JP Morgan

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JP Morgan 24th Annual Healthcare Conference
January 9, 2006
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Forward-Looking Statements

• Statements included in this presentation or in
  the oral comments made as part of this
  presentation may contain forward-looking
  statements, including but not limited to
  statements of the Companys plans, objectives,
  expectations or intentions, that involve risk and
  uncertainties.
• The Companys actual results may differ
  significantly from those projected or suggested
  in any forward-looking statement due to a variety
  of factors, which are discussed in detail in the
  Companys filings with the Securities and
  Exchange Commission.

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Todays Challenging Environment

• Maintaining Access to Safe and Affordable Drugs

4
Unmanaged Prescription Drug Trend
Source 2004 Drug Trend Report
Plan sponsors will likely increase the use of PBM
tools to manage drug spend
5
Our Value Proposition Complete
Alignment

• To reduce pharmacy costs, without
  compromise to health outcomes, while maximizing
  patient satisfaction

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Alignment - Building a Formulary

• Evaluate relative clinical value
• Determine net cost

Drug A
Drug B
Relative clinical value
Drug C
Cost per prescription
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Alignment - Building a Formulary

• Evaluate relative clinical value
• Determine net cost
• Account for market share

Drug B
Drug A
Relative clinical value
Drug C
50
60
70
80
Cost per prescription
8
Alignment - Building a Formulary

• Evaluate relative clinical value
• Determine net cost
• Account for market share
• Account for rebates

Drug B
Drug A
Relative clinical value
Drug C
50
60
70
80
Cost per prescription
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Alignment - Building a Formulary

• Evaluate relative clinical value
• Determine net cost
• Account for market share
• Account for rebates
• Select formulary products

Exception Market dynamics might trump net cost
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Alignment - Retail Network Management
Greater Management
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Alignment Clinical Programs
Plan Designs Encourage Greater Use of Generics
and Preferred Low-cost Brands
Clients using step therapy realize on average a
2 percentage point increase in generic
utilization
12
Alignment Home Delivery
We Offer Highly Efficient, Cost-effective Home
Delivery
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Alignment Growing Demand for Home Delivery
Increased home delivery penetration
Excludes UHC claims

• Represents network claims plus 3 times home
  delivery claims home delivery claims are 90 days
  vs. 30 days in the network.
• Twelve months ended Sept 2005

Home Delivery Helps Manage the Cost of
Maintenance Drugs
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Alignment Generic Utilization
Express Scripts Leads in
Generic Utilization
Source From public filings
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Alignment Growing Generic Opportunity
ESI Analysis
Our Clients and Members Will Benefit From a
Growing Generic Opportunity
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Alignment Specialty Pharmacy
Traditional Spend 210 Billion
Specialty Spend 35 Billion
2004 Total Outpatient Pharmacy Spend 190 Billion
Specialty Spend 73 Billion
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2008 Projected Outpatient Pharmacy Spend 283
Billion
Traditional Spend 155 Billion
Sources IMS Data through November 2004 Wall
Street Equity Research, 2004 CMS National
Healthcare Expenditure Projection 2003
2013 Data on file CuraScript.
Clients are Seeking Solutions for High-cost
Specialty Drugs
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CuraScript Penetration intoExpress Scripts
Percentage of Plan Costs
Source Express Scripts Analysis.
Express Scripts specialty penetration has
increased from 2 to 30 in the first 5.5
quarters of our CuraScript acquisition.
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Priority Acquisition - Strategic Rationale

• Creates one of the largest specialty franchises
  in the U.S.
• 3 billion annual specialty revenues
• One of the fastest growing sectors in healthcare
• Sector remains fragmented and market structure
  continues to emerge (greenfield opportunities)
• Fills key therapy classes within CuraScript
  portfolio one-stop shopping for clients
• Infertility (number one fertility franchise)
• Pulmonary Fibrosis
• Pulmonary Hypertension
• Home Infusion
• Offers additional capabilities
• Specialty distribution capabilities
• Supply chain services
• Leverages PBM core competencies (payor and
  manufacturer relationships, mail order
  pharmacies, clinical and trend management
  expertise)
• Synergy potential
• Increased value proposition for clients (single
  vendor, integrated reporting)

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What Are the Savings?
Retail, Clinical. Formulary And Rebate Savings 24
Paid by Cash Customer at Pharmacy
Retail Pharmacy Cash Price
Home Delivery Savings 6
Express Scripts Client Savings
Express Scripts Client Costs
C O S T
Paid by Express Scripts Clients Total Savings 30
Availability of Proven PBM Cost Management Tools
Will Produce 2025 Savings (CBO)
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Alignment A Win-Win-Win Proposition
We make money by saving clients and members money
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We Deliver Against Client and Patient
Expectations

• To make the use of prescription drugs safer and
  more affordable

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Client/Patient Focus

• Why Express Scripts?
• Alignment With Clients
• Generics
• Specialty

By membership
Health Plan Sponsors Recognize Express Scripts
Single Focus on Making Prescription Drugs More
Affordable
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2006 Upsell Pipeline is Strong
10,000

