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EviCore to boost Express Scripts growth as Anthem exit looms, new players enter


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EviCore to boost Express Scripts growth as Anthem exit looms, new players enter

With the looming expiration of one of its biggest contracts and the introduction of new market players, Express Scripts Holding Co. is banking on its pending acquisition of eviCore healthcare to drive growth in 2018.

The pharmacy benefit manager unveiled the $3.6 billion deal to acquire the privately held medical benefit management company earlier in October. The addition of eviCore will bring immediate accretion to Express Scripts' growth, earnings and cash flow, with projected EBITDA in the range of $265 million to $285 million for 2018.

"With eviCore, Express Scripts will be an even more powerful partner in managing healthcare costs for patients and payers," President and CEO Timothy Wentworth said on the company's guidance update call.

The transaction is also part of Express Scripts' steps to move into overall medical benefit management, Wentworth added.

EviCore's integration into Express Scripts has kept the company optimistic, even amid the increasing rivalry in an already highly competitive market, with CVS Health Corp. and Aetna Inc.'s pending $69 billion merger and Anthem Inc.'s formation of its own hybrid in-house pharmacy benefit manager.

The CVS-Aetna combination has also raised the concern of CVS possibly providing better pricing. However, Wentworth voiced his confidence in the business, stating "I would actually say that the way the market works now, and I believe will continue to work, is the payers are looking for solutions, and they're willing to buy in pieces to create a competitive overall offering."

Express Scripts is not closing its doors to making further M&A transactions next year in the wake of the eviCore acquisition, if and when, a strategic opportunity presents itself. "I don't see us being wildly time-constrained in terms of being able to make moves incremental to that acquisition if we see an attractive opportunity out there that makes sense from a strategic standpoint first and from a pricing standpoint," Wentworth said.

Addressing the Anthem loss

The company has begun preparing ahead of Anthem's exit by the end of 2019 and is determining the variable costs related to the health insurer.

As a way of dealing with the Anthem loss, Express Scripts is looking to eliminate fixed cost by prioritizing projects focused on client setup, claims processing, client support, technology, and managing products and solutions.

"All of that savings and all of that improvement is going to be reflected in our core business and that's the key that we're driving towards and that's what we keep in mind as we manage this process and pick and choose those investments that are going to work best for us as we look today and down the road," Express Script CFO and Executive Vice President James Havel said.