.com

Walgreens.com

Wal-Mart

Medco

$10

$20

$30

$40

$50

$60

$70

$80

CVS.com

Walgreens.com

Wal-Mart

Medco

$10

$15

$20

$25

$30

$35

$40

$45

$50

CVS.com

Walgreens.com

Wal-Mart

Medco

Source: Wall Street Journal: Based on comparable script quantity

Zocor (Simvastatin)

Zoloft (Sertraline)

Flonase (Fluticasone)

Zithromax (Azithromycin)

Mail penetration rate for new business

Rx volume

(in millions)

Mail opportunity

Annualized new business

2004A

2005A

2006

2007 YTD

35%

32%

18%

40%

88 MM

87 MM

~90 MM

1.9 MM

3.2 MM

3.7 MM

~95 MM

1.2 MM

Medicare Part D

Continued growth

Incremental retiree

net income contribution

2007 assumptions

for Medco PDP

34%–36% mail penetration rate

57%–59% generic dispensing rate

$0.20–$0.26 per share

incremental growth

$100–$135MM gross margin

$3–$8MM SG&A

$60–$75MM net income

Lives: PDP 75k –

125k*, Other 7.2MM –

7.5MM

* Reflects reduced level of dual-eligibles

Accredo Health Group

2007 Outlook

Revenue to reach nearly $6B

EPS contribution of $0.23 to

$0.26 per share

1.8

2.6

3.6

4.0

2003

2004

2005

9 mos

2006

Specialty pharmacy revenue

($B)

Share guidance

7.5MM

2007 Estimated options dilution

300MM –

305MM

3Q06 Guidance for 2006

295MM –

300MM

2007 Guidance

(12.5MM)

2007 Estimated share repurchases

Weighted average

diluted shares

Share repurchase program

Board authorized program for up to $2.5B through 2008

Repurchases to date:

Utilizing 10b5-1 and discretionary trading in

non-blackout periods

Periodic review by Board of Directors for trading guidelines

and additional repurchase authorizations

$272.5MM

5.2MM

4Q06 to date

Inception to date

3Q06

$71.8MM

1.2MM

$1.5B

28.1MM

Cost

* As of close of business 11/28/06

2007 guidance

$3.12–$3.19

$2.76–$2.83

2007

guidance

15%–19%

$2.69–$2.72

EPS (adj. for

intangible

amortization)

17%–21%

$2.33–$2.36

EPS

2006

guidance*

growth

* Excludes legal settlements charge

Growing Today

Innovating for a Greater Tomorrow

Growing

Today,

Innovating

for a Greater

Tomorrow

Growing

the Bottom

Line

Growing

Specialty

Pharmacy

Growing

in the

Marketplace

Optimizing

Prescriptions

Medco is a registered trademark of Medco Health Solutions, Inc.

Growing Specialty Pharmacy

Timothy C. Wentworth

President & Chief Executive Officer,

Accredo Health Group, Inc.

Analyst Day

November 30, 2006

24%

15%

18%

28%

Specialty pharmacy market opportunity

Medical Benefit (approx $27-32B)*

Cancer

Anemia

Neutropenia

Rheumatoid

arthritis

All other

19%

15%

19%

28%

Pharmacy Benefit (approx $22-27B)*

Cancer

Multiple

sclerosis

Growth hormone

All other

Rheumatoid

arthritis

Anemia

Hepatitis C

Deep vein

thrombosis/

Anti-coagulation

*Source: Medco estimated $54 billion national market opportunity; data represents a sample of Medco clients with

available integrated data, 2005.

Biotechnology drug pipeline

Over 400 drugs in development

1995

2000

2006E

2010E

Specialty pharmacy drug spend*

($ in billions)

CAGR 1995-2010 = 34.1%

More than 400 drugs

in development pipeline*

Source: Medco Estimates

*Excludes

oncology

spend

approximately

$20

$25B

*Source:

PhRMA

2005

Survey:

Medicines

Development,

Oct.

2006

Some medicines are listed in more than one category.

45%

drugs

clinical

trials

for

new

indications

are

specialty

21%

pipeline

drugs

through

2007

are

specialty

210

Cancer/related conditions

Infectious diseases

Autoimmune disorders

AIDS/HIV

Cardiovascular disease

Neurologic disorders

Diabetes/related

Digestive disorders

Respiratory disorders

Blood disorders

Genetic disorders

Skin disorders

Eye conditions

Growth disorders

Transplantation

Other

Specialty pharmacy growth opportunity

78%

Accredo

* Based on 2005 results

Sources: AIS Specialty Pharmacy: Stakeholders, Strategies & Markets (October 2006). Company estimates,

Wall Street research.

