Transcript Slide 1

INVESTORS’ MEETING — ORLANDO, FL
 2005 Express Scripts, Inc.
All Rights Reserved
April 28, 2005
1
Forward-Looking Statements
Statements included in this presentation or in the oral
comments made as part of this presentation may
contain forward-looking statements, including but not
limited to statements of the Company’s plans,
objectives, expectations or intentions, that involve
risk and uncertainties.
The Company’s actual results may differ significantly
from those projected or suggested in any forwardlooking statement due to a variety of factors, which
are discussed in detail in the Company’s filings with
the Securities and Exchange Commission.
 2005 Express Scripts, Inc.
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2
Agenda
Express Scripts’ Value Proposition
Express Scripts’ Value Proposition George Paz
Engaging the Market Larry Zarin
Multi-Faceted Growth Ed Ignaczak
Managing the Supply Chain Chip Casteel
Providing a Cost-Effective Dom Meffe
Solution for Specialty Drugs
Break
Adding Value Through David Lowenberg, Doug Porter
Service Performance Patrick McNamee
Medicare: An Opportunity for Our Clients Agnès Rey-Giraud
Delivering Superior Financial Ed Stiften
Results and ROIC
Positioning for the Future George Paz
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3
Express Scripts’ Value Proposition
George Paz
President and CEO
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4
What We Do
We Make the Use of
Prescription Drugs Safer
and More Affordable
But more importantly …
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… Is How We Do It
A Business Model Based on An
Unwavering Commitment to
Alignment
• Supported by Best in Class
‐ People
‐ Service
‐ Technology
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What Are the Results?
•
•
•
•
•
•
High Client and Patient Satisfaction
Superior Trend Management
The Validation of Our Business Model
Innovative Culture
State-of-the-Art Facilities
Outstanding Track Record
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7
What Are the Savings?
Retail, Clinical.
Paid by
Formulary
Cash Customer And Rebate
at Pharmacy Savings 24% Mail Savings 6%
Retail Pharmacy Cash Price
Express Scripts Client Savings
Express Scripts Client Costs
C
O
S
T
Paid by
Express Scripts
Clients
Total Savings 30%
Availability of Proven PBM Cost Management Tools
Will Produce 20%–25% Savings (CBO)
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8
Why This Model Works
Increased Savings
Opportunities:
Moving to preferred brands, mail and generics
Client
Member
Moving to preferred brands, mail and generics
Increased
Profit
Opportunities:
Express Scripts
Moving to preferred brands, mail and generics
Retail NonPreferred Brand
Retail
Preferred
Brand
Home
Delivery
Generics
We Make Money by Saving Clients and Members Money
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9
Strong Management Team
Executive
Role
Tom Boudreau
Chip Casteel
Ed Ignaczak
David Lowenberg
Patrick McNamee
Dom Meffe
Chris Pawlowicz
Doug Porter
Agnès Rey-Giraud
Ed Stiften
Larry Zarin
Legal
Supply Chain Management
Sales and Account Management
Operations
Information Technology
Specialty Pharmacy
Human Resources
Patient and Client Services
Research and Product Management
Finance
Marketing & Corporate Communications
 2005 Express Scripts, Inc.
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10
Recent Additions to Strong
Corporate Governance
Board Member
Gary Benanav
Frank Borelli
Maura Breen
Nicolas Lahowchic
Thomas Mac Mahon
John Parker
George Paz
Samuel Skinner
Seymour Sternberg
Barrett Toan
Howard Waltman
Norman Zachary*
Principal Occupation
Vice Chairman, New York Life Insurance
Ret. CFO, Marsh & McLennan
Senior Vice President, Verizon
President & CEO, Limited Logistics Services
Chairman & CEO, LabCorp
Chairman, Care Capital, LLC
President & CEO, Express Scripts
Ret. Chairman, President & CEO, USF Corp
Chairman, President & CEO, New York Life Insurance
Ret. CEO, Express Scripts
Director, Chairman of the Corp. Governance Cmtte.
