Medco shares 10-year strategic financial plan

Medco Health Solutions, Inc. (NYSE: MHS) today presented the results of a recently completed strategic financial plan that forecasts a decade of substantial growth through 2020.

"Since becoming a public company in 2003, we have delivered compound average GAAP earnings per share growth exceeding 20 percent.  Looking forward to the next decade through 2020, we expect to deliver continued strong EPS growth.  Based upon our detailed internal projections, our goal is to achieve compound average annual GAAP earnings per share growth for the period from 2003 through 2020 in the range of 16 to 20 percent – a substantial achievement in a large and rapidly growing Fortune 50 enterprise," Medco Chairman and CEO David B. Snow Jr. told those attending the company's annual Analyst Day meeting held here today.

Snow, joined by several of the company's senior executives, provided industry analysts and investors with a comprehensive overview of the company's expectations for future growth.  He explained Medco's broad and expanding portfolio of drivers that are expected to contribute to Medco's long-term earnings growth, while also "Making Medicine Smarter."

Among the most significant observations was the fact that the small molecule generic wave continues through 2020.  This will drive particular benefit to Medco clients and shareholders as a result of Medco-specific mail-order penetration rates for these medicines, which are largely used to treat chronic and complex conditions.  The company provided significant detail related to incremental longer-range generic contributions to Medco's earnings per share.

"The generic wave does not end in 2015.  For Medco, 2011 represents the lowest year of the decade for new generic incremental EPS contribution, followed by 2012, which is by far the highest.  We are confident in the continued incremental earnings power delivered by new generics through each year of the next decade," said Snow.  " In addition, our ability to deliver strong 2011 GAAP EPS growth of 12 to 17 percent is a testament to the strength of our business model and the promise for years of strong earnings growth over the longer-term horizon."

Snow's presentation included a detailed discussion on the significant growth opportunity expected from the specialty drug pipeline over the next several years as the company delivers innovative solutions to help its clients manage the expected influx of expensive new medicines.  He also outlined the promise of biosimilars as a key tool to drive savings starting as early as 2013, based on Medco projections.

Many other Medco initiatives were discussed throughout the presentation, ranging from the strategy surrounding international opportunities to the promise of e-prescribing.  Snow also highlighted the power of the United BioSource acquisition – a company focused on post-approval Risk Evaluation and Mitigation Strategies (REMS) and comparative effectiveness research.

"When you consider the large number of drugs in the specialty pipeline, the expected growth of biosimilars, and the fact that we have a large specialty drug footprint, there is tremendous opportunity to elevate product safety to an even higher level with the addition of United BioSource capability to our portfolio," said Snow.  

Additional presentations were delivered by Richard Rubino, chief financial officer; Kenneth Klepper, president and chief operating officer; Mary Daschner, group president, Government PBM; and Dr. Robert Epstein, President of Advanced Clinical Science and Research.

Rubino added: "I believe that sharing some of the elements of our recently completed 10-year strategic financial plan with investors is a powerful differentiator for Medco.  We have always been a very transparent company and this information will enable investors to have a clear line of sight into our future growth.  We have taken into consideration the risks and opportunities we see today.  Following our comprehensive analysis, we continue to believe that we will be uniquely positioned to generate continued strong earnings growth and returns on invested capital – all for the ultimate benefit of our shareholders."