Specialty Pharmacy Market

Walgreens

Caremark

CVS/PharmaCare

Express/Priority

Market Share*

Incremental opportunity to manage major medical spend as

clients transition to Accredo/Medco platform

Remaining

Pharmacy

Opportunity

Specialty channel

Current

Penetration

63%

37%

Specialty pharmacy –

dynamic landscape

Significant move underway in marketplace from "unmanaged"

fee-for-service providers to managed/PBM platform

Large health plans attempting to manage and dispense specialty

drugs themselves

Smaller unaligned specialty pharmacies under significant

pressure as market replatforms

Manufacturers and physicians are concerned about the ability of

any one provider to be able to service large, non-rare disease

patient populations

With the Accredo acquisition, Medco became the largest provider

of specialty care

Industry replatforming

from

fee-for-service to managed care

Accredo is THE

superior choice for plans

and manufacturers in a changing market

Initial partnership

Purchase of ACDO

Most complete

access to limited

distribution drugs

Accredo is THE

superior choice for plans

and manufacturers in a changing market

Initial partnership

Purchase of ACDO

Most complete

access to limited

distribution drugs

42 MM lives

$0.23–$0.26 2007

contribution

First Therapeutic

Resource Center (TRC)

Accredo is THE

superior choice for plans

and manufacturers in a changing market

Initial partnership

Purchase of ACDO

Most complete

access to limited

distribution drugs

7 new limited

distribution

drugs

Flolan

exclusivity

Oncology

Formulary

Manufacturer

services

Major med;

preferred provider

initiatives

42 MM lives

$0.23–$0.26 2007

contribution

First Therapeutic

Resource Center (TRC)

New limited distribution medications 2006

Renal cell carcinoma

Bayer

4. Nexavar

MDS (myelodysplastic syndrome)

Celgene

3. Revlimid

Iron overload due to blood

transfusions

Novartis

2. Exjade

Hunter syndrome

Pompe disease

Immunoglobin replacement

therapy

IGF-1 deficiency

Treatment

Shire

7. Elaprase

Genzyme

6. Myozyme

ZLBehring

5. Vivaglobin

Tercica

1. Increlex

Manufacturer

Drug Name

$150 MM revenue to Accredo in 2007

Pricing/value equation

drives client opportunity

Leverage preferred

provider

Consolidate targeted

major medical volume

More restricted

Consolidate all

Rx specialty volume

Accredo

In-network

Value

Utilization management:

e.g., reduced days supply; off-label usage

Therapy management for Accredo scripts

Utilization management; consistent therapy mgmt

Improved discount

Preferred brand opportunity

Utilization management; consistent therapy mgmt

Improved discount

Preferred brand opportunity

Eliminate targeted major med/physician mark-up

Accredo’s growth opportunity

is multi-faceted

New client wins for

combined organization

New client wins for

combined organization

Medco book of business

Narrowing network

Major med opportunity

Medco book of business

Narrowing network

Major med opportunity

“Long list”

Accredo clients

“Long list”

Accredo clients

Productivity

enhancements

Productivity

enhancements

New products

Oncology

Formulary –

biogenerics

Formulary –

biogenerics

Services

Acquisition/M&A

Growing Today

Innovating for a Greater Tomorrow

Growing

Today,

Innovating

for a Greater

Tomorrow

Growing

the Bottom

Line

Growing

Specialty

Pharmacy

Growing

in the

Marketplace

Optimizing

Prescriptions

Medco is a registered trademark of Medco Health Solutions, Inc.

Analyst Day

November 30, 2006

Optimizing Prescriptions

Laizer Kornwasser

Senior Vice President,

Channel and Generic Strategy

Generic growth opportunity

$51B

†

brand drugs off-patent through 2011

Off-patent compounding effect

($ Billions, prorated)

14.0

7.1

5.9

12.3

1.9

12.5

2006

2007

2008

2009

2010

2011

$51B in US off-patent

Brand-name drug spend

($ Billions, annualized)

Zocor

Zoloft

Norvasc

Ambien

Fosamax

Zyrtec

Risperdal

Prevacid

Lexapro

Aciphex

Flomax

6.5

11.4

3.7

7.1

5.9

12.3

1.5

1.9

11.4

7.1

5.9

5.7

12.3

8.2

2006

2007

2008

2009

2010

2011

Toprol XL

6.5*

15.1

†

Pravachol

Flonase

Mobic

Plavix

Lipitor

†

Excludes Plavix, $2.7B annual US spend

* Includes Plavix, $2.7B annual US spend

Source:

U.S.

