ESRX – Market expectations are for Uniform ROA to decline to levels not seen since 2011, driven by concerns surrounding customer loss, regulatory uncertainty, and their pending merger

• Express Scripts Holding Company (ESRX:USA)is currently trading near recent lows relative to UAFRS-based (Uniform) Earnings, with a 10.6x Uniform P/E. At these levels, the market has bearish expectations for the firm, driven by the loss of Anthem, potential limitations on legal protection for drug rebates and uncertainty regarding the approval of the Cigna merger
• Specifically, the market appears concerned about the loss of the firm’s relationship with Anthem after 2020, which accounted for $19bn in sales in 2017. Additionally, the market may be concerned about potential regulations that would limit the legal protection of drug price rebates among PBM (Pharmacy-benefit managers). Finally, the market may lack confidence in their ability to get the proposed merger between ESRX and Cigna Corp. (CI:USA) approved