Express Scripts Holding Co. (NASDAQ:ESRX)

Operating Income

The operating income exhibited a consistent upward trajectory over the five-year period. Starting at approximately 3.5 billion US dollars in 2013, it increased moderately to around 3.55 billion in 2014, followed by more substantial growth in subsequent years, reaching approximately 5.41 billion by the end of 2017. This represents an overall increase of more than 54% from 2013 to 2017, indicating strengthening operational profitability.

Revenues

Revenues showed a slight declining trend throughout the period. Beginning at approximately 101.9 billion US dollars in 2013, revenues decreased gradually each year, ending at roughly 95.3 billion in 2017. This downward trend amounts to a revenue contraction of about 6.4% over the five years, suggesting potential challenges in top-line growth or shifts in business volume.

Segment Profit Margin

The segment profit margin demonstrated a continuous improvement during the years analyzed. Starting at 3.44% in 2013, the margin increased incrementally each year, reaching 5.68% in 2017. This increase of over 2 percentage points represents significant margin expansion, indicating enhanced efficiency or higher profitability per unit of revenue within the segment.

Summary Insights

The data reveals that despite a decline in overall revenues, the segment managed to improve both operating income and profit margins significantly. This suggests that operational improvements, cost control, or a shift towards higher-margin business strategies effectively enhanced profitability. The combination of increasing operating income and rising segment profit margins, in the face of decreasing revenues, points to a more efficient and potentially more focused segment performance over time.

The analysis of the "Other Business Operations" segment over the five-year period reveals several notable trends in revenues, operating income, and segment profit margin.

Revenues

There is a consistent upward trajectory in revenues throughout the period, starting from approximately $2.21 billion in 2013 and increasing each year to reach about $4.80 billion in 2017. This reflects a more than doubling of revenues over the five-year span, indicating significant growth and expansion in this business segment.

Operating Income

Operating income generally increases from 2013 to 2015, rising from $49.7 million to $77.1 million. However, there is a sharp decline in 2016 to $7.8 million, followed by a strong recovery in 2017 where operating income reaches $87.0 million, the highest level in the observed period. The steep dip in 2016 suggests a temporary operational challenge or increased costs impacting profitability that year.

Segment Profit Margin

The segment profit margin follows a less consistent pattern compared to revenues. It starts at 2.25% in 2013 and remains relatively stable through 2014 at 2.23%. It improves to 2.76% in 2015, indicating enhanced profitability efficiency relative to revenue. However, there is a pronounced drop to 0.21% in 2016, closely aligned with the sharp operating income decline, and a partial recovery to 1.81% in 2017. This margin volatility suggests fluctuating cost structures or pricing pressures impacting operational profitability during the period.

In summary, the segment demonstrates robust revenue growth across the five years. Despite this, operating income and profit margin exhibit volatility, particularly marked by a significant downturn in 2016. The rebound in 2017 signals operational improvements or corrective measures that restored profitability, though the margin remains below the levels observed in 2013 to 2015.

Operating Income

The operating income has demonstrated a consistent upward trend over the five-year period. Starting at 3,502,000 thousand US dollars in 2013, it increased marginally in 2014 to 3,546,400 thousand. The growth accelerated in subsequent years, with a notable rise to 4,262,200 thousand in 2015, continuing to 5,080,000 thousand in 2016, and reaching 5,407,000 thousand by the end of 2017. This steady increase reflects enhanced profitability within the segment over the analyzed period.

Total Assets

Total assets have displayed a declining trend from 2013 through 2017. Beginning at 52,599,100 thousand US dollars in 2013, the asset base remained relatively stable in 2014 at 52,891,600 thousand but started to decrease thereafter. The total assets fell to 52,174,900 thousand in 2015, then dropped more significantly to 50,432,700 thousand in 2016 and further declined to 48,562,600 thousand in 2017. This reduction in assets suggests possible divestitures, asset utilization efficiency improvements, or other operational changes.