Drug

spend

estimates

are

based

IMS

Health

data

for

2005,

compounded

amounts

prorated

for

mid-term

expirations.

Brand

drug

expirations

based

expected

patent

expiration

dates

current

October

2006.

Changes

may

occur

due

litigation,

patent

challenges,

etc.

Effexor

Protonix

Avandia

Topamax

22.5

†

30.1

†

38.2

†

46.8

†

Financial

incentives

Education &

communication

Step

therapy

rules

How will Medco maximize

the opportunity?

Financial

incentives

Education &

communication

Step

therapy

rules

Financial incentives

Financial

incentives

Education &

communication

Step therapy

rules

Incentive formulary /

preferred drug alignment

Incentive formulary /

preferred drug alignment

Mail alignment

Member pay

the difference

Member pay

the difference

Co-pay

waivers

Co-pay

waivers

Impact of “member pays the difference”

(MPD) on generic rates

Source: Based on a sample of Medco data.

Generic

dispensing

rates

Financial

incentives

Education &

communication

Step therapy

rules

Managed

Sensitive

No MPD program

49.5%

55.9%

57.2%

Financial incentives drive results

National account case study

2005 retail: $10/25/35/50

2006 retail: $10/30/40/55

Added member

pay the difference

Client saved 4%

of drug spend

Co-pay changes

GDR

Financial

incentives

Education &

communication

Step therapy

rules

55.4%

3Q2005

62.4%

3Q2006

$1B

Mail alignment will allow our clients

to maximize on its generic opportunity

Generic substitution rate

New chronic generics over the past 2 years

Days

Financial

incentives

Education &

communication

Step therapy

rules

Note: Savings based on the gap over the past 2 years and applying it to the generics listed on earlier slide

75%

80%

85%

90%

95%

100%

120

150

180

210

240

270

300

330

365

Mail

Retail

Financial

incentives

Education &

communication

Step

therapy

rules

Awareness deepens members’

understanding of generics

Pre-script

mailings

Pre-script

mailings

Welcome kit

Generic education

Open enrollment/

Benefit information

Post-script

mailings

Post-script

mailings

Targeted drug mailings/

Consumer Reports

Mail conversion programs

EOB’s

Internet

Savings Advisor

Email communications

Generic resource center

Drug information

Benefit and co-pay information

Trusted

advisor

Trusted

advisor

Therapeutic Resource Centers

My Rx Choices

Optimal Health

Financial

incentives

Education &

communication

Step therapy

rules

Financial

incentives

Education &

communication

Step Therapy

Rules

Consumer

Reports

Best

Buy

Drug

Ratings

provide

proven,

effective,

and

affordable

options

for

consumers

who

take

maintenance

medications.

These

independent

ratings

for

safety,

effectiveness

and

relative

cost

drugs

help

consumers

make

better

decisions

about

the

alternatives

available

them

and

empower

informed

conversations

with

their

physicians.

The

content

free

consumers

and

available

its

entirety

crbestbuydrugs.org.

Through

non-exclusive

partnership

with

Medco,

Consumer

Reports

will

making

their

ratings

available

Medco’s

clients’

members.

New generics education for statins

Ask your doctor to consider prescribing a lower-cost

generic alternative.

Talk to your doctor

and ask whether simvastatin, lovastatin, or

pravastatin would be right for you.

If your doctor agrees, ask for a new prescription.

* Consumers Union:Consumer Reports Best Buy Drugs Report: The Statins: Comparing Safety, Effectiveness, and Price.

June 2006. Available at http://www.crbestbuydrugs.org/drugreport_DR_Statins.html.

†

This product also contains extended-release niacin.

simvastatin (Zocor)

lovastatin

(Mevacor)

pravastatin (Pravachol)

Lipitor

Mevacor

Pravachol

Vytorin

Zocor

Advicor

®†

Altoprev

Crestor

Lescol

Ask your doctor whether one of these lower-cost

generic medications would be right for you ...