• Significant potential to continue to manage
  client trends in key product categories
• New products continue
• to be developed and
• rolled out
• Strong track record of success

Sold
Weighted Pipeline
9,000
8,000
7,000
6,000
('000 Lives)
5,000
4,000
3,000
2,000
1,000
0
Home Delivery
Three Tier
Generic Enforcement
Specialty/CuraScript
New Clinical Products
Narrowing Formularies
As of April 2005
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Client Satisfaction Steadily Improving

• Service and satisfaction metrics have increased
  consistently quarter over quarter since 2003 with
  an early spike in 2005

100
95
2003
90
85
2004
80
1q05
75
70
65
60
Exceed
ESI Performance
Likelihood to
Likelihood to
Expectations
Recommend
Renew
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Our Financial Results

• Express Scripts has demonstrated a proven track
  record

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Q3 2005 Highlights

• Adjusted EPS of 0.67, up 34 from 0.50 last
  year
• Cash flow from operations of 214.6 M vs. 150.0
  M last year
• Repurchased 4.0 million shares for 219.9 million
• Generic drugs were 55 of total prescriptions vs.
  51 last year
• Gross profit of 293.2 M, up 25
• Gross profit per adjusted claim was 2.13, up 20
• EBITDA per adjusted claim was 1.32, up 19
• Raised EPS guidance for 2005
• Provided 2006 EPS guidance of 3.10 to 3.22

Excludes prior period tax benefit of 0.01 in Q3
2005 and non recurring charge of 0.10 for
legal defense costs in Q3 2004 reconciliation
of reported EPS to adjusted EPS is included in
Table 4 of the 3Q 2005 earnings release
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Quality of Earnings
(4)
(1)
(4)
(3)
(2)

• Reflects a 70-75 million reduction in Q2 2003
  due to one-time impact of implementing a new
  wholesale purchase agreement
• Excludes a 0.04 per share charge for the early
  retirement of debt
• Excludes a 0.10 charge to increase legal
  reserves for the cost of defense.
• Excludes an 0.08 and 0.01 prior year tax
  benefit in Q2 and Q3, respectively

• Reflects a 12-month moving average of free cash
  flow (cash from operations less CapX)

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Components of EPS Growth 2004
2004
6
7
8
Excluding 25 million charge to increase
legal reserves for the cost of defense and 5.5
million termination payment received
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Major PBM Prescription Growth
Note Rx growth for Medco, Caremark reflect as
configured today YTD 9-30-05
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Claims Volume Vs. EPS Growth
Expanding Margins Supports Strong EPS Growth on
More Modest Claims Growth
(3)
(2)
(1)
(4)

• Excludes a 0.10 charge to increase legal
  reserves (4) Reflects the June 1st
  anniversary of the DoD retail contract
• Excludes an 0.08 prior year tax benefit
• Excludes a 0.01 prior year tax benefit

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Profits Per Claim Growth
EBITDA per adjusted claim

11 CAGR
Pricing can be lowered as clients tighten
formulary compliance, increase home delivery,
utilize generics and restrict retail networks.
These changes result in lower prices to our
clients and greater profits to Express Scripts.
A reconciliation of EBITDA to net income and
to net cash provided by operating activities can
be found in the Investor Relations section
of Express Scripts Web site, www.express-scripts.
com under Presentations. Excluding 25
million charge to increase legal reserves for the
cost of defense and 5.5 million termination
payment received.
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Gross Profit / SGA / EBITDA per Adj. Rx

Before depreciation and amortization
Excluding 25 million charge to increase legal
reserves for the cost of defense and 5.5 million
termination payment received. Source Express
Scripts Analysis.
Future EBITDA per Adj. Rx Must Come From Gross
Profit per Adj. Rx
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Components Of EPS Growth
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Focus on Return on Invested Capital (ROIC)
Reflects operating income less tax divided by
average invested capital, which consists of
stockholders equity, plus interest bearing
liabilities plus long-term deferred income taxes,
net. Excludes 25 million charge to increase
legal reserves for the cost of defense and 5.5
million termination payment received
ROIC is our Preferred Performance Metric
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Why Express Scripts? Industry-Leading ROIC
We Lead Our Peer Group in ROIC Performance
Source Express Scripts Analysis
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Peer Group Total Return - 2005
Peer group avg. 32.4
ESIs 119 return is more than 3.5 times our peer
group
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SP Total Return 2005
Only 2 companies in the SP 500 exceeded
ESIs total return to stockholders of 119 in 2005
Note Returns reflect stock price increase plus
dividend yield
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Our Value Proposition Will Continue to Drive
Growth

• Making the use of drugs safer and more
  affordable is more
• important than ever
• Plan sponsors will increasingly deploy our tools
• Express Scripts is well-positioned for
  sustainable growth
• Strong market fundamentals/new business
  opportunities
• Increased use of home delivery and generic drugs
• Growth in management of specialty pharmacy
• Productivity and capital structure improvements
• We have taken a different approach
• Alignment -- we make money by saving our clients
  money
• Strategic acquisitions have enhanced our value
  proposition

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