Ret. President, Logica Data Architects
*Director Emeritus
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11
Express Scripts’ Value Proposition
Engaging the Market
Larry Zarin
Vice President
Marketing and Corporate Communications
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Common Cause
• Keeping the prescription-drug benefit off the
endangered list
• Member buy-in versus fear of member disruption
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Fact
• We have the strategies and tools to
control drug spend with no compromise
to health outcomes.
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Value Proposition: Complete Alignment
• Reduce pharmacy costs … eliminate waste
• No compromise to health outcomes … drive generics,
low-cost brands
and home delivery
• Maximize member satisfaction … no cost shifting
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15
“Tell me and I’ll forget. Show me
and I may not remember. Involve me
and I will understand.”
— Native American Saying
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The Express Scripts Way
• Face-to-face
• Workshops, symposiums, seminars
– AKA “Business Theater”
Great for brand, relationships,
retention and new sales.
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Express Scripts’ Value Proposition
Multi-Faceted Growth
Ed Ignaczak
Senior Vice President
Sales and Account Management
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Capturing New Business
Service
Improvements
New
Programs to
Meet Market
Demands
Highest
Generic Fill
Rate
Capturing
New
Business
Medicare D
Support
Services
Formulary
Mgmt and
Flexibility
Transparency
and Client
Alignment
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Client Satisfaction Steadily Improving
• Service and satisfaction metrics have increased consistently
quarter over quarter since 2003 with an early spike in 2005
100%
95%
90%
2003
85%
2004
80%
1q05
75%
70%
65%
60%
ESI Performance
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Exceed
Expectations
Likelihood to
Recommend
Likelihood to
Renew
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Renewals
• Service and Satisfaction have contributed to strong
retention rates in ’04 and YTD ’05
Top 100 Accounts
Through 2006 (# of Clients)
Secured 90
Pending 6
Loss 4
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21
2006 Upsell Pipeline is Strong
• Strong track record of
success
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9,000
Sold
Weighted Pipeline
8,000
7,000
('000 Lives)
• Significant potential to
continue to manage client
trends in key product
categories
• New products continue
to be developed and
rolled out
10,000
6,000
5,000
4,000
3,000
2,000
1,000
0
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Capturing New Business
• Excellent new business
growth for 2003 & 2004
• Pipeline for 2005/2006
is strong with more
than $9 Billion in
revenues
• Managed care ‘jumbo’
pipeline down as MCO’s
focus on Medicare
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12,000,000
New Business
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0
2003 Wins
2004 Wins
Total Pipeline
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Why Express Scripts?
•
•
•
•
Alignment With Clients
Our People
Generics
Specialty
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Exceeding
Client
Expectations
24
Express Scripts’ Value Proposition
Managing the Supply Chain
Chip Casteel
Senior Vice President
Supply Chain
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How Do We Get the Best Value
From Our Suppliers?
• By enhancing and harnessing the forces of
competition
• By rewarding “winners”
• By reinvigorating competition at regular
intervals
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Traditional Approach to Suppliers
Pharma
Harness Forces
– “Preferred Savings Grid”
Reward Winners
– Strengthen benefit designs
– Narrow formularies
– Move market share
Reinvigorate Competition
– Rebid every 2 years
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Improvement in PSG Benefit Design
Restricted
Standard
100%
80%
56%
50%
(3-Tier / Closed)
30%
29%
25%
70%
71%
75%
2002
2003
2004
41%
60%
40%
20%
44%
50%
59%
0%
1999
2000
2001
75% of PSG utilization occurs within
Restricted Benefit Designs
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2003-05 Formulary Analysis
Count of Brand Drugs on Formulary
Within Competitive Product Categories
350
300
Brand
Formulary
Drugs in
CPC Structure
328
275
250
200
150
100
50
0
2003 National Preferred
2005 National Preferred
• Narrower formularies provide greater value to clients
• Focus on lower net cost drugs — 16% of brand drugs
removed from formulary
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Traditional Approach to Suppliers
Pharma
Retail
Harness Forces
Harness Forces?