If you are using one of these

brand-name drugs…

Financial

incentives

Education &

communication

Step therapy

rules

Our communications drive results

Non-formulary PPI drug

Strategy

Results

Impact on GDR

Educational mailing

150,000 members

Non-formulary drug market share dropped 50%

Generic omeprazole up 30%

Source: Medco data.

Financial

incentives

Education &

communication

Step therapy

rules

Financial

incentives

Education &

communication

Step

therapy

rules

Step therapy

Co-pay and coverage options drive generics and lower

cost brands

Effective communication

High success rate with minimal member noise

Financial

incentives

Education &

communication

Step therapy

rules

Step therapy for new and existing users:

$222

$181

Pre-Program

Post-Program

42%

Pre-Program

Post-Program

58%

91%

Pre-Program

Post-Program

PPI case study

79% decrease in non-preferred market share

57% increase in formulary compliance

Clients cost/Rx reduced by 18.4% for the category

–

Generic share increased by 53%

Avg

79%

Avg

79%

Non-preferred

market share

Formulary compliance

Net cost per Rx

Financial

incentives

Education &

communication

Step therapy

rules

Avg

18%

Avg

18%

Avg

57%

Avg

57%

Medco has an opportunity to capitalize

on our PPI success

0.8

3.8

6.9

2004

2005

2006

Financial

incentives

Education &

communication

Step therapy

rules

PPI step therapy enrollment

(Member lives MM)

Optimizing

prescriptions

Lower client

drug trend

Increase

EBITDA

per Rx

A win-win solution

Growing Today

Innovating for a Greater Tomorrow

Growing

Today,

Innovating

for a Greater

Tomorrow

Growing

the Bottom

Line

Growing

Specialty

Pharmacy

Growing

in the

Marketplace

Optimizing

Prescriptions

Medco is a registered trademark of Medco Health Solutions, Inc.

Growing in the Marketplace

Brian T. Griffin

Group President

Health Plans Group

Analyst Day

November 30, 2006

eslide -

P3330 -

Medco Analyst Day 2006

2006 selling season:

Winning on superior execution and innovation

Medco’s unique value

proposition:

Single-digit drug trend

Award-winning client

and member service

Flexibility and

customization

Technology leadership

Industry-leading client

analytical tools

Clinical innovation

Market-focused

structure:

Better execution

High client satisfaction

Enhanced client

experience

Award-winning

member service

Alignment and

Execution:

Driving generics,

formulary, mail,

specialty, UM

programs,

Medicare solutions

and integrated

data solutions

Transparency

Optimizing client

savings while

improving margin

2006

Results in the marketplace

Net-new sales 2006, to date

(includes Medicare)

$3.3B

2006 renewals (above $10B renewals in 2005)

$6.3B+

New annualized business for 2007

$1.2B+

New annualized business in 2006

$3.7B+

Client retention rate –

average contract

length 4.5 years

97.5%

Medco

New 2006 business

28%

10%

11%

23%

28%

$3.7B+ annualized

new business wins in 2006

Average mail penetration

by client group

2006 new

business

2006

existing

Key Accounts

24%

41%

National

26%

52%

Health Plans

28%

Systemed

24%

41%

Medicare PDP

11%

Substantial growth opportunity

to immediately increase mail

service and mail GDR

Medco

New 2006 business by incumbent

2006 annual drug spend

(% by incumbent)

29%

31%

18%

20%

Caremark

Express

Scripts

Wellpoint

Other

NMHC

Medco

New 2007 business

$1.2B+ annualized

new business wins for 2007

2007 annual drug spend

(% by incumbent)

31%

42%

27%

26%

33%

Caremark

Express

Scripts

Wellpoint

Other

NMHC

Health Plans

Key

Accounts

Employer

Leveraging Medco specialty solutions

for market and margin expansion

Growing specialty across all market groups

Maintaining pricing discipline

Meeting the demand for integrated pharmacy solutions and

component specialty services

Driving incremental value by focusing on:

–

Superior patient care

–

Reduced claim costs

–

Narrowing network access and product selection

–

Capturing specialty pricing for major medical claims

Creating new opportunity to partner with Health Plans:

