Express Scripts Earnings: 3 Things You Need to Know

The reported numbers were concerning, but these 3 things may matter even more.

May 2, 2014 at 2:30PM

Express Scripts (NASDAQ:ESRX) investors had a rough day Tuesday, as a surprised market cut 6% from the company's value after a disappointing first quarter earnings report. There were three huge areas of concern for investors, but first let's talk about the overall numbers.

UnitedHealth Group (NYSE:UNH) left Express Scripts and brought its PBM work in-house at Optumrx, which significantly affected Express Scripts' business this quarter for the year-over-year comparisons. Adjusted claims dropped 18% (still a 9% drop when we ex-out the UNH loss), driving a 9% revenue drop and a 6% reduction in adjusted net income.

But there are some even potentially bigger issues at work at Express Scripts. In the video below, Motley Fool health care analysts David Williamson and Michael Douglass identify these three issues and what investors should watch for at Express Scripts moving forward.

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David Williamson owns shares of Express Scripts and UnitedHealth Group. Michael Douglass has no position in any stocks mentioned. The Motley Fool recommends Catamaran, Express Scripts, Gilead Sciences, and UnitedHealth Group. The Motley Fool owns shares of Catamaran, Express Scripts, and Gilead Sciences. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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