Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
Debt Ratios
Coverage Ratios
Express Scripts Holding Co., solvency ratios
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).
The solvency profile from 2013 to 2017 is characterized by a period of increasing financial leverage that peaked in 2016, followed by a slight contraction in 2017. Despite the increase in total debt relative to equity and assets, the capacity to service these obligations improved significantly over the five-year period.
- Leverage and Capital Structure
- A consistent upward trend in leverage is observed from 2013 through 2016. The debt to equity ratio rose from 0.64 to a peak of 0.96, while the debt to assets ratio increased from 0.26 to 0.30. Similarly, debt to capital climbed from 0.39 to 0.49. This indicates a strategic shift toward a higher proportion of debt financing during this interval. A slight reversal occurred in 2017, with the debt to equity ratio moderating to 0.88 and debt to capital returning to 0.47.
- Financial Leverage
- Financial leverage increased steadily from 2.45 in 2013 to 3.19 in 2016, reflecting an increase in the use of debt to acquire assets. This metric aligned with the trends seen in the debt-to-equity and debt-to-asset ratios before decreasing to 2.99 by the end of 2017.
- Debt Service Capacity
- Strong solvency is evidenced by the performance of coverage ratios, which trended upward despite the increase in nominal leverage. The interest coverage ratio improved from 6.08 in 2013 to 9.11 in 2017, signaling a robust ability to meet interest expenses. The fixed charge coverage ratio followed a nearly identical trajectory, rising from 5.46 in 2013 to 8.28 in 2017. The stability and growth of these ratios suggest that operating earnings grew at a pace that comfortably offset the costs associated with the increased debt load.
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Debt to Equity
Express Scripts Holding Co., debt to equity calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Short-term debt and current maturities of long-term debt | 1,032,900) | 722,300) | 1,646,400) | 2,555,300) | 1,584,000) | |
| Long-term debt, excluding current maturities | 14,981,500) | 14,846,000) | 13,946,300) | 11,012,700) | 12,363,000) | |
| Total debt | 16,014,400) | 15,568,300) | 15,592,700) | 13,568,000) | 13,947,000) | |
| Total Express Scripts stockholders’ equity | 18,119,600) | 16,236,000) | 17,372,800) | 20,054,200) | 21,837,400) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 0.88 | 0.96 | 0.90 | 0.68 | 0.64 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Abbott Laboratories | — | — | — | — | — | |
| Elevance Health Inc. | — | — | — | — | — | |
| Intuitive Surgical Inc. | — | — | — | — | — | |
| Medtronic PLC | — | — | — | — | — | |
| UnitedHealth Group Inc. | — | — | — | — | — | |
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).
1 2017 Calculation
Debt to equity = Total debt ÷ Total Express Scripts stockholders’ equity
= 16,014,400 ÷ 18,119,600 = 0.88
2 Click competitor name to see calculations.
The solvency profile between 2013 and 2017 is characterized by a general increase in leverage, driven by a combination of rising total debt and a period of contracting stockholders' equity. While the debt-to-equity ratio peaked in 2016, a partial reversal in this trend occurred in 2017.
- Total Debt Trends
- Total debt remained relatively stable between 2013 and 2014, followed by a significant increase in 2015 to approximately 15.59 billion USD. Following a period of stability in 2016, debt levels rose further to reach 16.01 billion USD by December 31, 2017, reflecting an overall upward trajectory in total liabilities over the five-year period.
- Stockholders' Equity Trends
- A consistent decline in total stockholders' equity was observed from 2013 to 2016, falling from 21.84 billion USD to a low of 16.24 billion USD. This downward trend suggests a reduction in the equity base during this interval. However, this trend reversed in 2017, with equity increasing to 18.12 billion USD.
- Debt to Equity Ratio Analysis
- The debt-to-equity ratio exhibited a steady increase from 0.64 in 2013 to a peak of 0.96 in 2016. This escalation was the result of simultaneous increases in total debt and decreases in equity. In 2017, the ratio improved to 0.88, primarily attributed to the recovery in stockholders' equity, which offset the continued moderate growth in total debt.