–

Clinically superior rare disease therapy management

–

Broadest access to limited distribution products

–

Industry-leading therapy management system

Leveraging Medco specialty solutions

to win across all markets

$113M annualized new name specialty business in 2006

16%

31%

34%

19%

Health Plans

National

Accounts

Key Accounts

Systemed

Delivering client value

Drug trend management

6.4E

10.2

12.9

8.5

14.0

16.4

5.4

19.7

16.4

15.9

15.3

11.9

8.0

7.7

10.7

0.0

5.0

10.0

15.0

20.0

25.0

1999

2000

2001

2002

2003

2004

2005

9M YTD

2006

Medco book of business

CMS estimates

Note: 2006 includes Part D/MA-PD lives; does not reflect subsidy payments

2005/2006 CMS numbers are projected

Winning on superior execution

and innovation

Consumer Driven Health (CDH)

Market leader in CDH functionality

–

Most sophisticated data integration capabilities

–

Industry-recognized thought leadership and expertise

Consumerism

–

Most advanced member engagement tools in the industry,

driving an enhanced member experience

–

Experienced, knowledgeable member service representatives

and seamless member service between Medco and carriers

–

Seamless web integration

Medco is the industry CDH thought leader

Winning on superior execution

and innovation

Captured 1/3 of the CDH market

Seamless integration of medical and pharmacy administration

with over 30 carriers including all the national players and the

CDH market leaders (e.g., UHG/Definity, Aetna,

Wellpoint/Lumenos, CIGNA, etc.)

Real-time capability vs. industry norm of batch processing

By 2007 we will have over 100 clients and approximately

3 million members

With 3MM lives by 2007, Medco is the clear

industry leader among PBMs in the CDH market

Teachable

moments

Trusted

advisor

Capturing marketplace advantage

through clinical leadership and innovation

Incentives

Most CDHPs

deliver only

this

Personalized

member

engagement

Capturing marketplace advantage

through clinical leadership and innovation

My Rx Choices

Maximizing client and member savings through a proactive review

of maintenance medications and facilitation to mail service

Therapeutic Resource Centers

Reducing pharmacy and total healthcare costs through a more

expert, personalized approach to pharmacy care

Optimal Health

Reducing total healthcare costs through a personalized member

engagement model

Client savings opportunity

–

Generics

–

Preferred medications

–

Preferred pharmacy

–

Improved overall healthcare

–

Preferred behaviors

Clinical product solutions’

growth accelerated in 2006,

and significant room for continued growth exists

24%

13%

2005

2006E

Total revenue

Growth

opportunity

captured

85%

15%

Clinical & therapeutic solutions

products annual growth rate

Estimated market potential

within Medco’s existing

book-of-business

Our clinical and therapeutic solutions offer

new market growth opportunities

7.2M

11.3M

2005

2006E

Launched

Optimal

Health

in collaboration with

Healthways, Inc. in May 2006

Existing Medco client base

offers $300M+ in potential

product revenue

Over 40 active prospects

57%

growth

RationalMed

safety solutions

Lives enrolled (year-end)

Disease management & wellness

Medco’s brandable difference

Client-centric focus

Client-facing organizational structure enhances our ability to

meet the needs of the individual client

Operational excellence and reliability

Consistent record of award winning service quality,

flexibility and customization, mail superiority, technology

leadership, client-facing analytical tools, and member

engagement functionality

Member engagement/clinical innovation

Creating market-leading solutions to maximize client savings

and improve clinical outcomes

Growing Today

Innovating for a Greater Tomorrow

Growing

Today,

Innovating

for a Greater

Tomorrow

Growing

the Bottom

Line

Growing

Specialty

Pharmacy

Growing

in the

Marketplace

Optimizing

Prescriptions

Medco Health Solutions, Inc.

Selected Information

(Unaudited)

(In millions, except for per share data)


	Quarter Ended September 24, 2005
	Net Income			Net Income per Diluted Share
Pro forma 2005 with stock option expense effect:
As reported	$	156.7		$	0.53
Pro forma stock option expense effect, net		(14.2	)		(0.05	)

Pro forma, including stock option expense effect	$	142.5		$	0.48


	Quarters Ended
	September 30, 2006			September 24, 2005
Earnings per share reconcilation
Net income per diluted share (2005 pro forma to include stock option expense)	$	0.62		$	0.48
Adjustment for the amortization of intangible assets		0.09			0.09

Adjusted net income per diluted share (2005 pro forma to include stock option expense)	$	0.71		$	0.57

Medco Health Solutions, Inc.