– “Preferred Savings Grid”
– Broad networks for maximum
locations
Reward Winners
Reward Winners?
– Narrow formularies
– No “Losers”
– Strengthen Benefit
Designs
– No market share movement
– Move Market Share
Reinvigorate Competition?
Reinvigorate Competition
– Custom Networks – value for
– Rebid every 2 years
specific clients
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Retail Strategy For the Future
It’s not all about locations anymore ...
Its about good access and client savings.
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Express Scripts’ Broadest Network
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Broad Network Without Two Large Chains
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Network Management
Greater Management
States
CA
NY
TX
FL
PA
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Available
Pharmacies
Most
Inclusive
Network
Most
Restrictive
Network
TRICARE
Access
Minimum
5,644
4,444
4,236
4,020
2,970
5,071
4,224
3,821
3,670
2,825
3,881
1,829
1,827
1,966
1,687
283
300
579
469
432
34
Home Delivery Wholesale Suppliers
• Brand Pharmaceuticals: All purchased from
licensed wholesalers ($4.1B in 2004)
• Generic Pharmaceuticals: 95+% purchased
direct from manufacturers ($250M in 2004)
• Express Scripts does not purchase from
repackagers or from alternate source suppliers
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Wholesaler Purchases
(Brand Pharmaceuticals)
• Product delivered twice daily to all
Express Scripts Pharmacies
• 99% service level for top 200 drugs, 98%
for all other products
• Sites keep approximately 5-6 days
supply on hand
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Generic Pharmaceutical Purchasing
• Express Scripts purchases direct from
about 45 generic manufacturers
• Substantial savings compared to purchase
through wholesalers
• Sites keep approximately 30-day supply on
hand
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Annual Generic Bid Process
• All generic contracted products put out
to bid annually
• All generic manufacturers participate,
covering more than 2000 NDCs
• Annual bid process savings average
8%–10%
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Express Scripts’ Value Proposition
Providing a Cost-Effective
Solution for Specialty Drugs
Dom Meffe
President and CEO, CuraScript
Senior Vice President, Specialty Pharmacy
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Specialty Pharmacy — The
Storm
Gathering
Payers’ Dilemma: Looming Costs for
Chronic Conditions
Biotechnology Healthcare, April 2005
Biologics’ Looming Price Tag Has Payers
Retooling Pharmacy Coverage
Biotechnology Healthcare, April 2005
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What are Specialty Medications?
• High-cost oral, injectable, infused
or inhaled medications
• Self-administered or administered
by a healthcare provider
• Outpatient or a home setting
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Characteristics of Specialty
Medications
• Frequent dosage adjustments
• More severe side-effects than
traditional drugs
• Specialized storage, handling and
distribution requirements
• Narrow therapeutic range
• Require periodic laboratory or
diagnostic testing
• Cost in excess of $1,300
per 30 day supply
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National Specialty Product Mix
RSV
10%
IVIG 1%
Hemophilia 3%
Growth Hormone
Deficiency 3%
Chemotherapy 32%
Hepatitis C 7%
$12.53
PMPM
Psoriasis 12%
Chemotherapy
Supportive Care 15%
Rheumatoid Arthritis 8%
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Multiple Sclerosis 9%
43
Biotech - Rapid Growth
Traditional Spend
$210 Billion
Specialty Spend
2004 Total
$35 Billion
Outpatient
Pharmacy
18%
Spend $190
Billion
Specialty Spend
$73 Billion
2008 Projected
Outpatient
Pharmacy Spend
$283 Billion
Traditional Spend
$155 Billion
Number of Drugs
Sources:
IMS Data through November 2004
Wall Street Equity Research, 2004
CMS National Healthcare Expenditure
Projection: 2003 – 2013
Data on file: CuraScript.
