WASHINGTON – Express Scripts reported a 12 per cent drop in its first-quarter earnings Tuesday, saying its prescription sales were hit by severe winter weather and slower-than-expected enrolment in the new public insurance exchanges.
The nation’s largest pharmacy benefits manager scaled back its 2014 earnings guidance to between $4.82 and $4.94 per share, citing several customer delays which pushed back implementation of service to early 2015 from mid-2014. The company had previously forecast earnings in the range of $4.88 to $5 per share.
Company shares fell 5 per cent in after-hours trading.
State-based health insurance exchanges opened for enrolment last fall, and customers could start using income-based tax credits to buy coverage that started in January. But problems with a key conduit for those exchanges, the HealthCare.gov website, left many exchange customers frustrated and slowed enrolment. Insurers worried that, at least initially, the only people who would persist through the problems and sign up for coverage would be sick customers who generate lots of claims.
Earlier this month, Express Scripts released some data showing that patients from the health care overhaul’s new insurance exchanges have been more likely to use expensive specialty drugs for chronic conditions. The company said that just over 1 per cent of the prescriptions it processed from exchange enrollees in January and February were for specialty medicines. That compares with less than 1 per cent of patients with commercial health plans.
Pharmacy benefits managers, or PBMs, run prescription drug plans for employers, insurers and other customers. They process mail-order prescriptions and handle bills for prescriptions filled at retail pharmacies.”
The St. Louis company said it earned $328 million, or 42 cents per share, in the three months that ended March 31. That was down from $373 million, or 45 cents per share, in last year’s quarter. Adjusted profit was 99 cents per share. Revenue fell 8.8 per cent to $23.68 billion.
Analysts forecast, on average, earnings of $1.01 per share on about $23.83 billion in revenue.
Express Scripts spent $29.1 billion to buy fellow pharmacy benefits manager Medco in 2012. The deal created a company big enough to handle the prescriptions of more than one in three Americans.
CEO and Chairman George Paz said Express Scripts will spend the rest of 2014 focused on integrating its operations and technology “and pivot our resources to focus on organic growth.”
Express Scripts Holding Co. shares fell $3.51, or 4.9 per cent, to $67.50 in late trading. Shares closed earlier up 42 cents to $71.01.