Express Scripts Holding Co. (NASDAQ:ESRX)

The financial data reveals several key trends over the five-year period ending in December 31, 2017.

Net Operating Profit After Taxes (NOPAT)

NOPAT exhibited a consistent growth trend from 2013 to 2016, increasing from approximately 1.82 billion USD to 3.38 billion USD. However, in 2017, there was a slight decline to roughly 3.27 billion USD, indicating a marginal slowdown after substantial growth.

Cost of Capital

The cost of capital showed minor fluctuations but remained relatively stable within a narrow range between 10.85% and 11.89%. Notably, it decreased slightly after 2014 and stabilized around 10.9% from 2016 onward, suggesting a relatively steady cost environment for the company’s capital during the latter years.

Invested Capital

Invested capital demonstrated a declining trend for the initial four years, falling from about 41.29 billion USD in 2013 to approximately 35.71 billion USD in 2016. This decline might indicate divestitures, asset sales, or efficiency improvements in capital allocation. In 2017, a reversal occurred with invested capital increasing to around 37 billion USD, signifying a possible reinvestment or acquisition activity.

Economic Profit

Economic profit remained negative throughout the entire period, though the magnitude of the loss decreased significantly from a deficit of approximately 3.03 billion USD in 2013 to a loss of roughly 499 million USD in 2016. This improvement signifies enhanced value generation relative to the cost of capital. Nevertheless, 2017 saw an increase in economic loss to about 761 million USD, indicating a deterioration in value creation despite relatively high operating profits.

Overall, the company showed robust growth in operating profitability alongside a reduction in invested capital initially, promoting improvement in economic profit. However, the slight decline in NOPAT and reversal in economic profit in the final year suggest emerging challenges impacting the efficacy of capital utilization and value creation.

Net Income Attributable to Express Scripts

The net income attributable to the company showed a consistent upward trend throughout the five-year period. Starting from approximately 1.84 billion US dollars in 2013, the net income increased annually, reaching about 4.52 billion US dollars by the end of 2017. This represents a more than doubling of net income over the duration analyzed, indicating strong profitability growth.

Net Operating Profit After Taxes (NOPAT)

The NOPAT figures likewise showed an overall increasing trend, rising from roughly 1.82 billion US dollars in 2013 to over 3.27 billion US dollars in 2017. The growth is generally steady, with an especially notable increase between 2015 and 2016. However, unlike net income, NOPAT slightly declined in 2017 compared to the previous year, decreasing from approximately 3.38 billion to 3.27 billion US dollars.

Comparative Insights

Both net income and NOPAT demonstrate sustained profitability improvements over the analyzed timeframe, highlighting effective operational and financial management. The disparity in 2017, where net income continued rising but NOPAT decreased, may suggest changes in operating efficiency, tax impact, or other factors affecting post-tax operating profits.

Provision for Income Taxes

The provision for income taxes exhibits fluctuation over the five-year period. It begins at 1,104,000 thousand US dollars at the end of 2013, then decreases slightly in 2014 to 1,031,200 thousand US dollars. A notable increase occurs in 2015, with the provision reaching 1,364,300 thousand US dollars, followed by a decline in 2016 to 999,500 thousand US dollars. By the end of 2017, there is a significant drop to 397,300 thousand US dollars, marking the lowest figure in the observed timeframe.

Cash Operating Taxes

Cash operating taxes demonstrate more variability with an overall upward trajectory throughout the period. Starting at 1,890,614 thousand US dollars in 2013, the amount decreases to 1,669,615 thousand US dollars in 2014. Subsequently, a sharp increase is observed in 2015, reaching 2,004,540 thousand US dollars. In 2016, cash operating taxes decline again to 1,743,214 thousand US dollars before climbing significantly to 2,292,125 thousand US dollars by the end of 2017, the highest level recorded in the five years.

Comparative Observations

Overall, the provision for income taxes and cash operating taxes do not follow the same trend patterns. While the provision for income taxes peaks in 2015 before steadily declining to its lowest point in 2017, cash operating taxes show a general increasing trend despite year-to-year fluctuations. The divergence between these two tax-related metrics may suggest differences in tax accounting policies, timing differences, or changes in cash flow management relating to tax obligations.

