Express Scripts Holding Co. (NASDAQ:ESRX)

Customer Contracts

The value of customer contracts remained relatively stable over the five-year period, with a slight decrease from approximately 17.6 billion US dollars in 2013 to about 17.58 billion US dollars in 2017, indicating consistent contractual holdings.

Trade Names

Trade names showed minimal change during the first four years, maintaining around 226,600 thousand US dollars, followed by a modest increase to 232,500 thousand US dollars in 2017, suggesting minor acquisitions or revaluations.

Miscellaneous Intangible Assets

There was a notable decline in miscellaneous intangible assets from 116,600 thousand US dollars in 2014 to 8,700 thousand in 2015 and 2016, with no data reported in 2017, indicating potential disposals or impairments.

Pharmacy Benefit Management (PBM)

The PBM intangible asset showed slight fluctuation but remained close to 17.9 billion US dollars throughout the period, suggesting stable valuation and importance within the asset base.

Customer Relationships

Customer relationships decreased significantly from 127,300 thousand US dollars in 2013 to 39,400 thousand in 2016, followed by a sharp increase to 2.27 billion in 2017, indicating a possible reclassification or significant new acquisitions in 2017.

Other Trade Names

Other trade names remained fairly constant around 35,700-35,800 thousand US dollars through 2016, then increased to 56,100 thousand in 2017, suggesting asset additions or revaluations in that year.

Other Business Operations

Other business operations intangible assets demonstrated a downward trend from 163,100 thousand US dollars in 2013 to 75,100 thousand in 2016, followed by a sharp increase to approximately 2.33 billion in 2017, again possibly due to acquisitions or reclassifications.

Other Intangible Assets, Gross Carrying Amount

There was a gradual decrease in the gross carrying amount from about 18.1 billion US dollars in 2013 to 17.88 billion in 2016, then a significant increase to over 20.1 billion in 2017, consistent with observed increases in various intangible asset categories.

Accumulated Amortization

Accumulated amortization increased steadily from -4.09 billion US dollars in 2013 to -10.5 billion in 2017, reflecting ongoing amortization expenses on intangible assets.

Other Intangible Assets, Net Carrying Amount

The net carrying amount of other intangible assets declined consistently from approximately 14 billion US dollars in 2013 to 8.64 billion in 2016, then rose to about 9.63 billion in 2017, indicating amortization impact offset by asset additions or revaluations in the final year.

Goodwill

Goodwill remained fairly constant around 29.3 billion US dollars from 2013 to 2016, with a significant increase to 31.1 billion in 2017, implying acquisition activity or reassessment of goodwill values during that year.

Goodwill and Other Intangibles

The combined balance of goodwill and other intangibles decreased from 43.3 billion US dollars in 2013 to 37.9 billion in 2016, then increased notably to approximately 40.7 billion in 2017, consistent with the increase in goodwill and intangible asset categories seen in 2017.

Total Assets

The reported total assets of the company remained relatively stable over the five-year period from 2013 to 2017, fluctuating slightly but generally maintaining a level slightly above 50 billion US dollars. The highest value within this period was observed in 2017 at approximately 54.3 billion, while the lowest was in 2016 at approximately 51.7 billion. Conversely, the adjusted total assets, which presumably exclude goodwill or other intangible elements, show a decreasing trend from about 24.2 billion in 2013 to 23.2 billion in 2017, with a dip reaching its lowest point in 2016 at approximately 22.5 billion. This suggests that a significant portion of the reported assets may be attributed to goodwill or similar items, and the tangible asset base is slightly contracting over time.

Stockholders’ Equity

The reported total stockholders’ equity experienced a clear downward trend over the five years analyzed. Starting at roughly 21.8 billion in 2013, equity declined consistently to reach about 16.2 billion in 2016, before a minor recovery to approximately 18.1 billion in 2017. This decline signals a reduction in the net assets attributable to shareholders as reported.

In marked contrast, the adjusted stockholders’ equity figures are negative throughout the period, starting at nearly -7.5 billion in 2013 and worsening to approximately -13.0 billion in 2016, with a slight improvement to around -13.0 billion in 2017. The negative adjusted equity indicates that, after removing certain assets (likely goodwill), the company’s liabilities exceed its tangible assets, reflecting potential financial stress or an accounting adjustment that significantly impacts the net asset value.

Overall Observations

The divergence between reported and adjusted figures is pronounced, particularly in stockholders' equity, underscoring the impact of goodwill and intangible assets on the company's financial position. While the reported assets and equity indicate a stable to slightly declining net asset base, the adjusted numbers reveal a tangible asset base that is shrinking modestly and an underlying negative net equity position. This dynamic may have implications for the company's leverage, solvency, and potential vulnerability to market or operational shocks.

In conclusion, while the company maintains a large asset base, a significant portion comprises intangible assets. The tangible financial foundation appears to be under pressure, as evidenced by negative adjusted equity and a slight downward trend in adjusted total assets.