Segment Return on Assets (ROA)

The segment's ROA exhibited a strong upward trajectory throughout the timeframe. From 6.66% in 2013, there was a slight increase to 6.71% in 2014. A more pronounced rise was observed in 2015, where ROA climbed to 8.17%, continuing to increase to 10.07% in 2016 and reaching 11.13% in 2017. This indicates improved profitability relative to the asset base, highlighting enhanced operational efficiency and effective use of assets within the segment.

The analysis of the "Other Business Operations" segment data over the five-year period reveals several key trends in financial performance and asset utilization.

Operating Income

The operating income exhibits a generally increasing trend from 2013 through 2015, rising from 49,700 thousand USD to 77,100 thousand USD. However, in 2016, there is a notable decline to 7,800 thousand USD, followed by a sharp recovery in 2017 reaching 87,000 thousand USD, representing the highest value in the period. This volatility in 2016 may indicate operational challenges or unusual expenses during that year, which were largely overcome by 2017.

Total Assets

Total assets display a steady growth from 918,100 thousand USD in 2013 to 1,312,200 thousand USD in 2016, indicating ongoing expansion or increased investment in assets. A dramatic increase is observed in 2017, with assets soaring to 5,693,200 thousand USD, more than quadrupling the previous year’s figure. This significant jump suggests a substantial acquisition, investment, or revaluation of assets that dramatically altered the asset base of the segment.

Segment Return on Assets (ROA)

The segment ROA aligns with operating income and asset trends, showing consistent improvement from 5.41% in 2013 to a peak of 7.22% in 2015. In 2016, ROA plunges sharply to 0.59%, reflecting the combined effect of lower operating income and increased assets, resulting in much-reduced asset efficiency or profitability. In 2017, ROA recovers modestly to 1.53%, significantly below earlier levels despite the highest operating income and asset base, indicating that although income improved, asset utilization remained relatively low compared to previous years.

Overall, the data indicates a period of growth and profitability from 2013 to 2015, followed by a challenging year in 2016 characterized by decreased income and efficiency. The segment experienced an aggressive asset expansion in 2017, with a strong rebound in operating income but only partial recovery in asset profitability. This suggests strategic shifts or investments requiring time to translate into improved returns.

Analysis of the financial data reveals several notable trends over the five-year period ending December 31, 2017.

Revenues

Revenues exhibit a slight downward trend overall. Beginning at approximately 101.9 billion US dollars in 2013, revenues decreased to around 95.3 billion US dollars by the end of 2017. While revenues dipped notably in 2014 and again in 2016, a mild recovery occurred in 2015 but was not sustained in subsequent years. This pattern indicates some instability or challenges in maintaining revenue levels across the period.

Total Assets

Total assets demonstrate a gradual reduction throughout the observed period. Starting at about 52.6 billion US dollars in 2013, total assets declined to approximately 48.6 billion US dollars by 2017. The decrease appears steady, reflecting either asset divestitures, depreciation, or strategic decisions to optimize asset holdings, which could impact operational capacity or financial flexibility.

Segment Asset Turnover

The segment asset turnover ratio, which measures efficiency in using assets to generate revenue, fluctuates modestly but shows a slightly improving trend overall. Beginning at 1.94 in 2013, it dipped to 1.86 in 2014, followed by a recovery to 1.90 in 2015 and a slight increase to 1.91 in 2016, culminating in the highest reported value of 1.96 in 2017. This upward movement suggests improved effectiveness in asset utilization, partially offsetting the decline in absolute revenue and asset values.

In summary, although revenues and total assets both trended downward over the five-year span, the improvement in segment asset turnover indicates enhanced operational efficiency. This could reflect management's efforts to optimize asset deployment despite facing revenue contractions, which is a positive sign from an efficiency perspective.

The financial data for the "Other Business Operations" segment demonstrates several notable trends across the five-year span from 2013 to 2017. The revenue figures exhibit a consistent upward trajectory, beginning at approximately 2.21 billion USD in 2013 and increasing each year to reach about 4.80 billion USD in 2017. This growth reflects a robust revenue expansion, with the largest annual increase observed between 2016 and 2017.

