1000 - Unaudited Consolidated B
1000 - Unaudited Consolidated Balance Sheet (USD $) | ||
In Millions | Jun. 30, 2009
| Dec. 31, 2008
|
Current assets: | ||
Cash and cash equivalents | $3,661 | 530.7 |
Restricted cash and investments | 6.3 | 4.8 |
Short-term investments | 1,202 | 8.4 |
Receivables, net | 1148.1 | 1155.9 |
Inventories | 180.2 | 203 |
Deferred taxes | 119.7 | 118.2 |
Prepaid expenses and other current assets | 24.4 | 22.8 |
Total current assets | 6341.7 | 2043.8 |
Property and equipment, net | 222 | 222.2 |
Goodwill | 2882.4 | 2881.1 |
Other intangible assets, net | 327 | 332.6 |
Other assets | 31 | 29.5 |
Total assets | 9804.1 | 5509.2 |
Current liabilities: | ||
Claims and rebates payable | 1354.1 | 1380.7 |
Accounts payable | 480.4 | 496.4 |
Accrued expenses | 404.3 | 420.5 |
Current maturities of long-term debt | 620 | 420 |
Current liabilities of discontinued operations | 6.9 | 4.1 |
Total current liabilities | 2865.7 | 2721.7 |
Long-term debt | 3471.9 | 1340.3 |
Other liabilities | 382.3 | 369 |
Total liabilities | 6719.9 | 4,431 |
Stockholders' Equity: | ||
Preferred stock | 0 | 0 |
Common stock | 3.5 | 3.2 |
Additional paid-in capital | 2228.5 | 640.8 |
Accumulated other comprehensive income | 9.9 | 6.2 |
Retained earnings | 3767.7 | 3,361 |
Common stock in treasury at cost | -2925.4 | (2,933) |
Total stockholders' equity | 3084.2 | 1078.2 |
Total liabilities and stockholders' equity | 9804.1 | 5509.2 |
1100 - Parenthetical Data for C
1100 - Parenthetical Data for Consolidated Balance Sheet (USD $) | ||
Jun. 30, 2009
| Dec. 31, 2008
| |
Preferred stock par value per share | 0.01 | 0.01 |
Preferred stock shares authorized | 5,000,000 | 5,000,000 |
Preferred stock shares issued | 0 | 0 |
Preferred stock shares outstanding | 0 | 0 |
Common stock par value per share | 0.01 | 0.01 |
Common stock shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock shares issued | 345,296,000 | 318,958,000 |
Common stock shares outstanding | 274,415,000 | 247,649,000 |
Common stock in treasury at cost, shares | 70,881,000 | 71,309,000 |
2000 - Unaudited Consolidated S
2000 - Unaudited Consolidated Statement of Operations (USD $) | |||||||||||||||||||
In Millions, except Share data | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 | |||||||||||||||
Revenues | 5503.3 | [1] | 5530.8 | [1] | 10926.1 | [1] | 11021.6 | [1] | |||||||||||
Cost of revenues | 4909.3 | [1] | 5028.2 | [1] | 9,798 | [1] | 10052.9 | [1] | |||||||||||
Gross profit | 594 | 502.6 | 1128.1 | 968.7 | |||||||||||||||
Selling, general and administrative | 214 | 185.9 | 392.6 | 357.5 | |||||||||||||||
Operating income | 380 | 316.7 | 735.5 | 611.2 | |||||||||||||||
Other (expense) income: | |||||||||||||||||||
Undistributed loss from joint venture | 0 | -0.1 | 0 | -0.4 | |||||||||||||||
Interest income | 1.2 | 3.3 | 2.1 | 8.7 | |||||||||||||||
Interest expense | -77.6 | (17) | -94.7 | -40.3 | |||||||||||||||
Income before income taxes | 303.6 | 302.9 | 642.9 | 579.2 | |||||||||||||||
Provision for income taxes | 111.6 | 111 | 236.2 | 209.1 | |||||||||||||||
Net income from continuing operations | 192 | 191.9 | 406.7 | 370.1 | |||||||||||||||
Net income (loss) from discontinued operations, net of tax | 0.3 | -1.7 | 0 | -2.8 | |||||||||||||||
Net income | 192.3 | 190.2 | 406.7 | 367.3 | |||||||||||||||
Weighted average number of common shares outstanding during the period: | |||||||||||||||||||
Basic: | 256.6 | 248.7 | 252.1 | 250.5 | |||||||||||||||
Diluted: | 258.8 | 252 | 254.3 | 253.9 | |||||||||||||||
Basic earnings per share: | |||||||||||||||||||
Continuing operations | 0.75 | 0.77 | 1.61 | 1.48 | |||||||||||||||
Discontinued operations | $0 | -0.01 | $0 | -0.01 | |||||||||||||||
Net earnings | 0.75 | 0.76 | 1.61 | 1.47 | |||||||||||||||
Diluted earnings per share: | |||||||||||||||||||
Continuing operations | 0.74 | 0.76 | 1.6 | 1.46 | |||||||||||||||
Discontinued operations | $0 | -0.01 | $0 | -0.01 | |||||||||||||||
Net earnings | 0.74 | 0.75 | 1.6 | 1.45 | |||||||||||||||
[1]Includes retail pharmacy co-payments of $721.1 million and $824.1 million for the three months ended June 30, 2009 and 2008, respectively and $1,543.8 million and $1,711.8 million for the six months ended June 30, 2009 and 2008, respectively. |
3000 - Unaudited Consolidated S
3000 - Unaudited Consolidated Statement of Changes in Stockholders' Equity (USD $) | ||||||