The analysis of the financial ratios over the period from 2013 to 2017 reveals several notable trends in asset efficiency, leverage, and profitability for the company.

Total Asset Turnover

The reported total asset turnover ratio remained relatively stable, fluctuating slightly around the range of 1.84 to 1.94. The highest point was 1.94 in both 2013 and 2016, with a slight dip to 1.84 by 2017. In contrast, the adjusted total asset turnover, which likely excludes goodwill or other intangible assets, is significantly higher by more than double throughout all years, ranging from 4.11 to 4.46. This adjusted measure shows a moderate upward trend from 4.29 in 2013 to a peak of 4.46 in 2016, followed by a slight decline to 4.32 in 2017, indicating consistent improvement in asset utilization when goodwill is adjusted out.

Financial Leverage

Reported financial leverage increased steadily from 2.45 in 2013 to a peak of 3.19 in 2016, before decreasing slightly to 2.99 in 2017. This indicates a progressive increase in the use of debt or liabilities relative to equity over the years, suggesting a more leveraged capital structure. No adjusted financial leverage data is available, which limits further insight into leverage net of goodwill adjustments.

Return on Equity (ROE)

Reported ROE exhibits a strong upward trajectory, rising from 8.45% in 2013 to 24.93% in 2017. This marked growth reflects enhanced profitability from the shareholders' perspective. The consistent increase implies improvements in net income generation relative to equity, potentially driven by operating performance and leverage effects. Adjusted ROE data is unavailable, thus the impact of goodwill adjustments on ROE cannot be assessed.

Return on Assets (ROA)

Reported ROA also shows a consistent upward trend, increasing from 3.44% in 2013 to 8.33% in 2017. This indicates improved effectiveness in using total assets to generate profits. The adjusted ROA, which excludes goodwill, is notably higher than the reported ROA across all years and follows a similar upward trend from 7.61% to 19.51%. The adjusted figures suggest that when goodwill is removed, asset profitability is substantially greater, highlighting the impact of intangible assets on reported asset base and returns.

Overall, the data demonstrate continuous improvement in profitability and asset efficiency despite a modest increase in financial leverage through 2016. The adjusted ratios, particularly asset turnover and ROA, emphasize the positive underlying operating performance when intangible assets such as goodwill are excluded. The slight reduction in both reported total asset turnover and financial leverage in 2017 may indicate early signs of stabilization or strategic adjustments in capital structure and asset management.

Total Assets

The reported total assets remained relatively stable over the five-year period, with a slight fluctuation between approximately 53.2 billion and 54.3 billion US dollars. A minor decrease occurred in 2016, reaching the lowest point within the period at around 51.7 billion before rising again in 2017.

The adjusted total assets, which exclude goodwill, show a downward trend from 24.2 billion US dollars in 2013 to 23.2 billion in 2017. The decline is more pronounced after 2014, with total adjusted assets reducing steadily each year, highlighting a reduction in asset value when goodwill is excluded.

Total Asset Turnover

The reported total asset turnover ratio indicates a slight decrease in asset efficiency over the period, starting at 1.94 in 2013, dipping to a low of 1.84 in 2017. The ratio fluctuated marginally but overall suggests a small decline in how effectively assets generate revenue.

In contrast, the adjusted total asset turnover, which is calculated using total assets adjusted for goodwill, is significantly higher than the reported figures each year, ranging from 4.11 to 4.46. This ratio shows an overall upward trend, increasing notably from 4.29 in 2013 to a peak of 4.46 in 2016, followed by a slight decrease to 4.32 in 2017. This pattern implies improved efficiency in asset usage when excluding intangible assets like goodwill.

Insights

The discrepancy between reported and adjusted total assets highlights the considerable portion of goodwill in the company's asset base, which impacts asset measurement and performance analysis.

The decline in adjusted total assets alongside the rising adjusted asset turnover suggests better operational management or asset utilization excluding goodwill. Conversely, the stable reported total assets combined with a slight decrease in reported turnover indicates that goodwill may dampen the apparent asset efficiency.

Overall, the company appears to have maintained asset levels fairly consistently while improving asset efficiency according to adjusted metrics, signaling potential strengthening in the underlying asset productivity aside from goodwill considerations.

The analysis of the financial data over the five-year period reveals several notable trends in both reported and goodwill-adjusted figures for the company.

Total Assets

The reported total assets remained relatively stable, fluctuating slightly between approximately US$53.2 billion and US$54.3 billion. A slight dip is observed in 2016, but the assets recovered by the end of 2017. In contrast, the adjusted total assets—net of goodwill—showed a consistent decline from about US$24.2 billion in 2013 to around US$22.5 billion in 2016, with a marginal increase in 2017 to about US$23.2 billion. This indicates that intangible assets, particularly goodwill, represent a significant portion of the reported total assets, and the underlying tangible or adjusted asset base diminished somewhat over the period.

