Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

Express Scripts Holding Co., consolidated cash flow statement

US$ in thousands

12 months ended:	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
Net income	4,531,700)	3,427,600)	2,499,500)	2,035,000)	1,872,700)
Net loss from discontinued operations, net of tax	—)	—)	—)	—)	53,600)
Net income from continuing operations	4,531,700)	3,427,600)	2,499,500)	2,035,000)	1,926,300)
Depreciation and amortization	1,802,000)	2,154,600)	2,359,100)	2,242,900)	2,447,000)
Deferred income taxes	(1,678,900)	(497,400)	(462,100)	(430,500)	(573,700)
Employee stock-based compensation expense	99,600)	107,000)	117,100)	111,000)	164,700)
Other, net	43,300)	(36,200)	(46,300)	(8,300)	29,200)
Receivables	55,900)	(374,000)	(770,300)	(2,042,400)	1,254,000)
Inventories	(166,700)	64,100)	90,100)	(242,100)	(218,900)
Other current and noncurrent assets	(172,500)	(137,500)	78,300)	(170,000)	94,200)
Claims and rebates payable	1,114,900)	(560,800)	909,500)	1,720,400)	(672,200)
Accounts payable	(126,800)	436,400)	318,300)	271,700)	15,900)
Accrued expenses	(241,700)	404,200)	(142,700)	948,900)	450,800)
Other current and noncurrent liabilities	90,500)	(68,600)	(102,200)	112,400)	(148,400)
Changes in operating assets and liabilities	553,600)	(236,200)	381,000)	598,900)	775,400)
Adjustments to reconcile net income to net cash provided by operating activities	819,600)	1,491,800)	2,348,800)	2,514,000)	2,842,600)
Net cash flows provided by operating activities	5,351,300)	4,919,400)	4,848,300)	4,549,000)	4,768,900)
Acquisitions, net of cash acquired	(3,501,100)	—)	—)	—)	—)
Capital expenditures for property and equipment and computer software	(267,400)	(330,400)	(295,900)	(436,600)	(423,000)
Net cash proceeds from the sale of business	85,300)	—)	—)	—)	356,900)
Other, net	(7,400)	(21,500)	27,400)	24,700)	(3,900)
Net cash used in investing activities	(3,690,600)	(351,900)	(268,500)	(411,900)	(70,000)
Treasury stock acquired	(2,938,000)	(4,746,900)	(5,500,000)	(4,493,000)	(4,055,200)
Proceeds from long-term debt, net of discounts	1,398,900)	5,986,800)	5,500,000)	2,490,100)	—)
Repayment of long-term debt	(1,125,000)	(5,932,500)	(3,390,800)	(2,834,300)	(1,931,600)
Commercial paper borrowings, net	194,800)	—)	—)	—)	—)
Net proceeds from employee stock plans	81,000)	87,200)	183,100)	510,500)	466,000)
Excess tax benefit relating to employee stock-based compensation	—)	13,000)	58,200)	94,000)	42,700)
Other, net	(44,900)	(85,400)	(67,500)	(57,000)	(16,700)
Net cash used in financing activities	(2,433,200)	(4,677,800)	(3,217,000)	(4,289,700)	(5,494,800)
Net cash used in operating activities, discontinued operations	—)	—)	—)	—)	(11,400)
Net cash used in investing activities, discontinued operations	—)	—)	—)	—)	(2,100)
Net cash used in discontinued operations	—)	—)	—)	—)	(13,500)
Effect of foreign currency translation adjustment	4,900)	1,200)	(9,100)	(6,200)	(5,700)
Cash (increase) decrease attributable to discontinued operations	—)	—)	—)	—)	13,400)
Net increase (decrease) in cash and cash equivalents	(767,600)	(109,100)	1,353,700)	(158,800)	(801,700)
Cash and cash equivalents at beginning of year	3,077,200)	3,186,300)	1,832,600)	1,991,400)	2,793,100)
Cash and cash equivalents at end of year	2,309,600)	3,077,200)	3,186,300)	1,832,600)	1,991,400)

Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).

Net Income and Profitability: Net income exhibited a consistent upward trend over the five-year period, increasing from $1.87 billion in 2013 to $4.53 billion in 2017. The net income from continuing operations also showed the same increasing pattern, reflecting solid and growing operational profitability. The growth was particularly pronounced between 2016 and 2017, where net income rose sharply by approximately 32%.
Depreciation and Amortization: Depreciation and amortization expenses declined steadily from $2.45 billion in 2013 to $1.80 billion in 2017. This downward trend may suggest reduced capital expenditures or changes in asset base composition over time.
Deferred Income Taxes: Deferred income taxes remained negative throughout the period, with a significant increase in the liability in 2017, reaching nearly $1.68 billion. This sizable change may indicate a shift in tax strategy, timing differences, or changes in tax regulations impacting future tax liabilities.
Stock-Based Compensation and Other Expenses: Employee stock-based compensation expenses decreased moderately from $165 million in 2013 to about $100 million in 2017. The "Other, net" line item fluctuated during the period, indicating some variability in non-operating or miscellaneous items.
Working Capital Components: Receivables showed unusual negative values from 2014 through 2016 but returned to a positive value in 2017, suggesting possible accounting adjustments or fluctuations in collection practices. Inventories were negative in two of the first years, turned positive in the middle years, and declined again at the end of the period. Other current and noncurrent assets exhibited volatility, moving between negative and positive values throughout the timeline. Payables and accrued expenses demonstrated variability with increases and decreases over time, indicating dynamic working capital management.
Operating Assets and Liabilities: Changes in operating assets and liabilities were positive in most years except for 2016, which reflected negative working capital movements. These changes had a notable effect on cash flow from operations.
Cash Flow from Operations: Net cash flows provided by operating activities remained robust, fluctuating between approximately $4.5 billion and $5.36 billion annually. Despite some minor variations, the company consistently generated strong operating cash flow, supporting liquidity and operational strength.
Investing Activities: There was a strong increase in net cash used in investing activities in 2017, primarily due to a significant one-time acquisition expense of roughly $3.5 billion. Capital expenditures for property and equipment steadily decreased from $423 million in 2013 to $267 million in 2017, reflecting reduced investment in physical and software assets. Net cash used in investing activities was generally negative, indicating ongoing investments and outflows.
Financing Activities: Net cash used in financing activities was consistently negative across all years but showed a declining trend in outflows by 2017. Treasury stock acquisitions were significant in early years but reduced substantially by 2017. There was active management of long-term debt with significant issuances balanced by repayments. Proceeds from long-term debt peaked in 2016 at nearly $6 billion and declined substantially to $1.4 billion in 2017. Commercial paper borrowings appeared only in 2017, indicating some short-term financing activity. Proceeds from employee stock plans were positive but declined across the period.
Cash Position and Overall Liquidity: Cash and cash equivalents fluctuated, increasing notably in 2015 but declining in 2017 to a balance of about $2.31 billion. The net change in cash and cash equivalents was negative in most years except 2015, showing an overall decreasing liquidity trend by the end of 2017. The company managed to sustain a sizeable cash reserve despite heavy investing and financing activities.
Foreign Currency and Discontinued Operations: Foreign currency impacts were minor throughout the period with small translation adjustments. Discontinued operations had minimal effect in the early years and seem to have ceased to contribute in later years.

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Express Scripts Holding Co. (NASDAQ:ESRX)

Cash Flow Statement