In Millions, except Share data | Common Stock
| Additional Paid-in Capital
| Accumulated Other Comprehensive Income
| Retained Earnings
| Treasury Stock
| Total
|
Shares, Issued, Beginning Balance at Dec. 31, 2008 | 318.9 | |||||
Stockholders' Equity Attributable to Parent, Beginning Balance at Dec. 31, 2008 | 3.2 | 640.8 | 6.2 | $3,361 | ($2,933) | 1078.2 |
Net income | 0 | 0 | 0 | 406.7 | 0 | 406.7 |
Other comprehensive income,foreign currency translation adjustment | 0 | 0 | 3.7 | 0 | 0 | 3.7 |
Comprehensive income | 0 | 0 | 3.7 | 406.7 | 0 | 410.4 |
Issuance of common stock, net of costs, value | 0.3 | 1568.8 | 0 | 0 | 0 | 1569.1 |
Issuance of commons stock, net of costs, shares | 26.4 | |||||
Changes in stockholders' equity related to employee stock plans, value | 0 | 18.9 | 0 | 0 | 7.6 | 26.5 |
Changes in stockholders' equity related to employee stock plans, shares | 0 | |||||
Stockholders' Equity Attributable to Parent, Ending Balance at Jun. 30, 2009 | 3.5 | 2228.5 | 9.9 | 3767.7 | -2925.4 | 3084.2 |
Shares, Issued, Ending Balance at Jun. 30, 2009 | 345.3 |
4000 - Unaudited Consolidated S
4000 - Unaudited Consolidated Statement of Cash Flows (USD $) | ||
In Millions | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Cash flows from operating activities: | ||
Net income | 406.7 | 367.3 |
Net loss (income) from discontinued operations, net of tax | 0 | 2.8 |
Net income from continuing operations | 406.7 | 370.1 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 49.7 | 49.6 |
Deferred financing fees | 57.7 | 1.2 |
Non-cash adjustments to net income | 42.5 | 50.3 |
Claims and rebates payable | -26.6 | 64 |
Other net changes in operating assets and liabilities | -11.9 | -52.4 |
Net cash provided by operating activities-continuing operations | 518.1 | 482.8 |
Net cash (used in) provided by operating activities-discontinued operations | -0.1 | 3.6 |
Net cash flows provided by operating activities | 518 | 486.4 |
Cash flows from investing activities: | ||
Purchase of short-term investments | -1198.9 | 0 |
Purchases of property and equipment | (32) | -30.1 |
Other | 5.4 | -0.7 |
Net cash used in investing activities | -1225.5 | -30.8 |
Cash flows from financing activities: | ||
Proceeds on long-term debt, net of discounts | 2491.6 | 0 |
Net proceeds from stock issuance | 1569.1 | 0 |
Deferred financing fees | -69.5 | 0 |
Repayment of long-term debt | -160.1 | (120) |
Tax benefit relating to employee stock-based compensation | 2.9 | 25.4 |
Treasury stock acquired | 0 | -494.4 |
Net proceeds from employee stock plans | 2.2 | 15.3 |
Net cash provided by (used in) financing activities | 3836.2 | -573.7 |
Effect of foreign currency translation adjustment | 1.6 | -0.8 |
Net increase (decrease) in cash and cash equivalents | 3130.3 | -118.9 |
Cash and cash equivalents at beginning of period | 530.7 | 434.7 |
Cash and cash equivalents at end of period | $3,661 | 315.8 |
6000 - Summary of significant a
6000 - Summary of significant accounting policies | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Summary of significant accounting policies | |
Note 1 – Summary of significant accounting policies | Our significant accounting policies normally included in financial statements prepared in conformity with generally accepted accounting principles, have been omitted from this Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission (SEC).However, we believe the disclosures contained in thisForm 10-Q are adequate to make the information presented not misleading when read in conjunction with the notes to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December31, 2008, as revised and filed with the SEC on Form 8-K on June 2, 2009, to reflect our change in segment reporting as described in Note 10 to the accompanying consolidated financial statements. We changed our reportable segments to Pharmacy Benefit Management (PBM) and Emerging Markets(EM) during the first quarter of 2009 (see Note 10).For a full description of our accounting policies, refer to the Notes to Consolidated Financial Statements included in our Current Report on Form 8-K dated June 2, 2009. We believe the accompanying unaudited consolidated financial statements reflect all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Unaudited Consolidated Balance Sheet at June 30, 2009, the Unaudited Consolidated Statement of Operations for the