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Debt to Capital
Express Scripts Holding Co., debt to capital calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Short-term debt and current maturities of long-term debt | 1,032,900) | 722,300) | 1,646,400) | 2,555,300) | 1,584,000) | |
| Long-term debt, excluding current maturities | 14,981,500) | 14,846,000) | 13,946,300) | 11,012,700) | 12,363,000) | |
| Total debt | 16,014,400) | 15,568,300) | 15,592,700) | 13,568,000) | 13,947,000) | |
| Total Express Scripts stockholders’ equity | 18,119,600) | 16,236,000) | 17,372,800) | 20,054,200) | 21,837,400) | |
| Total capital | 34,134,000) | 31,804,300) | 32,965,500) | 33,622,200) | 35,784,400) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.47 | 0.49 | 0.47 | 0.40 | 0.39 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Abbott Laboratories | — | — | — | — | — | |
| Elevance Health Inc. | — | — | — | — | — | |
| Intuitive Surgical Inc. | — | — | — | — | — | |
| Medtronic PLC | — | — | — | — | — | |
| UnitedHealth Group Inc. | — | — | — | — | — | |
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).
1 2017 Calculation
Debt to capital = Total debt ÷ Total capital
= 16,014,400 ÷ 34,134,000 = 0.47
2 Click competitor name to see calculations.
The financial solvency profile between 2013 and 2017 is characterized by a gradual increase in leverage and a shifting capital structure. There is a clear trend of increasing reliance on debt relative to total capital, which peaked in 2016 before experiencing a slight correction in 2017.
- Total Debt Trends
- Total debt exhibited a general upward trajectory over the five-year period. Following a marginal decrease from 13,947,000 thousand US dollars in 2013 to 13,568,000 thousand US dollars in 2014, debt levels rose significantly to 15,592,700 thousand US dollars in 2015. This elevated level remained relatively stable through 2016, ending the period at a peak of 16,014,400 thousand US dollars in 2017.
- Total Capital Fluctuations
- Total capital experienced a sustained decline from 2013 through 2016, falling from 35,784,400 thousand US dollars to a low of 31,804,300 thousand US dollars. This contraction in the capital base occurred simultaneously with the increase in debt, compounding the impact on solvency ratios. A reversal of this trend occurred in 2017, with total capital increasing to 34,134,000 thousand US dollars.
- Debt to Capital Ratio Analysis
- The debt to capital ratio rose steadily from 0.39 in 2013 to a peak of 0.49 in 2016. This increase indicates a systematic shift toward a more leveraged capital structure. In 2017, despite the continued rise in total debt, the substantial increase in total capital resulted in a slight decrease of the ratio to 0.47, suggesting a marginal improvement in the solvency position toward the end of the analyzed period.
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Debt to Assets
Express Scripts Holding Co., debt to assets calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Short-term debt and current maturities of long-term debt | 1,032,900) | 722,300) | 1,646,400) | 2,555,300) | 1,584,000) | |
| Long-term debt, excluding current maturities | 14,981,500) | 14,846,000) | 13,946,300) | 11,012,700) | 12,363,000) | |
| Total debt | 16,014,400) | 15,568,300) | 15,592,700) | 13,568,000) | 13,947,000) | |
| Total assets | 54,255,800) | 51,744,900) | 53,243,300) | 53,798,900) | 53,548,200) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.30 | 0.30 | 0.29 | 0.25 | 0.26 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Abbott Laboratories | — | — | — | — | — | |
| Elevance Health Inc. | — | — | — | — | — | |
| Intuitive Surgical Inc. | — | — | — | — | — | |
| Medtronic PLC | — | — | — | — | — | |
| UnitedHealth Group Inc. | — | — | — | — | — | |
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).
1 2017 Calculation
Debt to assets = Total debt ÷ Total assets
= 16,014,400 ÷ 54,255,800 = 0.30
2 Click competitor name to see calculations.
The analysis of solvency ratios for the period between December 31, 2013, and December 31, 2017, reveals a moderate increase in the company's reliance on debt relative to its total asset base.
- Total Debt Trends
- Total debt exhibited an overall upward trajectory, rising from approximately $13.95 billion in 2013 to $16.01 billion by the end of 2017. A notable increase occurred between 2014 and 2015, during which debt rose from $13.57 billion to $15.59 billion. Following this period, debt levels remained relatively stable through 2016 before continuing a slight ascent in 2017.
- Total Asset Performance
- Total assets remained relatively consistent throughout the five-year period, fluctuating within a narrow range. After a slight peak in 2014 at $53.80 billion, assets experienced a gradual decline, reaching a period low of $51.74 billion in 2016, before recovering to $54.26 billion in 2017.
