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Express Scripts posts rise in Q4'17 earnings, provides Q1 outlook

Express Scripts Holding Co. posted a year-over-year increase in its profit for the fourth quarter of 2017, and expects growth in EPS for 2018.

Fourth-quarter adjusted net income attributable to the company was $1.23 billion, or $2.16 per share, versus $1.15 billion, or $1.88 per share, in the year-ago period.

The S&P Capital IQ consensus normalized EPS estimate for the quarter was $2.09.

Net income attributable to the company amounted to $2.33 billion, or $4.10 per share, versus $1.43 billion, or $2.34 per share, in the same quarter of 2016.

Total revenue reached $25.38 billion, compared with $24.86 billion in the fourth quarter of 2016.

Full-year results

Adjusted net income attributable to the company for the full year was $4.14 billion, or $7.10 per share, up from $4.03 billion, or $6.39 per share, in 2016. Revenue for the year totaled $100.06 billion, versus $100.29 billion in 2016.

The S&P Capital IQ consensus normalized EPS estimate for 2017 was $7.03.

Net income attributable to the company amounted to $4.52 billion, or $7.74 per share, up from $3.40 billion, or $5.39 per share, in 2016. Net income for the fourth quarter and full year included a gain of about $1.4 billion due to the U.S. tax reform.

Express Scripts is using $20 million to fund a bonus pool to reward its nonexecutive employees.

Outlook

Express Scripts maintained its 2018 guidance disclosed in December 2017.

The pharmacy benefit manager is targeting full-year 2018 adjusted EPS of $9.27 to $9.47. Adjusted EPS for the first quarter is expected to be between $1.73 and $1.78.

The S&P Capital IQ consensus normalized EPS estimates are $1.76 for the first quarter and $8.91 for full-year 2018.

Express Scripts' enterprise value initiative is expected to cost $600 million to $650 million and to deliver cumulative savings of nearly $1.2 billion by 2021, with an annual run rate of between $550 million to $600 million thereafter.

This initiative is expected to help the company achieve its targeted compounded annual adjusted EBITDA growth rate for the core business from 2017 to 2020 of between 2% and 4%, and drive significant value to patients and clients beginning in 2018.

The company repurchased a total of 45.9 million shares under its share repurchase program for $2.95 billion in the aggregate during 2017. In December 2017, the company's board approved a 45-million-share increase in the authorized number of shares that may be purchased under the program.