three months and six months ended June 30, 2009and 2008, the Unaudited Consolidated Statement of Changes in Stockholders Equity for the six months ended June 30, 2009, and the Unaudited Consolidated Statement of Cash Flows for the six months ended June 30, 2009 and 2008.Operating results for the three months and six months ended June 30, 2009 are not necessarily indicative of the results that may be expected for the year ending December31,2009. New Accounting Guidance.In December 2007, the Financial Accounting Standards Board ( FASB) issued Financial Accounting Standard ( FAS)141R, Business Combinations and FAS 160, Business Combinations and Noncontrolling Interests (FAS 141Rand FAS 160, respectively).FAS 141R and FAS 160 are effective for fiscal years beginning after December 15, 2008.FAS 141R changes the definitions of a business and a business combination, and will result in more transactions recorded as business combinations.Certain acquired contingencies will be recorded initially at fair value on the acquisition date, transaction and restructuring costs generally will be expensed as incurred and in partial acquisitions, companies generallywill record 100 percent of the assets and liabilities at fair value, including goodwill.In April 2009, the FASB issued Financial Staff Position (FSP) FAS 141R-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination that Arise from Contingencies which amends and clarifies the accounting for assets acquired and liabilities assumed in a business combination that arise from contingencies.ThisFSP is effective as of the start of the first quarter 2009.We will account for all future business combinations under the provisions of FAS 141R. In April 2008, the FASB issued FSP FAS 142-3, Determination of the Useful Life of Intangible Assets which intends t |
6010 - Fair value measurements
6010 - Fair value measurements | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Fair value measurements | |
Note 2 – Fair value measurements | In September2006, the FASB issued FAS 157, Fair Value Measurements.FAS 157 defines fair value, establishes guidelines for measuring fair value and expands disclosures regarding fair value measurements.FAS 157 will apply whenever another standard requires (or permits) assets or liabilities to be measured atfair value.This standard does not expand the use of fair value to any new circumstances. We adopted FAS 157 as of January1, 2008, and adopted the application of the statement to nonrecurring nonfinancial assets and nonfinancial liabilities as of January 1, 2009.Our adoption of FAS157 did not have a material impact on our consolidated financial position, results of operations or cash flows. FAS 157 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than quoted prices for similar assets and liabilitiesin active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore, requiring an entity to develop its own assumptions. Financial assets accounted for at fair value on a recurring basis at June 30, 2009 include cash equivalents of $3,551.6 million, restricted cash and investments of $6.3 million, short-term investments of $1,198.9 million and trading securities of $14.5 million (included in other assets).These assets are carried at fair value basedon quoted market prices for identical securities (Level 1 inputs). As of June 30, 2009, short-term investments includes our investment in the Reserve Primary Fund (the Primary Fund), which is a money market fund.The estimated fair value of our investment in the Primary Fund was $2.9 million as of June 30, 2009.The net asset value of the Primary Fund decreased below $1 per share as a result of the Primary Funds valuing at zero its holdings of debt securities by Lehman Brothers Holdings, Inc., which filed for bankruptcy on September 15, 2008.Accordingly, we recognized an unrealized loss of $2.0 million in the third quarter of 2008 and we reclassified the Primary Fund investment from cash and cash equivalents to prepaid expenses and other current assets in the unaudited consolidated balance sheet.We assessed the fair value of the underlying collateral for the PrimaryFund through evaluation of the liquidation value of assets held by the Primary Fund, which is classified within Level 3 of the fair value hierarchy.There were no assets or liabilities classified as Level 3 prior to the third quarter of 2008. We received cash distributions from the Primary Fund of $38.9 million during 2008 and $5.5 million during the six months ended June 30, 2009.We expect to receive future distributions as the Primary Fundss assets mature or are sold.If the markets for short-term securities remain illiquid, there may be further declinesin the value of our remaining investments.To the extent we determine there is a further decline in fair value, we may recognize additional losses in future periods up t |
