About OUTSIDE MEDCO HEALTH SOLUTIONS, LLC

Express Scripts Holding knows that its customers like their medicine delivered quickly. The company administers more than a billion prescription drug benefits of tens of millions of health plan members in the US and Canada. Members have access to a network of about 69,000 retail pharmacies, as well as the company's own mail-order pharmacies. On behalf of its insurer clients, Express Scripts processes claims for prescriptions, designs drug benefit plans, and offers such services as specialty drug delivery, disease management programs, and consumer drug data analysis. The firm merged with rival Medco Health Solutions in 2012, creating the largest pharmacy benefits management (PBM) company in North America.

Operations

The company and the industry have grown rapidly, as PBMs strive to save money for their customers by negotiating good deals for prescription drugs with networks of retail pharmacies, as well as by encouraging the use of cheaper generic drugs and home-delivered medications. Express Scripts also works to save clients' money by offering disease and medication management programs to help members avoid unnecessary medical expenses.

Express Scripts provides services in four areas: benefit choices, drug choices, pharmacy choices, and health choices. Its Health Decision Science method combines behavioral science, clinical specialization, and actionable data to help customers make the best choices. Additionally, the firm's Therapeutic Resource Center provides access to specialist pharmacies and nurses to fill in gaps in health care.

The company operates in two segments: PBM (which accounts for some 98% of revenues) and Other Business Operations. The PBM segment covers an array of benefits services including personalized medicine, case coordination, specialized pharmacy care, home delivery, retail network pharmacy administration, benefit design consultation, and public exchange offerings such as Medicare and Medicaid.  The Other Business Operations segment includes subsidiaries CuraScript Specialty Distribution (which distributes specialty medicines to treat rare and orphan diseases directly to providers and hospitals in the US) and United BioSource (scientific consulting services for pharmaceutical manufacturers).

Geographic Reach

Express Scripts has 66 owned or leased PBM facilities throughout the US and three owned or leased PBM facilities in Canada. In the Other Business Operations segment, it owns or leases 50 locations throughout the US and five more locations in Canada and Europe.

The company also has eight home delivery pharmacies and 35 specialty branch pharmacies.

Sales and Marketing

The company's clients include HMOs and other health insurers, self-insured businesses, managed care organizations, third-party administrators, employers, workers' compensation plans, government health programs, and union benefit plans throughout North America. In 2014 Express Script's top two clients were Anthem (14% of total revenues) and the Department of Defense (12%).

Financial Performance

The company’s revenues jumped by 103% in 2012 and 11% in 2013 thanks to higher network and home delivery and specialty revenues as the result of Medco acquisition and inflation on branded drugs. However, revenue declined 3% to $100.9 billion due to a decline in network revenues related to lower claims volume and the loss of UnitedHealth Group as a customer (previously one of the top three customers) in 2013. The decline was partially offset by growth in home delivery and specialty revenues as a result of inflation on branded drugs.

Despite the dip in sales, net income continued its upward trend in 2014, growing 9% to pass the $2 billion mark, thanks to factors including lower provisions for income taxes.

Cash flow from operations decreased 4% to $4.5 billion that year as more cash was used for accounts payable.

Strategy

The PBM industry has undergone rapid consolidation, a factor that has allowed Express Scripts to grow its sales and profits exponentially in recent years. Express Scripts had historically expanded its PBM operations through smaller purchases. It has also grown through organic measures, such as the addition of new customer contracts, as well as the extension of existing contracts to add new services. In addition, Express Scripts occasionally establishes new operating centers. In 2014 it opened a new office in St. Louis, and a new high-volume pharmacy fulfillment facility in Florence, New Jersey. The company has also been investing some $75 million in the improvement of two new data centers in Chicago and Piscataway, New Jersey.

Another element of Express Scripts' PBM business that is experiencing higher consumer demand is specialty pharmacy subsidiary CuraScript. Through its primary operating unit, CuraScript Specialty Pharmacy (or CuraScript SP), the subsidiary provides home distribution of specialty prescriptions (primarily injectable biotech drugs that require special packaging and handling); the unit also delivers to doctors' offices and other health care providers. 

The company has also exited certain lines of business as it grows in the PBM arena. In 2013 it sold parts of its United BioSource consulting operations related to health economics, research, and analytics. It also sold its acute therapies infusion business, which was part of its PBM segment.

In 2014 Express Scripts partnered with Walgreen to sell its 2015 Medicare Prescription Drug Plans (PDP) through Walgreen stores.

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OUTSIDE MEDCO HEALTH SOLUTIONS, LLC

1810 Lincoln Hwy
North Versailles, PA 15137-2512
Phone: 1 (412) 829-3200
Fax: 1 (412) 829-3286
www.medco.com

Stats

  • Employer Type: Public
  • Chairman: Jay Goldman
  • Vice President And Chief Information Officer: Teresa Gunn
  • Senior Manager Business Analysis: Sujata Patel

Major Office Locations

  • North Versailles, PA

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