600
600
500
300
240
200
0
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Biotech Drugs in Development
Biotech Drugs on the Market
369
400
100
26%
100
10
1990
29
1995
197
92
2000
Source:
PhRMA, International Federation of Pharmaceutical
Wholesalers & Biotech Industry Organization
2005
Estimated
44
Routes of Administration
Specialty Drug Pipeline
Oncology
46
17
• Late-stage development;
Phase II or later
• Majority are injectable
26
15*
4**
Rheumatoid Arthritis
20
5
8
7
5
Hepatitis C
9
5
8
1
Crohn’s Disease
Oral
10
2
1
Injectable
8
2
3
1
2
Multiple Sclerosis
IM
Unknown
2
Psoriasis
IV
SQ
7
7
7
5
2
Source: Express Scripts data
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Current Distribution Channels
Today’s Wild, Wild West
Typical Payer Injectable Spend
Retail
Pharmacy
15%-20%
Mail Order
Pharmacy
5%-10%
Specialty
Pharmacy
5%-25%
Unmanaged injectables result in:
• Inappropriate utilization
• Inconsistent clinical management
• Variable reimbursement
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Physician
Office
40%-60%
•
•
•
•
•
Outpatient
Hospital
15%-20%
Home Care
& Infusion
5%-10%
Higher cost for payer
Reduced effectiveness of treatment
Reduced patient care
Reduced member satisfaction
Physician panel frustration
46
Our Specialty Solution
CARE
The CuraScript
Difference
Making specialty
drug therapy more
effective and
affordable,
one patient at a time
COST SAVINGS
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CONVENIENCE
47
CuraScript Value Proposition:
A Legacy of Results
Current
cost
100%
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CuraScript Value Proposition:
A Legacy of Results
Lower unit
costs
Current
cost
100%
7.2%
savings
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CuraScript Value Proposition:
A Legacy of Results
Lower unit
costs
Clinical based
utilization
savings
Current
cost
100%
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7.2%
8.2%
savings
savings
50
CuraScript Value Proposition:
A Legacy of Results
Lower unit
costs
Clinical-based
utilization
savings
Lower
administrative
costs
Current
cost
100%
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7.2%
8.2%
5.9%
savings
savings
savings
51
CuraScript Value Proposition:
A Legacy of Results
Lower unit
costs
Clinical based
utilization
savings
Lower
administrative
costs
Current
cost
100%
7.2%
8.2%
5.9%
savings
savings
savings
21.3%
savings
overall
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52
CARELogic™ Patient Care Management
Care management programs designed to
specifically manage a disease state and the
related drug therapy
Tools of the program include:
•
•
•
•
•
•
•
•
•
•
Patient assessment and risk stratification
Integration of diagnostic and medical data
Dedicated clinical patient support team
Critical pathway management
Intense patient education
Adherence support for medication regimen compliance
Psychosocial assessment and counseling
Utilization and dose management
Delivery coordination of medication
Outcomes reporting
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CARELogic™ Clinical Management
Patient Admission
High risk Clinical
assessment and ongoing interventions
Initial Clinical
Assessment
Three follow-up
interventions in
the first six
months
Disease Specific
Clinical Pathway
Initiated
Patient Care Coordination
Ongoing Clinical
Assessment and
Interventions
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01/11/05
54
The Value of Clinical Management
Case Study
2003 Annualized Healthplan Savings
Total Plan Claims
CARELogic Savings
Savings as a %
of Claims
Q1
$3,557,786.20
$148,058.43
4.2%
Q2
$3,837,958.59
$324,653.25
8.5%
Q3
$4,041,100.73
$407,177.25
10.1%
Q4
$4,149,502.00
$363,805.78
8.8%
$15,755,208.51
$1,243,694.71
7.9%
410,000 Lives Healthplan 2003 Annual Clinical Management Summary —
Exclusive program with UM
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55
Proven Clinical Outcomes ...