6020 - Acquisition
6020 - Acquisition | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Acquisition | |
Note 3 – Acquisition | On April 9, 2009, we entered into a Stock and Interest Purchase Agreement (the Acquisition Agreement) with WellPoint, Inc., an Indiana corporation (WellPoint).The Acquisition Agreement provides that, upon the terms and subject to the conditions set forth in the Acquisition Agreement, we will purchase all of the shares andequity interests of three WellPoint subsidiaries, NextRx, Inc., NextRx Services, Inc., and NextRx, LLC, that provide pharmacy benefit management services, for $4.675 billion.We may, in our discretion, deliver up to $1.4 billion of the purchase price in the form of common stock (valued based on average closing price over the 60 days preceding the closing of the acquisition) in lieu of cash, although we do not currently intend to do so.Additionally, the parties have agreed to make an electionunder Section 338(h)(10) of the Internal Revenue Code with respect to the transaction. We estimate the value of such election to us to be between $800 million and $1.2 billion dependent upon the discount factor and tax rate assumed.At the closing of the acquisition, we will enter into a 10-year contract with WellPoint under which we will provide pharmacy benefits management services to WellPoint and its designated affiliates. WellPoints NextRx subsidiaries provide PBM services to approximately 25 million Americans and manage more than 265 million adjusted prescriptions annually.We anticipate that the transaction will close in the 4th quarter of 2009 subject to certain closing conditions.The transaction will be accounted for under the provisions of FAS 141R Business Combinations.Weintend to use the net proceeds from recent debt and equity offerings to finance a portion of the $4.675 billion purchase price for the acquisition (see Note 6 and Note 7). Our obligation to consummate the acquisition is subject to certain additional conditions, including (i) the receipt of all necessary government approvals (except for those which would not be material to NextRx as a whole) and the receipt of any state insurance law approvals; and (ii) the completion of certain transition and integration projects to our reasonable satisfaction (this condition will be deemed to be satisfied from and after December 31, 2009).WellPoints obligation to consummate the acquisition is subject to certain other conditions, including the receipt of all necessary government consents and approvals (except for those which would not materially affect WellPoints non-PBM business) without the imposition of a burdensome term or condition on WellPoints post-closing operations.Thewaiting period under the Hart-Scott-Rodino Antitrust Improvements Act in connection with the acquisition expired on May 27, 2009. On July 22, 2008, we completed the acquisition of the Pharmacy Services Division of MSC Medical Services Company (MSC), a privately held PBM, for a purchase price of $251.0 million, which includes a purchase price adjustment for working capital and transaction costs. MSC is a leader in providing PBM services to clients providing workerscompensation benefits.The transaction was accounted for under the provisions of FAS 141, Business Combinations.The purchase price was funded |
6030 - Discontinued operations
6030 - Discontinued operations | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Discontinued operations | |
