SG Cowen

1
Express Scripts Aligning Interests

• SG Cowen
• 25th Annual Health Care Conference
• March 15, 2005

2
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.

3
Our Interests are Aligned with Clients and
Patients

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

4
Alignment Formulary Management
Ensure Clinical Quality at Lowest Cost
Relative clinical value
Drug B
Drug A
Drug D
Drug C

• 0

• 20

• 40

• 60

• 80

• 100

• 120

Cost for 30-day supply
5
Alignment Formulary Management
Ensure Clinical Quality at Lowest Cost
Drug D
Drug A
Drug B
Relative clinical value
Drug C

• 0

• 20

• 40

• 60

• 80

• 100

• 120

Cost for 30-day supply
6
Alignment Formulary Management
Ensure Clinical Quality at Lowest Cost
Drug A
Drug D
Drug B
Relative clinical value
Drug C

• 0

• 20

• 40

• 60

• 80

• 100

• 120

Cost for 30-day supply
7
Alignment Formulary Management
Ensure Clinical Quality at Lowest Cost
Drug A
Drug D
Drug B
Relative clinical value
Drug C

• 0

• 20

• 40

• 60

• 80

• 100

• 120

Cost for 30-day supply
8
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
9
Alignment Supply Chain Management
Therapy Class
We Provide Flexible Management of the Supply
Chain 1. Select number of drugs in therapy
class
of drugs
of drugs
of drugs
of drugs
10
Alignment Supply Chain Management
Therapy Class
We Provide Flexible Management of the Supply
Chain 1. Select number of drugs in therapy
class 2. Determine formulary control
of drugs
of drugs
of drugs
of drugs
Open
Differential Co-pay
Closed
11
Alignment Supply Chain Management
Therapy Class
We Provide Flexible Management of the Supply
Chain 1. Select number of drugs in therapy
class 2. Determine formulary control 3.
Drive towards lowest overall cost
of drugs
of drugs
of drugs
of drugs
Open
Differential Co-pay
Lowest Overall Cost
Closed
12
Alignment Home Delivery
We Offer Highly Efficient, Cost-effective Home
Delivery
13
Alignment Growing Demand for Mail
Increased mail penetration
Represents network claims plus 3 times mail
claims - mail claims are 90 days vs. 30 days in
the network. Excludes UHC claims
Home Delivery Helps Manage the Cost of
Maintenance Drugs
14
Alignment Generic Utilization
Express Scripts Leads in
Generic Utilization
Source From public filings
15
Alignment Growing Generic Opportunity
Represents approximately 18 of 2003 branded
drug sales
ESI Analysis
Our Clients and Members Will Benefit From a
Growing Generic Opportunity
16
Alignment Specialty Pharmacy
Billions
Specialty Market 2004
Source ESI Analysis
Clients are Seeking Solutions for High-cost
Specialty Drugs
17
Alignment -- PBM Tools Work
Availability of Proven PBM Cost Management Tools
Will Produce Savings of 20 25 (CBO)
18
What Do Plan Sponsors Want?
Unmanaged Drug Trend

• Affordability
• Flexibility
• Accountability

20
15
10
5
0
-5
2001
2002
2003
2004
2005
2006
2007
2008
Source 2003 ESI Drug Trend Report
19
What Does Express Scripts Provide?
Unmanaged Drug Trend

• Affordability
• Low-cost formulary
• Effective clinical programs
• Mail pharmacy services
• Flexibility
• Customized management of the pharmacy benefit
• Accountability
• Alignment of interests
• Transparency

20
15
10
5
0
-5
2003 Managed
2001
2002
2003
2003 1 New Tool
2003 2 New Tools
Source 2003 ESI Drug Trend Report
20
Alignment A Win-Win-Win Proposition
We make money by saving clients and members money
21
PBMs Are Part of the Solution for Medicare

• Medicare Prescription Drug Act of 2003
• PBMs are expected to play an important role
• Congressional Budget Office estimated
• PBMs would save Medicare about 25
• We will review the regulations to evaluate
• our participation in the program
• We will work closely with employers and
• plans supporting their participation in Part D.

22
Benefits of ePrescribing
Medicare Part D Will Advance Important
Initiatives Including e- Prescribing
23
We Deliver Against Client and Patient
Expectations

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

24
Client/Patient Focus

• Successful track record in
• growing membership to over 50
• million
• Differentiation through flexible
• formulary, clinical programs and
• retail network management
• New market opportunities
• 70 to 100 million unmanaged lives
• Medicare
• Medicaid
• Uninsured

By membership
Health Plan Sponsors Recognize Express Scripts
Single Focus on Making Prescription Drugs More
Affordable
25
Case Study Medium-Sized Employer
1,000
800
600
60
PMPY
40
400
GFR
Mbr share
20
0
1999
2000
2001
2002
2003
Generics policy Plan design Clinical/trend
programs
26
Case Study Medium-Sized Employer
1,000
SAVINGS 250 PMPY
800
600
60
PMPY
40
400
GFR
Mbr share
20
0
1999
2000
2001
2002
2003
Generics policy Plan design Clinical/trend
programs
27
Express Scripts Major Locations Thru Mid 2004
Bensalem, PA

• Mail Service Pharmacy

• High Vol Mail Services

• Patient Contact Center

Tempe, AZ

• Patient Contact Center

• High Vol Mail Services

• Mail Service Pharmacy

28
Express Scripts Major Locations 2005 Plan
Bloomington, MN

• Patient Contact Centers

Farmington Hills, MN

• Rx Entry

• Mail Service Pharmacy

• Patient Contact Centers

Harrisburg, PA
St. Louis, MO

• Patient Contact Center

• Corporate Headquarters

• Patient Contact Center

• Mail Service Pharmacy

• Rx Entry

• High Vol Mail Services

• High Vol. Mail Services

• Mail Service Pharmacy

Tempe, AZ

• Patient Contact Center

• High Vol Mail Services

• Mail Service Pharmacy

• Mail Pharmacy Services

29
High Client Satisfaction
30
Our Financial Results

• Express Scripts has demonstrated a proven track
  record

31
Financial Overview
Q4 2004 Highlights

• 4Q EPS 1.07, up 24 from last year
• Record cash flow from operations of 193.0
  million
• Repurchased 2.4 million shares for 176 million
• Record mail claims of 10.1 million, up 17 from
  last year
• Generic drugs were 52 of total prescriptions vs.
  48 last year
• Gross profit up 13

32
Financial Overview
Claims volume growth
Network Claims (Millions) 1992-2004 44 CAGR
Mail Claims (Millions) 1992-2004 40 CAGR

• Excludes UHC claims

33
Financial Overview
EBITDA per adjusted claim

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 at www.express-scripts.c
om under Presentations. Excluding 25 million
charge to increase legal reserves for the cost of
defense and 5.5 million termination payment
received.
34
Financial Overview
Quality of earnings
(1)
(2)
(3)

• Reflects a 70-75 million reduction in Q2 2003
  due to the one-time impact of implementing a new
  wholesale purchase agreement
• Reflects a 0.10 per share charge for the early
  retirement of debt
• Reflects a 0.20 charge to increase legal
  reserves for the cost of defense.

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

35
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
36
Industry-Leading ROIC
37
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

38
Express Scripts Aligning Interests