Name: Express Scripts Holding Co. (NASDAQ:ESRX) | Cash Flow Statement
Creator: Stock Analysis on Net

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.

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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).

An analysis of the cash flow trends from 2013 to 2017 reveals a period of significant earnings growth and an aggressive capital return strategy, balanced by strategic acquisitions and debt management.

Operating Cash Flow Performance: Net income exhibited a consistent upward trajectory, growing from 1.87 billion USD in 2013 to 4.53 billion USD in 2017. Net cash provided by operating activities followed a similar positive trend, increasing from 4.77 billion USD to 5.35 billion USD over the same period. The consistently higher value of operating cash flow relative to net income is largely attributable to non-cash charges, specifically depreciation and amortization, although these charges trended downward from 2.45 billion USD in 2013 to 1.80 billion USD in 2017. Changes in working capital, particularly claims and rebates payable, introduced volatility into the annual operating cash flows.
Investing Activities and Capital Allocation: Investing activities were characterized by stable capital expenditures for property, equipment, and software, which generally fluctuated between 267 million USD and 437 million USD. However, 2017 marked a significant shift in investment strategy with a substantial cash outflow of 3.50 billion USD for acquisitions, net of cash acquired. This represents the most significant investing outflow in the five-year period, shifting the net cash used in investing activities to 3.69 billion USD in 2017, compared to a range of 70 million USD to 412 million USD in prior years.
Financing Activities and Capital Structure: Financing activities were dominated by a consistent and aggressive share repurchase program. Treasury stock acquisitions remained high throughout the period, peaking at 5.50 billion USD in 2015 and totaling over 22 billion USD across the five years. To support these buybacks and other obligations, the entity engaged in active debt management. Significant proceeds from long-term debt were realized between 2014 and 2016, with peaks of 5.50 billion USD in 2015 and 5.99 billion USD in 2016, which were partially offset by long-term debt repayments. By 2017, the reliance on new long-term debt issuance decreased to 1.40 billion USD.
Liquidity and Overall Cash Position: The net increase or decrease in cash and cash equivalents varied annually, reflecting the timing of acquisitions and financing outflows. Cash and cash equivalents at the end of the year fluctuated from a high of 3.19 billion USD in 2015 to 2.31 billion USD in 2017. The overall liquidity position remained stable despite the heavy outflows for share repurchases and the 2017 acquisition, supported by the robust and growing cash generation from core operating activities.

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