Stockholders’ Equity

Reported stockholders’ equity exhibited a downward trend over the five years, declining from approximately US$21.8 billion in 2013 to US$16.2 billion in 2016, before a modest recovery to about US$18.1 billion in 2017. However, when adjusted for goodwill, the stockholders' equity values are consistently negative, ranging from approximately negative US$7.5 billion to negative US$13 billion, which worsened until 2016 and then slightly improved by 2017. This persistent negative adjusted equity suggests that the goodwill and other intangible assets substantially inflate the reported equity position, masking an underlying equity deficit on a tangible basis.

Financial Leverage

The reported financial leverage ratios increased steadily from 2.45 in 2013 to a peak of 3.19 in 2016, suggesting that the company progressively relied more on debt relative to equity during this period. This trend reversed somewhat in 2017, with the leverage ratio declining to 2.99. The absence of adjusted financial leverage data precludes detailed analysis on leverage excluding goodwill; however, the rising reported leverage combined with declining adjusted equity underscores potential concerns about financial risk and capital structure robustness on a tangible asset basis.

Overall, the data portray a company with a stable reported asset base that is heavily influenced by goodwill and intangible assets. The decline in adjusted equity and stable yet high financial leverage imply increasing financial risk when evaluating underlying tangible financial strength. The modest improvement in 2017 suggests some stabilization after preceding declines, but the negative adjusted equity remains a critical point for consideration.

The financial data reveals significant trends in both reported stockholders’ equity and related profitability metrics over the five-year period ending in 2017.

Reported Total Stockholders’ Equity

There is a consistent decline in reported total stockholders’ equity from 2013 through 2016, with values decreasing from approximately $21.8 billion to $16.2 billion. In 2017, equity shows a modest recovery, rising to about $18.1 billion. This overall downward trend followed by a slight increase may indicate share repurchases, dividend payments exceeding net income, or other capital structure adjustments during these years.

Adjusted Total Stockholders’ Equity

The adjusted total stockholders’ equity, reflecting adjustments for goodwill or other intangible assets, remains negative throughout the period and becomes progressively more negative from -$7.5 billion in 2013 to almost -$13.0 billion in 2017. The negative adjusted equity and worsening position suggest substantial goodwill or intangible assets recorded that exceed the book value of equity, which may raise concerns about asset impairment or overvaluation from an accounting perspective.

Reported Return on Equity (ROE)

The reported ROE exhibits a strong upward trend, improving steadily from 8.45% in 2013 to a high of nearly 25% in 2017. This indicates increasing profitability relative to the reported equity base, suggesting enhanced operational efficiency, improved profit margins, or effective utilization of shareholder capital. The growing ROE in the context of decreasing equity implies higher net income or favorable leverage effects over time.

Adjusted ROE

No data is available for adjusted ROE, preventing analysis of profitability after adjustments for goodwill or intangible assets.

Overall, the company’s reported stockholders’ equity declined significantly in the initial years before a partial rebound, while the adjusted equity metric remains deeply negative and worsening. In contrast, reported profitability, as measured by ROE, has improved markedly, reflecting a positive trend in earning power despite the equity base contraction. These patterns highlight the importance of considering both reported and adjusted figures when evaluating the financial health and value generation of the company.

Total Assets

The reported total assets of the company showed a fluctuating yet overall stable pattern over the five-year period. Beginning at approximately $53.55 billion in 2013, reported assets experienced a slight increase in 2014, followed by a gradual decline in 2015 and 2016, before rising again in 2017 to the highest point in the period at $54.26 billion. Adjusted total assets, which presumably exclude goodwill or intangible assets, followed a similar descending trend from 2013 through 2016, moving from roughly $24.24 billion to $22.47 billion, with a modest recovery in 2017 reaching about $23.16 billion. The adjusted totals consistently remained less than half of the reported totals throughout the period, indicating significant goodwill or intangible value on the balance sheet.

Return on Assets (ROA)

Both reported and adjusted ROA demonstrated a clear upward trend, reflecting improved efficiency or profitability relative to asset base over time. The reported ROA started at 3.44% in 2013 and steadily increased each year, reaching 8.33% by the end of 2017, more than doubling across the period. The adjusted ROA, which likely reflects operating performance excluding goodwill effects, was consistently higher each year than the reported ROA, starting at 7.61% in 2013 and significantly accelerating to 19.51% in 2017. This wider margin suggests underlying operational improvements apart from asset base changes, with profitability relative to adjusted assets improving substantially more over the given timeframe.

Insights

The divergence between reported and adjusted figures highlights the impact of goodwill and intangible assets on the company's financial structure. While total assets remained relatively stable, the adjusted asset base decreased over the first four years before showing signs of stabilization, suggesting asset write-downs or amortization related to intangible assets. The strong upward trend in both forms of ROA, especially the adjusted ROA, indicates increased operational efficiency and profitability, implying the company has been successfully leveraging its core assets more effectively over time.