The acquisition of rival Medco Solutions, which was completed in the first half of 2012, more than doubled sales at Express Scripts. The combined companies’ larger size will help Express ring additional profits at a time when the healthcare insurance industry is entering uncharted waters. Changes put in place by Obama’s Affordable Care Act go into place starting in 2014. Like other health insurance companies, Express could face trouble if employers drop their insurers and push employees onto the country’s new health exchanges. CEO George Paz says there is no evidence you will see a rush of companies dropping coverage January 1.
Still, despite the benefits of the deal, Express had to raise $11 billion in new debt in order to complete the acquisition. Fitch Ratings recently gave Express a debt rating of BBB, which is one notch above junk. Fitch said Express's leverage ratio was high, but it expected it to come down in the wake of the deal. And 2013 is starting out strong, as the company recently gave a profit outlook for 2013 that exceeded analysts’ previous expectations.
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