- Debt to Assets Ratio Analysis
- The debt to assets ratio increased from 0.26 in 2013 to 0.30 in 2017. A marginal improvement to 0.25 was observed in 2014, but this was followed by a steady increase to 0.29 in 2015 and 0.30 in 2016. The ratio remained stagnant at 0.30 through 2017. This upward trend indicates that debt grew at a faster rate than assets, particularly during the 2015-2016 window.
Overall, the data indicates a slight deterioration in the solvency profile over the observed timeframe, as the proportion of assets financed by debt increased from 26% to 30%.
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Financial Leverage
Express Scripts Holding Co., financial leverage calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Total assets | 54,255,800) | 51,744,900) | 53,243,300) | 53,798,900) | 53,548,200) | |
| Total Express Scripts stockholders’ equity | 18,119,600) | 16,236,000) | 17,372,800) | 20,054,200) | 21,837,400) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 2.99 | 3.19 | 3.06 | 2.68 | 2.45 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Abbott Laboratories | — | — | — | — | — | |
| Elevance Health Inc. | — | — | — | — | — | |
| Intuitive Surgical Inc. | — | — | — | — | — | |
| Medtronic PLC | — | — | — | — | — | |
| UnitedHealth Group Inc. | — | — | — | — | — | |
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).
1 2017 Calculation
Financial leverage = Total assets ÷ Total Express Scripts stockholders’ equity
= 54,255,800 ÷ 18,119,600 = 2.99
2 Click competitor name to see calculations.
The financial leverage profile shows a progressive increase in risk exposure from 2013 to 2016, followed by a modest correction in 2017. The primary driver of this trend was a consistent contraction in stockholders' equity while the total asset base remained relatively stable.
- Total Assets
- Asset levels demonstrated relative stability throughout the analyzed period, fluctuating between a minimum of US$ 51.7 billion in 2016 and a maximum of US$ 54.3 billion in 2017. This indicates a consistent scale of operations without significant expansion or divestment.
- Stockholders' Equity
- A sustained downward trend in equity is observed between 2013 and 2016, with values falling from US$ 21.8 billion to US$ 16.2 billion. This decline represents a significant reduction in the equity buffer. A partial reversal of this trend occurred in 2017, with equity increasing to US$ 18.1 billion.
- Financial Leverage Ratio
- The leverage ratio rose steadily from 2.45 in 2013 to a peak of 3.19 in 2016, signaling an increasing reliance on liabilities to finance assets. The subsequent decrease to 2.99 in 2017 correlates with the recovery in stockholders' equity, suggesting a slight improvement in the solvency position toward the end of the period.
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Interest Coverage
Express Scripts Holding Co., interest coverage calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income attributable to Express Scripts | 4,517,400) | 3,404,400) | 2,476,400) | 2,007,600) | 1,844,600) | |
| Add: Net income attributable to noncontrolling interest | 14,300) | 23,200) | 23,100) | 27,400) | 28,100) | |
| Less: Net loss from discontinued operations, net of tax | —) | —) | —) | —) | (53,600) | |
| Add: Income tax expense | 397,300) | 999,500) | 1,364,300) | 1,031,200) | 1,104,000) | |
| Add: Interest expense and other | 607,900) | 694,800) | 500,300) | 582,900) | 596,100) | |
| Earnings before interest and tax (EBIT) | 5,536,900) | 5,121,900) | 4,364,100) | 3,649,100) | 3,626,400) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 9.11 | 7.37 | 8.72 | 6.26 | 6.08 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Abbott Laboratories | — | — | — | — | — | |
| Elevance Health Inc. | — | — | — | — | — | |
| Intuitive Surgical Inc. | — | — | — | — | — | |
| Medtronic PLC | — | — | — | — | — | |
| UnitedHealth Group Inc. | — | — | — | — | — | |
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).
1 2017 Calculation
Interest coverage = EBIT ÷ Interest expense
= 5,536,900 ÷ 607,900 = 9.11
2 Click competitor name to see calculations.
The interest coverage ratio demonstrates a consistent overall upward trajectory between 2013 and 2017, indicating a strengthening capacity to service debt obligations from operational profits. Despite a temporary fluctuation in 2016, the solvency position improved significantly over the five-year period.