Note 4 – Discontinued operations | On June 30, 2008, we completed the sale of CuraScript Infusion Pharmacy, Inc. (IP), our infusion pharmacy line of business, for $27.5 million which includes a pre-tax gain of approximately $7.4 million in 2008.Rights to certain working capital balances related to IP were not sold and are retained on the balance sheet as of June30, 2009.For a period of time, we will continue to generate cash flows and statement of operations activity on assets and liabilities of discontinued operations as these working capital balances wind down, which are not expected to be material. The results of operations for IP are reported as discontinued operations for all periods presented in the accompanying Unaudited Consolidated Statement of Operations.Additionally, for all periods presented, assets and liabilities of the discontinued operations are segregated inthe accompanying Unaudited Consolidated Balance Sheet, and cash flows of our discontinued operations are segregated in our accompanying Unaudited Consolidated Statement of Cash Flow. On April 4, 2008, we completed the sale of Custom Medical Products, Inc. and recorded a pre-tax loss of approximately $1.3 million in the second quarter of 2008. 9 Certain information with respect to the discontinued operations for the three months and six months ended June 30,2009 and 2008 is summarized as follows: Three Months Ended, June 30, Six Months Ended, June 30, (in millions) 2009 2008 2009 2008 Revenues $ - $ 18.9 $ - $ 44.7 Net income (loss) from discontinued operations, net of tax 0.3 (1.7 ) - (2.8 ) Income tax expense (benefit) from discontinued operations 0.2 (0.5 ) - (0.1 ) |
6040 - Earnings per share
6040 - Earnings per share | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Earnings per share | |
Note 5 – Earnings per share | Basic earnings per share (EPS) is computed using the weighted average number of common shares outstanding during the period.Diluted EPS is computed in the same manner as basic earnings per share but adds the number of additional common shares that would have been outstanding for the period if the dilutive potential common shares had been issued.The following is thereconciliation between the number of weighted average shares used in the basic and diluted EPS calculations for all periods: Three Months Ended June 30, Six Months Ended June 30, (in millions) 2009(1) 2008 2009(1) 2008 Weighted average number of common shares outstanding during the period Basic EPS(2) 256.6 248.7 252.1 250.5 Dilutive common stock equivalents: Outstanding stock options, stock-settled stock appreciation rights (SSRs), restricted stock units, and executive deferred compensation units(2) 2.2 3.3 2.2 3.4 Weighted average number of common shares outstanding during the period Diluted EPS(2) 258.8 252.0 254.3 253.9 (1) The increase in weighted average number of common shares outstanding for the three and six months ended June 30, 2009 for Basic and Diluted EPS resulted from the 26.45 million shares issued in the common stock offering on June 10, 2009 (see Note 7). (2) Excludes awards of 2.0 million and 1.7 million for the three months ended June 30, 2009 and 2008 , respectively, and 2.1 million and 1.1 million for the six months ended June 30, 2009 and 2008, respectively.These were excluded because their effect was anti-dilutive. The above shares are all calculated under the treasury stock method in accordance with FAS 128, Earnings per Share. |
6050 - Financing
6050 - Financing | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Financing | |
Note 6 – Financing | Long-term debt consists of: June 30, December 31, (in millions) 2009 2008 Term A loans due October 14, 2010 with an average interest rate of 1.7% at June 30, 2009 $ 800.0 $ 960.0 Term-1 loans due October 14, 2010 with an average interest rate of 1.0% at June 30, 2009 800.0 800.0 5.25% senior notes due 2012, net of unamortized discount 999.2 - 6.25% senior notes due 2014, net of unamortized discount 995.7 - 7.25% senior notes due 2019, net of unamortized discount 496.7 - Revolving credit facility due October 14, 2010 - - Other 0.3 0.3 Total debt 4,091.9 1,760.3 Less current maturities 620.0 420.0 Long-term debt $ 3,471.9 $ 1,340.3 At June 30, 2009, our credit facility includes $800.0 million of Term A loans, $800.0 million of Term-1 loans and a $600.0 million revolving credit facility.The revolving credit facility (none of which was outstanding as of June 30, 2009) is available for general corporate purposes.During the first six month of 2009,we made scheduled payments of $160.0 million on the Term A loan.The maturity date of the credit facility is October 14, 2010. The credit facility requires us to pay interest periodically on the London Interbank Offered Rates (LIBOR) or base rate options, plus a margin.The margin