Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Return on Sales
Return on Investment
Express Scripts Holding Co., profitability 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).
A consistent upward trajectory is observed across all profitability metrics from 2013 through 2017. The steady improvement in both profit margins and return ratios indicates a period of sustained operational optimization and enhanced financial efficiency.
- Profit Margin Analysis
- Gross profit margin experienced steady growth, rising from 7.81% in 2013 to 8.76% in 2017. Operating profit margin demonstrated a more significant increase, growing from 3.41% to 5.49%, suggesting that the company successfully managed its operating expenses relative to revenue growth. This trend is further reflected in the net profit margin, which more than doubled from 1.77% to 4.51% over the five-year period, indicating an improved ability to convert sales into actual profit.
- Return Ratios
- Return on equity (ROE) exhibited the most dramatic increase, climbing from 8.45% in 2013 to 24.93% in 2017, which points to a substantial increase in the efficiency of generating profits from shareholders' equity. Simultaneously, return on assets (ROA) improved from 3.44% to 8.33%, confirming that the company increased its productivity in utilizing its asset base to drive earnings.
The synchronization of growth across all these ratios suggests that the increase in profitability was not driven by a single factor but was the result of comprehensive improvements in both cost management and asset utilization.
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Gross Profit Margin
Express Scripts Holding Co., gross profit margin 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) | ||||||
| Gross profit | 8,762,100) | 8,620,500) | 8,401,900) | 7,925,100) | 8,132,400) | |
| Revenues | 100,064,600) | 100,287,500) | 101,751,800) | 100,887,100) | 104,098,800) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 8.76% | 8.60% | 8.26% | 7.86% | 7.81% | |
| Benchmarks | ||||||
| Gross Profit Margin, 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
Gross profit margin = 100 × Gross profit ÷ Revenues
= 100 × 8,762,100 ÷ 100,064,600 = 8.76%
2 Click competitor name to see calculations.
Between 2013 and 2017, a consistent expansion in the gross profit margin is observed, despite fluctuations and an overall slight decline in total revenues. This divergence indicates an improvement in operational efficiency and cost management relative to revenue generation over the five-year period.
- Revenue Performance
- Revenues peaked in 2013 at approximately 104.1 billion US dollars and experienced a general downward trend, stabilizing near 100.1 billion US dollars by 2017. The lack of significant top-line growth suggests a mature market position or a strategic shift in pricing and volume.
- Gross Profit Trends
- Gross profit exhibited a slight contraction in 2014, falling to 7.9 billion US dollars, but subsequently grew every year through 2017, reaching 8.76 billion US dollars. The growth in gross profit occurred while revenues remained stagnant or declined, signaling a reduction in the cost of goods sold as a percentage of total sales.
- Gross Profit Margin Expansion
- The gross profit margin demonstrated a steady and uninterrupted increase from 7.81% in 2013 to 8.76% in 2017. This positive trajectory reflects a sustained improvement in the company's ability to retain a larger portion of each dollar of revenue after accounting for direct costs.
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Operating Profit Margin
Express Scripts Holding Co., operating profit margin 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) | ||||||
| Operating income | 5,494,000) | 5,087,800) | 4,339,300) | 3,602,400) | 3,551,700) | |
| Revenues | 100,064,600) | 100,287,500) | 101,751,800) | 100,887,100) | 104,098,800) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 5.49% | 5.07% | 4.26% | 3.57% | 3.41% | |
| Benchmarks | ||||||
| Operating Profit Margin, 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
Operating profit margin = 100 × Operating income ÷ Revenues
= 100 × 5,494,000 ÷ 100,064,600 = 5.49%
2 Click competitor name to see calculations.
Between 2013 and 2017, a distinct divergence is observed between revenue stability and profitability growth. While total revenues remained relatively stagnant, operating income grew consistently, resulting in a steady expansion of the operating profit margin.
- Operating Income Growth
- Operating income demonstrated a consistent upward trend, increasing from 3,551,700 thousand US dollars in 2013 to 5,494,000 thousand US dollars by 2017. This represents a substantial overall increase, with the most pronounced growth acceleration occurring between 2014 and 2016.
- Revenue Stability
- Revenues exhibited minimal fluctuation, remaining concentrated around the 100 billion US dollar mark throughout the five-year period. A slight downward trend is noted from a high of 104,098,800 thousand US dollars in 2013 to 100,064,600 thousand US dollars in 2017, confirming that profitability gains were not the result of top-line growth.
- Operating Profit Margin Expansion
- The operating profit margin increased monotonically each year, rising from 3.41% in 2013 to 5.49% in 2017. This expansion indicates a significant improvement in operational efficiency and cost management, as the organization successfully increased its operating earnings despite a marginal decline in total revenue.