CuraScript’s MSLogic™ Case Study
Clinical Management Strategies
Goal: Reduce number and severity of relapses by improving patient
compliance with their drug therapy
Interventions: Patient assessment, education, utilization management,
side effect management, physician consultation
Translates into substantial impact on patient's quality of life and
medical costs savings
Average
Exacerbations Per
Patient
Rate of Compliance
CuraScript
National
0.67
1.0
2004 Client Savings
Avoided Exacerbation Expenses:
92.2%
54%
$ 719,175.53
2004 Results of a 410,000 Life Health plan managed by CuraScript
Marks, A.S., Johnson, KE; Value in Health, 2002;5.
O'Brien et al, BMC Health Services Research, Sept. 2003
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Implementation Expertise
• Program and Benefit Design Consultation
• Communication Strategy
• Ongoing Account Management
Ongoing Account Management
Patient satisfaction
• Implement new
programs
•
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• Support to the client’s
 Client satisfaction
initiatives
• Continuous communication
strategies
57
CuraScript Client Network Mix
Mix 7%
Preferred
10%
Exclusive
40%
Open 43%
As Percent of Total Revenue
Source: Data on file
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Percentage of Plan Costs
CuraScript Penetration into
Express Scripts
100
90
80
82%
73%
70
70%
69%
66%
60
Retail
50
CuraScript
40
30
20
16%
10
0
2%
17%
20%
14%
13%
25%
Mail
9%
13%
11%
Q1 2004 Q2 2004 Q3 2004 Q4 2004 Q1 2005
Express Scripts Enterprise Book of Specialty Medications
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BREAK
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Express Scripts’ Value Proposition
Adding Value Through
Service Performance
David Lowenberg
Chief Operating Officer
Doug Porter
Senior Vice President, Client and Patient Services
Patrick McNamee
Senior Vice President and CIO
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Win-Win Solution for Clients, Patients
and Stockholders
EXPRESS SCRIPTS’ PROFITABILITY
Client Retention
Home Delivery Growth
People
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Client Implementation
Generic Promotion
Service
Cost Efficiencies
Technology
62
Our Success Starts With
Our People
Results
Organization
Competencies
People
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Adjusted Claims* (millions)
Focus on the Customer
Service
Improvement
Integration
600
500
400
Acquisitions
300
Organic
Growth
200
IPO
100
0
Jun- '92
92
'93
'94
'95
'96
'97
'98
Network claims
'99
'00
'01
'02
'03
'04
MailClaims*
•* Represents 3 times home delivery claims; home delivery claims are 90 days versus 30 days in the network
Service
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Technology Investment Portfolio
High
Home Delivery Growth
Generic Promotion
Profit
Cost Efficiencies
Client
Implementation
Low
Expected Value
High
Technology
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Client and Patient Services Alignment
Client Retention
Personal, specific service drives higher patient
satisfaction and ensures client retention
Home Delivery Growth
Personal provider for pharmacy home delivery
Cost Efficiencies
Focused investments to reduce costs and improve
service
Generics Promotion
Saving money for clients and patients
Client Implementation
Industry leading team and track record for new
clients and patients
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Client Retention Through Service
• Specific Attention, Personalization
and Care
• Deliver Value — Service, Savings
and Lower Cost
• Accepting Nothing Less Than
Satisfied
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Very
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Service Enhancements
Knowledge Management
• Integrating Critical Information Into Single Source
―
―
―
―
Prescription history
Patient-specific information
Plan benefits and features
Client-specific requirements
• Proactively Pushing Information
to Advocate’s Desktop
― Situational scripting
― Decision trees and case-based
reasoning
― Client-specific messaging
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Improved First
Call Resolution
+
Specific,
Patient-Focused
Outcomes
=
Patient Satisfaction
and Savings
68
Optimal Configuration for Home
Delivery Growth
Regional Model
Former Configuration
Bensalem
Troy
Patient
Scripts
Bensalem
Bensalem
Troy
Troy
Harrisburg
Harrisburg
Order
Processing
Fulfillment
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Current Configuration
Patient
Scripts
Bensalem
Harrisburg
Order
Processing
Fulfillment
69
Investment in Accuracy and Cost
Efficiencies
• Enterprise Contact Center Model
– High-quality, low-cost labor market
– Reduce attrition levels
– Create a service-centric environment
• St. Marys, GA - Q3 2004
• Pueblo, CO – Q3 2005
• Home Delivery Pharmacy Model
– Proprietary dispensing technology
– Engineered workflow
– Proactive, caring and trusted
patient consultation
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Generic Penetration Growth
• Exclusive focus on patient savings
through generics
• Physician and patient-friendly process
• Extend our industry leading conversion
rate, enhancing our bottom line
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Successful Client Implementations
•
•
•
•
Unparalleled experience
Proven processes and tools
Client customization
Invaluable results for client retention and
attracting new accounts
1/1/05 CLIENT IMPLEMENTATION COMMENTS
“I really appreciate all that you and your team are doing for us. Express Scripts is really going the
extra mile …”
“Way to start things off for 2005!”