Total assets for the segment show a varied pattern. From 2013 to 2016, the asset base increases steadily from approximately 918 million USD to 1.31 billion USD. However, in 2017 there is a significant jump to about 5.69 billion USD, which represents a substantial increase compared to prior years. This sharp rise suggests a major acquisition, investment, or other capital adjustment impacting the segment’s asset base.

The segment asset turnover ratio, which measures the efficiency of asset use in generating revenue, generally remains stable from 2013 to 2016, fluctuating between 2.41 and 2.88. This indicates relatively consistent asset utilization for revenue generation during these years. However, in 2017 the ratio falls dramatically to 0.84. This decline is directly linked to the disproportionate increase in assets relative to revenue growth, highlighting a lower efficiency in asset use during that final reported year despite rising revenues.

Revenues

Show steady growth, more than doubling over the five years, with especially strong growth in the last year.

Total assets

Increase gradually through 2016, then surge significantly in 2017, indicating a large capital inflow or acquisition.

Segment asset turnover

Stable and efficient usage of assets till 2016, followed by a marked decline in 2017, reflecting decreased asset turnover efficiency due to the rapid asset growth.

The analysis of the annual data reveals several notable trends in capital expenditures, depreciation and amortization expense, as well as their relationship for the reportable segment of the company under review.

Capital Expenditures

The capital expenditures show a decreasing trend over the five-year period. Beginning at $411,200 thousand in 2013, expenditures slightly increased in 2014 to $412,300 thousand; however, from 2015 onward, a consistent decline is observed, reaching a low of $248,100 thousand in 2017. This represents a significant reduction from the levels seen at the start of the period.

Depreciation and Amortization Expense

Depreciation and amortization expenses demonstrate a fluctuating but overall downward trend. After a peak of $2,419,100 thousand in 2013, the expense dropped to $2,209,500 thousand in 2014, increased marginally to $2,328,700 thousand in 2015, then decreased again to $2,124,100 thousand in 2016, followed by a substantial reduction to $1,769,700 thousand in 2017. This decline suggests either accelerated asset amortization or changes in asset base and valuation over time.

Segment Capital Expenditures to Depreciation Ratio

The ratio of capital expenditures to depreciation remained relatively low throughout the period, beginning at 0.17 in 2013 and peaking at 0.19 in 2014. Subsequently, it fell to 0.12 in 2015 before rising slightly and stabilizing around 0.14 in 2016 and 2017. This pattern indicates that capital investment has consistently been a fraction of the depreciation expense, suggesting limited net additions to asset base relative to the ongoing consumption or amortization of existing assets.

Overall, the data reflect a cautious approach to capital spending in recent years combined with a steady reduction in depreciation and amortization expenses. The persistent low ratio of capital expenditures to depreciation further suggests that asset renewal or expansion has not kept pace with the rate at which existing assets are being depreciated. This could have implications for the maintenance of operational capacity or future growth potential in the segment.

Capital Expenditures

The capital expenditures exhibited an overall upward trend from 2013 to 2015, increasing from $11,800 thousand to $26,800 thousand. Following this peak, there was a decline in capital expenditures to $22,500 thousand in 2016 and further down to $19,300 thousand in 2017. Thus, the capital spending rose significantly in the initial years but showed a downward adjustment in the later periods.

Depreciation and Amortization Expense

Depreciation and amortization expenses increased steadily from $27,900 thousand in 2013 to $33,400 thousand in 2014, then decreased somewhat in 2015 to $30,400 thousand. The expense remained relatively stable in 2016 at $30,500 thousand, before rising again to $32,300 thousand in 2017. Overall, the expenses demonstrate moderate fluctuations with a general upward tendency.

Segment Capital Expenditures to Depreciation Ratio

The ratio of segment capital expenditures to depreciation showed a rising trend from 0.42 in 2013 to a peak of 0.88 in 2015. Afterward, the ratio declined to 0.74 in 2016 and further decreased to 0.60 in 2017. This suggests that capital spending increased relative to depreciation costs until 2015 but diminished relative to these costs in the subsequent years.