Selected Information

(Unaudited)

(In millions, except for per share data)


	Full Year Ended December 30, 2006 *(1)*				Full Year Ended December 29, 2007
	Low End		High End		Low End			High End
Earnings Per Share Guidance Reconciliation:
Estimated net income per diluted share	$	2.33	$	2.36	$	2.76		$	2.83
Estimated adjustment for the amortization of intangible assets		0.36		0.36		0.36			0.36

Estimated adjusted net income per diluted share	$	2.69	$	2.72	$	3.12		$	3.19

2007 net income per diluted share growth over 2006						17	%		21	%
2007 adjusted net income per diluted share growth over 2006						15	%		19	%


	Full Year Ended December 31, 2005
Pro forma 2005 Earnings Per Share with stock option expense effect:
Net income per diluted share	$	2.05
Stock option expense effect, net		(0.21	)

Pro forma net income per diluted share including stock option expense effect	$	1.84


	Full Year Ended December 30, 2006 *(1)*
	Low End			High End
2006 estimated net income per diluted share (above)	$	2.33		$	2.36

2006 growth over pro forma 2005		27	%		28	%

(1)

2006 guidance excludes the one-time legal settlements charge of $0.33 per share.

Medco Health Solutions, Inc.

Selected Information

(Unaudited)

(In millions, except for EBITDA per adjusted prescription data)


	Quarter Ended September 30, 2006			Nine Months Ended September 30, 2006			Full Years Ended
	Quarter Ended September 30, 2006			Nine Months Ended September 30, 2006			December 31, 2005(1), (2)			December 25, 2004			December 27, 2003
EBITDA Reconciliation:
Net income	$	185.8		$	401.4		$	602.0		$	481.6		$	425.8
Add:
Interest and other (income) expense, net		20.9			49.8			39.9	(3)		59.9	(4)		23.7	(5)
Provision for income taxes		109.3	(6)		242.3	(6)		350.9	(7)		324.7			302.9
Depreciation expense		42.3			133.2			165.0			197.6	(8)		189.0	(8)
Amortization expense		54.6			163.9			192.5			179.9			94.3

EBITDA	$	412.9		$	990.6		$	1,350.3		$	1,243.7		$	1,035.7
One-time legal settlements charge(9)		—			162.6			—			—			—

EBITDA, excluding the one-time legal settlements charge	$	412.9		$	1,153.2		$	1,350.3		$	1,243.7		$	1,035.7

Adjusted prescriptions(10)		179.2			542.3			714.1			678.3			688.2

EBITDA per adjusted prescription	$	2.30		$	1.83		$	1.89		$	1.83		$	1.50

EBITDA per adjusted prescription, excluding the one-time legal settlements charge	$	2.30		$	2.13		$	1.89		$	1.83		$	1.50

(1)

53-week fiscal year. All other fiscal years are comprised of 52 weeks.

(2)

Includes Accredo’s operating results commencing August 18, 2005, the date of acquisition.

(3)

2005 includes the write-off of deferred debt issuance costs amounting to $2.7 million associated with the debt refinancing for the Accredo acquisition and accelerated term loan payments.

(4)

2004 includes the write-off of deferred debt issuance costs amounting to $5.5 million associated with a debt refinancing.

(5)

2003 excludes a one-time gain of $11 million from the sale of a minority equity investment in a nonpublic company.

(6)

2006 includes a $6.6 million nonrecurring tax benefit reflected in the third quarter, as well as a $12.5 million nonrecurring tax benefit reflected for the nine months.

(7)

2005 includes a $25.7 million nonrecurring tax benefit reflected for the full year.

(8)

For 2004 and 2003, this includes accelerated depreciation of $24.5 million and $13.3 million, respectively, associated with facility closures that took place in 2004.

(9)

This represents the one-time pre-tax legal settlements charge of $162.6 million recorded in the first quarter of 2006. This charge reflected an agreement with the U.S. Attorney’s Office for the Eastern District of Pennsylvania to settle three previously disclosed pending federal legal matters. The settlement agreements for these three matters were signed and approved by the District Court on October 23, 2006.

(10)

Estimated adjusted prescription volume equals the majority of mail-order prescriptions multiplied by 3, plus retail prescriptions. These mail-order prescriptions are multiplied by 3 to adjust for the fact that they include approximately 3 times the amount of product days supplied compared with retail prescriptions.

Medco Health Solutions (MHS) Inactive 8-KRegulation FD Disclosure