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Net Profit Margin
Express Scripts Holding Co., net profit margin 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) | |
| Revenues | 100,064,600) | 100,287,500) | 101,751,800) | 100,887,100) | 104,098,800) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 4.51% | 3.39% | 2.43% | 1.99% | 1.77% | |
| Benchmarks | ||||||
| Net Profit Margin, 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
Net profit margin = 100 × Net income attributable to Express Scripts ÷ Revenues
= 100 × 4,517,400 ÷ 100,064,600 = 4.51%
2 Click competitor name to see calculations.
Between 2013 and 2017, a consistent and accelerating improvement in profitability is observed. Despite a stagnation in top-line revenue, the company successfully expanded its bottom-line results, indicating a strong focus on operational efficiency and cost optimization.
- Net Profit Margin Trend
- The net profit margin exhibited a continuous upward trajectory over the five-year period. Starting at 1.77% in 2013, the margin increased annually, reaching 4.51% by December 31, 2017. This represents a more than twofold increase in the percentage of revenue converted into net income, reflecting a significant enhancement in profitability per dollar of revenue generated.
- Net Income Performance
- Net income attributable to the company grew substantially and consistently each year. From a baseline of 1,844,600 thousand US dollars in 2013, net income rose to 4,517,400 thousand US dollars by 2017. The growth rate accelerated in the latter years of the period, with the most significant absolute increase occurring between 2016 and 2017.
- Revenue Correlation
- A notable divergence exists between revenue and net income. While net income climbed steadily, revenues remained relatively flat, fluctuating within a narrow range between approximately 100 billion and 104 billion US dollars. The fact that net profit margins expanded while revenues stayed stagnant suggests that the increase in profitability was driven by internal cost reductions or a shift toward higher-margin business activities rather than volume-driven growth.
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Return on Equity (ROE)
Express Scripts Holding Co., ROE 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) | |
| Total Express Scripts stockholders’ equity | 18,119,600) | 16,236,000) | 17,372,800) | 20,054,200) | 21,837,400) | |
| Profitability Ratio | ||||||
| ROE1 | 24.93% | 20.97% | 14.25% | 10.01% | 8.45% | |
| Benchmarks | ||||||
| ROE, 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
ROE = 100 × Net income attributable to Express Scripts ÷ Total Express Scripts stockholders’ equity
= 100 × 4,517,400 ÷ 18,119,600 = 24.93%
2 Click competitor name to see calculations.
Between 2013 and 2017, a consistent and significant improvement in the Return on Equity (ROE) is observed, with the ratio rising from 8.45% to 24.93%. This trajectory indicates a substantial enhancement in the efficiency with which shareholders' equity is utilized to generate profit over the five-year period.
- Net Income Growth
- Net income attributable to Express Scripts exhibited a steady and aggressive upward trend, increasing from US$ 1,844,600 thousand in 2013 to US$ 4,517,400 thousand by 2017. This represents a sustained increase in absolute profitability throughout the analyzed timeframe.
- Equity Base Fluctuations
- Total stockholders' equity experienced a general decline for the majority of the period, falling from US$ 21,837,400 thousand in 2013 to a low of US$ 16,236,000 thousand in 2016, followed by a moderate recovery to US$ 18,119,600 thousand in 2017.
- ROE Driver Analysis
- The rapid expansion of the ROE was driven by the simultaneous occurrence of rising net income and a shrinking equity base between 2013 and 2016. The combination of an increasing numerator (net income) and a decreasing denominator (equity) accelerated the growth of the ratio, culminating in a peak ROE of 24.93% in 2017 despite the slight increase in equity during the final year.
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Return on Assets (ROA)
Express Scripts Holding Co., ROA 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) | |
| Total assets | 54,255,800) | 51,744,900) | 53,243,300) | 53,798,900) | 53,548,200) | |
| Profitability Ratio | ||||||
| ROA1 | 8.33% | 6.58% | 4.65% | 3.73% | 3.44% | |
| Benchmarks | ||||||
| ROA, 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
ROA = 100 × Net income attributable to Express Scripts ÷ Total assets
= 100 × 4,517,400 ÷ 54,255,800 = 8.33%
2 Click competitor name to see calculations.
The financial performance between 2013 and 2017 is characterized by a consistent improvement in asset efficiency and a substantial increase in net profitability.
- Net Income Growth
- A strong upward trend in net income attributable to Express Scripts is observed, rising from 1,844,600 thousand US dollars in 2013 to 4,517,400 thousand US dollars by the end of 2017. This represents a significant expansion in earnings capacity over the five-year period.
- Asset Base Stability
- Total assets remained relatively stable throughout the period, fluctuating between a low of 51,744,900 thousand US dollars in 2016 and a high of 54,255,800 thousand US dollars in 2017. The stability of the asset base indicates that the increase in profitability was not driven by an expansion of the company's asset footprint.
- Return on Assets (ROA) Progression
- The ROA exhibited a continuous and accelerating increase, moving from 3.44% in 2013 to 8.33% in 2017. This progression demonstrates a marked improvement in the ability to generate profit relative to the total assets employed, with the growth rate of the ratio intensifying specifically between 2015 and 2017.
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