over LIBOR will range from 0.50% to 1.125%, depending on our consolidated leverage ratio or our credit rating.Under the credit facility we are required to pay commitmentfees on the unused portion of the $600.0million revolving credit facility.The commitment fee will range from 0.10% to 0.25% depending on our consolidated leverage ratio or our credit rating. At June 30, 2009, the weighted average interest rate on the facility was 1.4%.The credit facility contains covenants which limit the indebtedness we may incur, the common shares we may repurchase, and dividends we may pay.The repurchase and dividend covenant applies if certain leverage thresholds are exceeded.Thecovenants also include a minimum interest coverage ratio and a maximum leverage ratio.At June 30, 2009, we believe we are in compliance with all covenants associated with our credit facility. On June 9, 2009, we issued $2.5 billion of Senior Notes, including $1 billion aggregate principal amount of 5.250% Senior Notes due 2012; $1 billion aggregate principal amount of 6.250% Senior Notes due 2014 and $500 million aggregate principal amount of 7.250% Senior Notes due 2019.The Senior Notes require interest to be paidsemi-annually on June 15and December 15.We may redeem some or all of each series of Senior Notes prior to maturity at a price equal to the greater of (1) 100% of the aggregate principal amount of any notes being redeemed, plus accrued and unpaid interest; or (2) the sum of the present values of the remaining scheduled payments of principal and interest on the notes being redeemed, not including unpaid interest accruedto the redemption date, discounted to the redemption date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the treasury rate plus 50 basis points with respect to any 2012 notes, 2014 notes and 2019 notes bei |
6060 - Common Stock
6060 - Common Stock | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Common Stock | |
Note 7 – Common stock | On June 10, 2009, we completed a public offering of 26.45 million shares of common stock, which includes 3.45 million shares sold as a result of the underwriters exercise of their overallotment option in full at closing, at a price of $61.00 per share.The sale resulted in net proceeds of $1,569.1 million after giving effect tothe underwriting discount and issuance costs of $44.4 million.We intend to use the net proceeds for the acquisition of WellPoints NextRx pharmacy benefit management business. |
6070 - Stock based compensation
6070 - Stock based compensation plans | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Stock-Based Compensation Plans | |
Note 8 – Stock-based compensation plans | Under our stock-based compensation plans, we have issued stock options, SSRs, restricted stock awards, restricted stock units, and performance share awards.Awards are typically settled using treasury shares.The maximum contractual term of stock options and SSRs granted under the 2000 Long Term Incentive Plan (LTIP)is 10 years.Due to the nature of the awards, we use the same valuation methods and accounting treatments for SSRs and stock options.During the first six months of 2009, we granted 2,409,000 stock options with a weighted average fair market value of $14.50.The SSRs and stock options have three-year graded vesting. During the first six months of 2009, we granted to certain officers and employees approximately 287,000 restricted stock units and performance shares with a weighted average fair market value of $46.43.The restricted stock units have three-year graded vesting and the performance shares cliff vest at the end of the three years.The number of performance shares that ultimately vest is dependent upon achieving specific performance targets.Prior to vesting, these shares are subject to forfeiture to us without consideration upon termination of employment under certain circumstances.The total number of non-vested restricted stock and performance share awards was 594,000 at June 30, 2009 and 518,000 at December 31, 2008. We recognized stock-based compensation expense of $12.6 million and $10.8 million in the three months ended June 30, 2009 and 2008, respectively, and $22.3 million and $19.8 million in the six months ended June 30, 2009 and 2008.Unamortized stock-based compensation as of June 30, 2009 was $36.4 million for stock options and SSRs and $24.6 million for restricted stock and performance shares. The fair value of options and SSRs granted is estimated on the date of grant using a Black-Scholes multiple option-pricing model with the following weighted average assumptions: Three Months Ended June 30, Six Months Ended June 30, 2009 2008 2009 2008 Expected life of option 3-5 years 3-5 years 3-5 years 3-5 years Risk-free interest rate 1.5%-2.4% 2.8%-3.4% 1.3%-2.4% 1.9%-3.4% Expected volatility of stock 39% 31% 35%-39% 30%-31% Expected dividend yield None None None None |
