Pharmacy benefit manager Express Scripts reported a 28% rise in quarterly profit Monday that beat Wall Street expectations, helped by increased use of generic drugs, and raised its profit forecast.
Net income rose to $133.7 million, or 97 cents a share, in the first quarter from $104.7 million, or 70 cents a share, in the year-earlier quarter.
Excluding one-time items, earnings were $1.04 a share. Analysts on average expected 94 cents a share, according to Reuters Estimates.
Pharmacy benefit managers administer prescription drug benefits for employers and health plans. Greater use of lower-cost generics helps Express Scripts, because it buys generics in bulk from manufacturers to leverage discounts.
In the first quarter, use of generics reached a record 60.3% of prescriptions processed by Express Scripts, up from 56.3%.
Express lost out earlier this year in a bidding war for rival pharmacy benefit manager Caremark to the company now known as CVS/Caremark .
Express Scripts recorded a $23 million charge related to the failed transaction, offset by a gain from a settlement.
The company said quarterly revenue rose 3.6% to $4.54 billion.
Express said it was increasing earnings forecast, excluding non-recurring items, to a range of $4.29 to $4.41 from $4.14 to $4.26. The company cited share repurchases and strong business trends including lower drug-purchasing costs and higher use of generic drugs.
The company also said it believes there is "potential upside" of 14 to 16 cents a share to its forecast beyond the new outlook.
Express Scripts shares rose $3.85 in after-hours trade to $92.75 from a close of $88.90 on the Nasdaq.