Total Reported Debt & Leases

The total reported debt and leases show a fluctuating trend over the five-year period. The value decreased slightly from approximately 14.27 billion USD at the end of 2013 to about 13.86 billion USD in 2014. However, from 2014 onward, the debt increased steadily, reaching around 16.25 billion USD by the end of 2017. This reflects a rising leverage position in the latter years.

Total Express Scripts Stockholders’ Equity

Stockholders’ equity demonstrates a declining trend from 2013 through 2016, dropping from roughly 21.84 billion USD in 2013 to about 16.24 billion USD in 2016. This decline represents a significant reduction in equity over this period. Notably, in 2017, there is a reversal of this downward trend with equity increasing to about 18.12 billion USD, suggesting a partial recovery or accumulation of retained earnings or capital injection during that year.

Invested Capital

Invested capital also declined consistently from 2013 to 2016, moving from approximately 41.29 billion USD to around 35.71 billion USD. In 2017, a modest increase to about 37.01 billion USD is observed. This trend indicates a contraction in the total capital employed by the company initially, followed by a slight expansion towards the end of the period.

The analysis of the financial data over the five-year period reveals several key trends in the economic profit, invested capital, and economic spread ratio.

Economic Profit

The economic profit figures, expressed in thousands of US dollars, show a consistent improvement from 2013 to 2016. Initially, the company recorded a significant negative economic profit of approximately -3,032,938,000 in 2013, which decreased in magnitude to -498,622,000 by 2016. However, there was a slight deterioration in 2017, with economic profit increasing in negative value to -761,050,000. Overall, although the company did not achieve positive economic profit in this period, the trend indicates a reduction in losses until 2016 followed by a minor setback in 2017.

Invested Capital

The invested capital demonstrates a gradual decrease from 2013 to 2016, declining from about 41,289,230,000 to 35,712,343,000. This reduction suggests efforts to optimize or reduce capital investment during these years. However, in 2017, there was a slight increase in invested capital to 37,007,152,000, indicating a possible strategic reinvestment or expansion. The overall trend reflects a general contraction in capital investment with a modest reversal in the final year observed.

Economic Spread Ratio

The economic spread ratio, which measures the difference between the return on invested capital and the cost of capital as a percentage, shows a consistent improvement over time. It started at a deeply negative ratio of -7.35% in 2013, improved year over year to reach -1.4% by 2016, indicating a narrowing gap between returns and cost of capital. In 2017, the ratio slightly reversed to -2.06%, mirroring the slight deterioration in economic profit during the same year. Despite remaining negative throughout, the improvement trend points to increasing operational efficiency or better capital utilization prior to 2017.

In summary, the financial data indicates a strengthening economic position through 2016, marked by decreased losses, reduced capital investment, and improved economic spread. The reversed trends in 2017 suggest challenges that partially offset gains achieved in previous years.

The annual financial data reveals several notable trends in the company’s economic profit, revenues, and economic profit margin over the five-year period ending in 2017.

Economic Profit

There is a clear improvement in economic profit from 2013 through 2016, with the loss decreasing substantially from approximately -3.03 billion to around -0.50 billion US dollars. However, in 2017, the economic profit worsened slightly, rising to about -0.76 billion US dollars. Despite the improvement over the first four years, the company remained in a negative economic profit position throughout the period, indicating that economic returns consistently fell short of cost of capital.

Revenues

Revenues displayed relative stability over the five years, staying close to the 100 billion US dollars mark. There was a minor peak in 2015 with approximately 101.75 billion US dollars but generally hovered just above or below this range. This indicates steady top-line performance without significant growth or decline during this timeframe.

Economic Profit Margin

The economic profit margin follows a pattern consistent with the economic profit values. It shows improvement from -2.91% in 2013 to -0.5% in 2016, reflecting a reduction in the deficit as a percentage of revenues. Nevertheless, the margin decreases again in 2017 to -0.76%, indicating a slight deterioration in economic profitability relative to sales in the final year measured. The negative margins affirm that the company incurred losses relative to its cost of capital throughout the periods.

In summary, while revenues remained relatively stable, the company made progress in reducing economic losses up to 2016. This positive trend reversed somewhat in 2017, with both economic profit and economic profit margin worsening, highlighting challenges in fully achieving profitable returns beyond costs during the entire timeline.