Express Scripts Inc. Earnings Cheat Sheet: Margin Expands Boosted by Rising Revenue, Net Income Rises

S&P 500 (NYSE:SPY) component Express Scripts, Inc. (NASDAQ:ESRX) reported its results for the third quarter. Express Scripts is a pharmacy benefit management (AMEX:PBM) company, providing services like retail network pharmacy management and patient care contact centers to its clients in North America.

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Express Scripts Earnings Cheat Sheet for the Third Quarter

Results: Net income for the healthcare facilities company rose to $324.7 million (66 cents per share) vs. $301.5 million (56 cents per share) in the same quarter a year earlier. This marks a rise of 7.7% from the year earlier quarter.

Revenue: Rose 2.8% to $11.57 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: ESRX reported adjusted net income of 79 cents per share. By that measure, the company beat the mean estimate of 78 cents per share. It beat the average revenue estimate of $11.26 billion.

Quoting Management: “Our third quarter results reflect the continued execution of our business model and the value of fully aligning with clients,” stated George Paz, chief executive officer and chairman. “We continue to invest robustly for the future, maintaining our focus on innovation, service and achieving optimal health outcomes. We are confident that these investments will create value for plan sponsors and patients and will continue to drive growth in shareholder value.”

Key Stats:

The company has now seen net income rise in three straight quarters. In the second quarter, net income rose 15.3% and in the first quarter, the figure rose 25.5%.

The company beat estimates last quarter after being in line with expectations in the second quarter with net income of 71 cents per share.

The company’s revenue has now risen for two straight quarters. In the second quarter, revenue increased 0.6% to $11.36 billion from the year earlier quarter.

Gross margins grew 0.4 percentage point to 7.2%. The growth seemed to be driven by increased revenue, as the figure rose 2.8% from the year earlier quarter while costs rose 2.4%.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the fourth quarter has moved down from 98 cents a share to 87 cents over the last sixty days. Over the past sixty days, the average estimate for the fiscal year has reached $2.99 abs per share, a decline from $3.19.

Competitors to Watch: Medco Health Solutions Inc. (NYSE:MHS), Magellan Health Services, Inc. (NASDAQ:MGLN), Centene Corporation (NYSE:CNC), AMERIGROUP Corporation (NYSE:AGP), American Dental Partners, Inc. (NASDAQ:ADPI).

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(Source: Xignite Financials)