- Earnings Before Interest and Tax (EBIT) Trends
- Operational profitability experienced uninterrupted growth throughout the period. EBIT increased from $3,626.4 million in 2013 to $5,536.9 million in 2017. This steady expansion of the earnings base served as the primary driver for the improvement in the interest coverage ratio.
- Interest Expense Fluctuations
- Interest expenses and other related costs exhibited volatility. A downward trend was observed from 2013 to 2015, with expenses falling to a period low of $500.3 million. This was followed by a sharp increase to $694.8 million in 2016, before moderating to $607.9 million in 2017.
- Interest Coverage Ratio Analysis
- The ratio rose from 6.08 in 2013 to a peak of 9.11 in 2017. A notable acceleration occurred in 2015, where the ratio reached 8.72 due to the simultaneous increase in EBIT and decrease in interest expenses. The decline to 7.37 in 2016 was attributable to the spike in interest costs, which partially offset the growth in EBIT. The final recovery to 9.11 in 2017 indicates that EBIT growth outpaced interest expenses, resulting in the highest level of debt-servicing comfort in the observed timeframe.
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Fixed Charge Coverage
Express Scripts Holding Co., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income attributable to Express Scripts | 4,517,400) | 3,404,400) | 2,476,400) | 2,007,600) | 1,844,600) | |
| Add: Net income attributable to noncontrolling interest | 14,300) | 23,200) | 23,100) | 27,400) | 28,100) | |
| Less: Net loss from discontinued operations, net of tax | —) | —) | —) | —) | (53,600) | |
| Add: Income tax expense | 397,300) | 999,500) | 1,364,300) | 1,031,200) | 1,104,000) | |
| Add: Interest expense and other | 607,900) | 694,800) | 500,300) | 582,900) | 596,100) | |
| Earnings before interest and tax (EBIT) | 5,536,900) | 5,121,900) | 4,364,100) | 3,649,100) | 3,626,400) | |
| Add: Rental expense under the office and distribution facilities leases | 69,300) | 62,900) | 62,500) | 59,700) | 83,800) | |
| Earnings before fixed charges and tax | 5,606,200) | 5,184,800) | 4,426,600) | 3,708,800) | 3,710,200) | |
| Interest expense and other | 607,900) | 694,800) | 500,300) | 582,900) | 596,100) | |
| Rental expense under the office and distribution facilities leases | 69,300) | 62,900) | 62,500) | 59,700) | 83,800) | |
| Fixed charges | 677,200) | 757,700) | 562,800) | 642,600) | 679,900) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 8.28 | 6.84 | 7.87 | 5.77 | 5.46 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Abbott Laboratories | — | — | — | — | — | |
| Elevance Health Inc. | — | — | — | — | — | |
| Intuitive Surgical Inc. | — | — | — | — | — | |
| Medtronic PLC | — | — | — | — | — | |
| UnitedHealth Group Inc. | — | — | — | — | — | |
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).
1 2017 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 5,606,200 ÷ 677,200 = 8.28
2 Click competitor name to see calculations.
The solvency position of the entity showed a general strengthening between 2013 and 2017, characterized by a consistent increase in the fixed charge coverage ratio. Starting at 5.46 in 2013, the ratio reached a peak of 8.28 by the end of 2017, indicating an enhanced capacity to meet fixed financial obligations from operational earnings.
- Earnings Performance
- Earnings before fixed charges and tax exhibited a strong upward trend over the analyzed period. After remaining relatively flat between 2013 and 2014 at approximately 3.7 billion USD, earnings grew significantly each subsequent year, reaching 5.6 billion USD in 2017. This growth provided a substantial cushion for the coverage of fixed obligations.
- Fixed Charge Trends
- Fixed charges demonstrated volatility rather than a linear trend. Expenses decreased from 679.9 million USD in 2013 to a period low of 562.8 million USD in 2015. A notable spike occurred in 2016, where charges rose to 757.7 million USD, before declining again to 677.2 million USD in 2017.
- Fixed Charge Coverage Ratio Analysis
- The coverage ratio improved from 5.46 in 2013 to 7.87 in 2015, driven by the simultaneous increase in earnings and decrease in fixed charges. The decline to 6.84 in 2016 was a direct result of the increase in fixed charges during that year. However, the recovery to 8.28 in 2017 reflects a combination of record-high earnings and a reduction in fixed costs, marking the strongest solvency level within the five-year period.
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