“I've done more of these implementations than I care to count, and this one has been the
smoothest by far.”
“I'm impressed with how responsive you guys are … very refreshing!”
“This has been by far the easiest transition I have gone through ...”
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Information Systems Role
Knowledge
Management
Patients
Technology
Clients
Deliver efficient and highly available systems in
support of business vision, clients and patients
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Operational Excellence
•
Knowledge Management Tool
– Single-source solution for advocates to
retrieve critical client, plan and
contact-specific information
– Automatic, personal presentation of
patient information
Generics Promotion
Client Retention
Home Delivery Growth
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Patient Interface
• Express-Scripts.com for Members
– Promotes self-service, which drives cost efficiencies
– Vehicle to facilitate home delivery and
generics outcomes
– Direct involvement from patients in their
prescription drug benefit
Home Delivery Growth
Cost Efficiencies
Generics Promotion
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Client-Focused Tools
• Trend Central
SM
– Delivers claims experience to optimally manage trend
– Facilitates client transparency into our business
Client Implementation
Client Retention
Home Delivery Growth
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Win-Win Solution for Clients, Patients
and Stockholders
EXPRESS SCRIPTS’ PROFITABILITY
Client Retention
Home Delivery Growth
People
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Client Implementation
Generic Promotion
Service
Cost Efficiencies
Technology
77
Express Scripts’ Value Proposition
Medicare: An Opportunity for Our Clients
Agnès Rey-Giraud
Senior Vice President
Research and Product Management
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78
Medicare Part D 2006 Strategy
Grow with our clients by becoming
the most trusted Part D advisor for
both employers and health plans.
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79
The Most Trusted Advisor on Part D …
• Express Scripts — the Part D PBM of
choice for our managed care and carrier
clients
• World class consulting, modeling and
education for our employers and labor
clients
• Flawless execution in 2006 and beyond
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80
As the Dust is Settling, HMOs and
Carriers Have Clarity on Key Objectives
•
Protect current business
(Medicare Supplement, Medicare
Advantage, employer retirees)
•
Maximize growth on MA-PD, PDP
•
Manage adverse selection
•
Maintain flexibility for future
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Protect and grow
clients’ business by
managing risk and
positioning for 2007
and beyond
81
We’ll Help Our Clients
Be Competitive
• Plan Management
– Manage to lowest net cost while meeting
Medicare standards
• Quality and Coordination
– Assure quality care, driving out fraud and ensuring
coordination with other Medicare coverage
• Senior-Focused Solutions
– Communicate effectively to members and actively
managing those with high spend
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82
Employers and Unions Are Also
Gaining Clarity on Key Objectives
•
Reduce spend
•
Minimize retiree disruption
•
Minimize administrative burden
•
Avoid inherent risks of first year
•
Maintain flexibility for future
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Generate certain
and significant
savings today with
little or no changes,
while positioning for
2007 and beyond.