6080 - Contingencies
6080 - Contingencies | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Contingencies | |
Note 9 – Contingencies | We accrue self-insurance reserves based upon estimates of the aggregate liability of claim costs in excess of our insurance coverage.Reserves are estimated using certain actuarial assumptions followed in the insurance industry and our historical experience.The majority of these claims are legal claims and our liabilityestimate is primarily related to the cost to defend these claims.We do not accrue for settlements, judgments, monetary fines or penalties until such amounts are probable and estimable, in compliance with FAS 5, Accounting for Contingencies.Under FAS 5, if the range of possible loss is broad, the liability accrued should be based on the lower end of the range.We received a $15.0 million insurance recovery in the three months ended June 30, 2009 for previously incurred litigationcosts. 12 While we believe our services and business practices are in compliance with applicable laws, rules and regulations in all material respects, we cannot predict the outcome of these matters at this time.An unfavorable outcome in one or more of these matters could result in the imposition of judgments, monetary fines or penalties, or injunctive or administrative remedies.We can give no assurance that such judgments, fines and remedies, and future costs associated with legal matters, would not have a material adverse effect on our financial condition, our consolidated results of operations or our consolidated cash flows. |
6090 - Segment Information
6090 - Segment Information | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Segment information | |
Note 10 – Segment information | During the first quarter of 2009, we changed our organizational structure with new strategic business segments: PBM and EM.Previously, we had reported segments of PBM and Specialty and Ancillary Services (SAAS).Our chief operating decision maker assessed performance under this new structure during the first quarterof 2009.The Specialty Pharmacy operations, which were previously in our SAAS segment, have been operationally integrated with our PBM operations in order to maximize its growth and improve efficiency.Additionally, the following services which were previously in SAAS were operationally integrated into the PBM: bio-pharma services including reimbursement and customized logistics solutions and fulfillment of prescriptions to low-income patients through pharmaceutical manufacturer- sponsored and company-sponsored generic patient assistance programs. The EM segment primarily consists of the following services: distribution of pharmaceuticals and medicals supplies to providers and clinics, distribution of fertility pharmaceuticals requiring special handling or packaging, distribution of sample units to physicians and verification of practitioner licensure and healthcare account administration and implementation of consumer-directed healthcare solutions. EM services represent opportunity for growth and aligning them together under strong leadership will benefit these key investments. As noted previously, we report segments on the basis of services offered and have determined we have two reportable segments: PBM and EM.Our domestic and Canadian PBM operating segments have similar characteristics and as such have been aggregated into a single PBM reporting segment. Operating income is the measure used by our chief operating decision maker to assess the performance of each of our operating segments.The following table presents information about our reportable segments for the three months and six months ended June 30, 2009 and 2008.The 2008 segment disclosures have beenreclassified in the table below to reflect the new segment structure.The discontinued operations described in Note 4 have been excluded from the table. 