Express Scripts Announces 2017 First Quarter Results; Provides Update on Anthem Relationship and Visibility into Core PBM Business Excluding Contribution from Anthem, Coventry and Catamaran

Update on Anthem Relationship

The Company's current long-term PBM contract with Anthem expires on December 31, 2019, and Anthem is currently engaged in a Request for Proposal (RFP) process for a PBM service provider following the end of its contract with Express Scripts.  While the Company has not formally participated in the RFP process, in recent months, management for the Company and Anthem have had several conversations in which the Company proposed providing as much as $1 billion in annual value ($3 billion in the aggregate) in the form of price concessions for 2017-2019 in connection with a negotiated contract extension for the period beyond 2019 at prevailing market rates.  Although conversations have been ongoing, the Company was recently told by Anthem management that Anthem intends to move its business when the Company's current contract with Anthem expires on December 31, 2019, and that Anthem is not interested in continuing discussions regarding pricing concessions for 2017-2019 or in receiving the Company's proposed pricing for the period beyond 2019.  As a result, today Express Scripts has elected to provide information as to its financial performance with and without Anthem, without any obligation to do so, in order to demonstrate that the Company's core PBM business, excluding Anthem, is well positioned for future growth.  See Appendix A for additional details regarding the Company's relationship with Anthem and the history of the agreement between the parties.

"It is difficult for us to understand why Anthem has not recognized the potential value which could be brought forth by engaging in meaningful discussions regarding a mutually beneficial pricing arrangement for the remaining term of our contract and beyond," said Tim Wentworth, President and CEO of Express Scripts.  "No other party can offer Anthem savings prior to 2020, and no other party can provide updated pricing terms beyond 2019 without the risk and disruption of a lengthy and complicated implementation. As our disclosure today clearly demonstrates, Express Scripts makes well below $3 billion annually on the Anthem contract despite Anthem's numerous public pronouncements to the contrary. Anthem's conflicting demands for annual PBM savings, ranging from $700 million in September 2015 to $3 billion in January 2016, its subsequent litigation against us, and now its decision to discontinue discussions altogether do not make any sense to us. We just can't explain why Anthem would choose to walk away from an opportunity to realize $1 billion in annual savings, which we have no obligation to provide under our current contract, in exchange for a contract extension at prevailing market rates with a longstanding business partner who has proven its ability to deliver value for their members," Wentworth said.

"Express Scripts is committed to fulfilling our obligations to serve patients and Anthem members through the remaining term of the contract and the required one-year transition period, in accordance with our agreement, as well as the successful implementation of any new business added by Anthem over the next 32 months," Wentworth added.

Contribution of Anthem, Coventry and Catamaran

While Anthem has not provided formal written notice that it does not intend to renew its contract with the Company, based on recent statements in conversations with Anthem management and other actions taken by Anthem, the Company believes it is unlikely its contract with Anthem will be extended.  As a result, the Company has elected to report Anthem's estimated 2015 and 2016 full year and 2017 first quarter contribution to financial results in order to provide visibility into the underlying performance of the Company's PBM business excluding any contribution from Anthem.  The tables below provide the portion of our estimated 2015 and 2016 full year and 2017 first quarter financial results attributable to Anthem (also see Tables 7 and 8 for further details of 2016 full year and 2017 first quarter financial results attributable to Anthem).

In addition to disclosing the estimated impact of the Anthem contribution, the tables below include the estimated contribution of the Company's remaining business with Coventry and Catamaran, both of which were acquired and are rolling off the Company's book of business. The Company is providing this information to assist in an analysis of the underlying performance of the Company's core PBM business, excluding the contributions from Coventry and Catamaran, to which we refer together as the "Transitioning Clients," as well as Anthem.

Full Year 2015 Overview
(in millions, except per claim data)	Full Year 2015 (Consolidated, as reported)	Anthem and Transitioning Clients1		Full Year 2015 (Excluding Anthem and Transitioning Clients)1
		Full Year 2015 (Attributable to Anthem)	Full Year 2015 (Attributable to Coventry & Catamaran)
Adjusted claims	1,441.6	207.4	90.4	1,143.8
Revenues2	$101,751.8	$15,153.3	$5,517.7	$81,080.8
Net Income	$2,476.4	N/A	N/A	N/A
Adjusted EBITDA3	$7,046.9	$1,862.7	$672.0	$4,512.2
Adjusted EBITDA per adjusted claim3	$4.89	$8.98	N/A	$3.94
Adjusted EBITDA less taxes3,4	$4,398.4	$1,162.6	$419.4	$2,816.4
Adjusted EBITDA less taxes per adjusted claim3,4	$3.05	$5.61	N/A	$2.46
See "Footnotes to Press Release," below.
Full Year 2016 Overview
(in millions, except per claim data)	Full Year 2016 (Consolidated, as reported)	Anthem and Transitioning Clients1		Full Year 2016 (Excluding Anthem and Transitioning Clients)1
		Full Year 2016 (Attributable to Anthem)	Full Year 2016 (Attributable to Coventry & Catamaran)
Adjusted claims	1,407.6	219.6	19.0	1,169.0
Revenues2	$100,287.5	$17,075.9	$1,696.9	$81,514.7
Net Income	$3,404.4	N/A	N/A	N/A
Adjusted EBITDA3	$7,260.4	$2,248.0	$222.4	$4,790.0
Adjusted EBITDA per adjusted claim3	$5.16	$10.24	N/A	$4.10
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