83
Employers Have Evaluated Options
Versus Objectives
Express
Subsidy
Reduce spend
Minimize retiree
disruption
Minimize administrative
burden
Avoid risk of first-year
program
Maintain flexibility for
future
 2005 Express Scripts, Inc.
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Employer
PDP
Wrap
Scripts
Dedicated
PDP
√
√
√
√
EXPRESS
SCRIPTS’
RECOMMENDATIONS FOR 2006
1. √If you qualify for the subsidy, TAKE
IT.
2. √If you don’t qualify, √
UPDATE or √
take a Wrap.
3. Regardless, position yourself for
√possible changes in 2007.
√
84
The Market Responded Favorably
To Our Approach
• Current Book
― Managed care and carrier clients: 36 MA-PDs and 14 PDPs
― Completed a Subsidy analysis for nearly 2,000 employer and
union clients
― Two employer clients considering becoming their own PDP
• New Business
– 2006
• Three new managed care clients won — 125,000 Medicare
lives
• Six prospective managed care prospects — 300,000
Medicare lives
– 2007
• Current pipeline growing as we speak
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85
Getting Ready For 2006
•
•
•
•
•
•
Clients’ PDP applications
Benefit design consulting and implementation
Supply chain and client contracting
People, technology, service
CMS compliant policies and procedures
Senior-focused communications and education
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86
Summary
• Well positioned for 2006
• Our 2006 offensive strategy is to help
our managed care and carrier clients
profitably grow their MA-PDs and PDPs
• We are building the foundation for 2007
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87
Express Scripts’ Value Proposition
Delivering Superior Financial Results
and ROIC
Ed Stiften
Senior Vice President and CFO
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88
Financial Overview
Q1 2005 Highlights
• 1Q EPS $1.14 — up 28% from last year
• Cash flow from operations of $138.1
million versus $97.8 million last year
• Record adjusted claims of 142 million, up
16% from last year
• Record generic utilization of 54% versus 49%
last year
• Gross profit per adjusted claim of $1.87
versus $1.77 last year (excluding nonrecurring gain last year)
• Increased 2005 EPS guidance
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89
Financial Overview
Quality of Earnings
$1.60
$1.40
Per share
$1.20
$1.00
(1)
(2)
$0.80
(3)
$0.60
$0.40
$0.20
$0.00
Q1
'01
Q2
'01
Q3
'01
Q4
'01
Q1
'02
Q2
'02
Q3
'02
EPS
(1)
(2)
(3)
Q4
'02
Q1
'03
Q2
'03
Q3
'03
Q4
'03
Q1
'04
Q2
'04
Q3
'04
Q4
'04
Q1
'05
Free cash flow per share*
Reflects a $70-$75 million reduction in Q2 2003 due to one-time impact of implementing a new wholesale purchase agreement
Excludes a $0.10 per share charge for the early retirement of debt
Excludes a $0.20 charge to increase legal reserves for the cost of defense.
* Reflects a 12-month moving average of free cash flow (cash from operations less CapX)