13 (in millions) PBM EM Total For the three months ended June 30, 2009 Product revenue: Network revenues(1) $ 3,232.9 $ - $ 3,232.9 Home delivery and specialtyrevenues 1,867.2 - 1,867.2 Other revenues 19.7 304.4 324.1 Service revenues 69.6 9.5 79.1 Total revenues 5,189.4 313.9 5,503.3 Depreciation and amortization expense 22.0 3.1 25.1 Operating income 377.0 3.0 380.0 Interest income 1.2 Interest expense (77.6 ) Income before income taxes 303.6 Capital expenditures 17.6 0.8 18.4 For the three months ended June 30, 2008 Product revenue: Network revenues(1) $ 3,299.2 $ - $ 3,299.2 Home delivery and specialtyrevenues 1,789.9 - 1,789.9 Other revenues 13.0 352.2 365.2 Service revenues 65.5 11.0 76.5 Total revenues 5,167.6 363.2 5,530.8 Depreciation and amortization expense 2 |
6100 - Condensed Consolidating
6100 - Condensed Consolidating Financial Information | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Condensed Consolidating Financial Information | |
Note 11 - Condensed consolidating financial information | Our Senior Notes are fully and unconditionally guaranteed by our 100% owned domestic subsidiaries, other than certain regulated subsidiaries including Express Scripts Insurance Company.The following condensed consolidating financialinformation has been prepared in accordance with the requirements for presentation of such information.Effective June 30, 2008, CuraScript Infusion Pharmacy, Inc. was sold and effective April 4, 2008, Custom Medical Products, Inc. was sold and are included as discontinued operations in those of the non-guarantors. Subsequent to the acquisition of Pharmacy Services Division of MSC Medical Services Company (MSC)on July 22, 2008 and Connect Your Care, LLC (CYC) on October 10, 2007, the assets, liabilities and operations of the 100% owned domestic subsidiaries have been included in those of the guarantors. The following presents the condensed consolidating financial information separately for: (i) Express Scripts, Inc. (the Parent Company), the issuer of the guaranteed obligations; (ii) Guarantor subsidiaries, on a combined basis, as specified in the indentures related to Express Scripts obligations under the notes; (iii) Non-guarantor subsidiaries, on a combined basis; (iv) Consolidating entries and eliminations representing adjustments to (a) eliminate intercompany transactions between or among the Parent Company, the guarantor subsidiaries and the non-guarantor subsidiaries, (b) eliminate the investments in our subsidiaries and (c) record consolidating entries; and (v) Express Scripts, Inc. and subsidiaries on a consolidated basis. 15 Condensed Consolidating Balance Sheet (in millions) Express Scripts, Inc. Guarantors Non-Guarantors Eliminations Consolidated As of June 30, 2009 Cash and cash equivalents $ 3,596.3 $ 22.3 $ 42.4 $ - $ 3,661.0 Short-term investments 1,202.0 - - - 1,202.0 Receivables, net 767.0 373.8 7.3 - 1,148.1 Other current assets 89.9 237.5 3.2 - 330.6 Current assets $ 5,655.2 $ 633.6 $ 52.9 $ $ 6,341.7 Property and equipment, net 169.2 47.1 5.7 - 222.0 Investments in subsidiaries 3,818.8 - - (3,818.8 ) - Intercompany (770.6 ) 829.5 (58.9 ) - - Goodwill 252.5 2,607.4 22.5 - 2,882.4 Other intangible assets, net 37.0 286.0 4.0 - 327.0 Other assets 25.0 3.0 3.0 - 31.0 Total assets $ 9,187.1 $ 4,406.6 $ 29.2 $ (3,818.8 ) $ 9,804.1 Claims and rebates payable $ 1,353.5 $ 0.6 $ - $ - $ 1,354.1 Accounts payable 464.0 14.5 1.9 - 480.4 Accrued expenses 126.5 274.0 3.8 - 404.3 Current maturities of long-term debt 620.0 - - - 620.0 Current liabilities of discontinued operations - - 6.9 - 6.9 Current liabilities $ 2,564.0 $ 289.1 $ 12.6 $ - $ 2,865.7 Long-term debt 3,471.9 - - - 3,471.9 Other liabilities 67.0 314.0 1.3 - 382.3 Stockholders equity 3,084.2 3,803.5 15.3 (3,818.8 ) 3,084.2 Total liabilitie |
Document Information
Document Information | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Document Information [Line Items] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | 2009-06-30 |
Entity Information
Entity Information (USD $) | ||
6 Months Ended
Jun. 30, 2009 | Jun. 30, 2008
| |
Entity Information [Line Items] | ||
Entity Registrant Name | Express Scripts, Inc. | |
Entity Central Index Key | 0000885721 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Public Float | $15,264,424,000 | |
Entity Common Stock, Shares Outstanding | 274,415,000 |