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90
Peer Group Total Return
Peer Group Comparison - YTD 2005
12/31/2004
ESRX
PBM
Medco
Caremark
Avg
MCD
Wellpoint
Cigna
Aetna
Avg
Retail
Walgreens
CVS
Avg
Peer Group
 2005 Express Scripts, Inc.
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$
$
$
$
$
$
$
$
4/22/2005
76.44
$
88.20
Stock Price
12/31/2004
4/22/2005
41.60
39.43
115.00
81.57
62.38
38.37
45.07
$
$
$
$
$
$
$
52.02
39.41
117.77
88.00
69.86
41.87
50.50
Our Job Is to Outperform This Peer
Group Median Over the Long Term
% Incr
Gain
15.4%
15.4%
% Incr*
25.0%
-0.1%
12.5%
33.4%
4.2%
2.4%
7.9%
12.1%
7.5%
33.3%
2.5%
9.4%
12.3%
10.9%
33.3%
3.6%
10.3%
*Reflects dividend yield
91
Components of EPS Growth — 2004
25%
20%
6%
15%
10%
5%
7%
8%
0%
Express Scripts*
Rx Growth
EBITDA/Rx Growth
Cap Structure/Other
* Excluding $25 million charge to increase legal reserves for the cost of defense and $5.5 million termination payment received
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92
U.S. Prescription Growth
25%
U.S. Scripts
Caremark
Medco
20%
19.2%
Caremark
18.0%
Express Scripts
15%
13.8%
9.1%
10%
5%
11.9%
11.0%
7.6%
5.2%
Medco
15.0%
Express Scripts
5.7%
18.0%
6.2%
4.8%
8.9%
5.4%
3.2%
7.2%
4.7%
4.6%
1.6%
10.1%
3.8%
8.3%
5.4%3.5%
3.1%
3.7%
0.8%
0%
-1.4%
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
-3.5%
-5%
Note: Rx growth for Medco, Caremark and Express Scripts reflect as configured today
 2005 Express Scripts, Inc.
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93
Financial Overview
EBITDA* per adjusted claim
$1.10
$1.03
$1.12
$1.05
$0.88
$0.90
$0.80
$0.68
$0.70
$0.50
1999
2000
2001
2002
2003
2004**
Pricing can be lowered as clients tighten formulary compliance, increase home delivery, utilize
generics and restrict retail networks. These changes result in lower prices to our clients and
greater profits to Express Scripts.
* A reconciliation of EBITDA to net income and to net cash provided by operating activities can be found in the Investor Relations
section of Express Scripts’ Web site, www.express-scripts.com under Presentations.
** Excluding $25 million charge to increase legal reserves for the cost of defense and $5.5 million termination payment received.
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94
Gross Profit/SGA/EBITDA per
Adj. Rx
$1.90
$1.70
$1.50
$1.30
$1.10
$0.90
$0.70
$0.50
1999
2000
2001
Gross Profit per Adj Rx
2002
SGA per Adj Rx
2003
2004*
EBITDA per Adj Rx
Future EBITDA per Adj. Rx Must Come From Gross Profit per Adj. Rx
•* Excluding $25 million charge to increase legal reserves for the cost of
defense and $5.5 million termination payment received.
 2005 Express Scripts, Inc.
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95
Focus on Return on Invested
Capital (ROIC)
2004**
2003
2002
2000
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
2001
Express Scripts ROIC*
* Reflects operating income less tax divided by average invested capital, which consists of stockholder’s equity, plus interest
bearing liabilities plus long-term deferred income taxes, net.
** Excludes $25 million charge to increase legal reserves for the cost of defense and 5.5 million termination payment received
ROIC is our Preferred Performance Metric
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96
Why Express Scripts?
Industry-Leading ROIC
Comparison of Peer Group ROIC - 2004
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
Wellpoint
Medco
CVS
Aetna
Caremark
Walgreens
Cigna
Express
Scripts
0%
We Lead Our Peer Group in ROIC Performance
Source: Express Scripts Analysis
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97
Our Financial Goals
• 15% + EBITDA
growth
• Increase gross
profit per claim
• Maintain ROIC
leadership
25%
20%
5%-7%
15%
10%
14%-16%
5%
0%
Express Scripts
EBITDA Growth
 2005 Express Scripts, Inc.
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Cap Structure/Other
98
Express Scripts’ Value Proposition
Positioning Us for the Future
George Paz
President and CEO
 2005 Express Scripts, Inc.
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99
Why Express Scripts?
A Strong Value Proposition
• Our 'Golden Rule' of Alignment
• The People To Grow the Business
• Technologies Second to None
• Operational and Service Excellence
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100
Why Express Scripts?
All the Right Growth Levers
•
•
•
•
•
New Sales
Upsells and Retention
Generics, Home Delivery and Specialty
Innovative Product Development
Strategic Deployment of Capital
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101
INVESTORS’ MEETING — ORLANDO, FL
 2005 Express Scripts, Inc.
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April 28, 2005
102