Adjusted claims of 194.9 million, up 2% from fourth quarter 2010 driven by increases in Canada and Medicaid business

Gross profit of $0.9 billion, up 8% from fourth quarter 2010

Gross profit and selling, general and administrative (“SG&A”) were impacted by the continued acceleration of projects to free up capacity for integration activities in 2012

SG&A expenses include an unexpected $11 million charge for tax items

EBITDA of $0.7 billion, up 8% from fourth quarter 2010

EBITDA per adjusted claim of $3.66, up 6% from fourth quarter 2010

Cash flow from operations of $0.5 billion, up 93% from fourth quarter 2010

Adjusted claims of 751.5 million, down slightly from 2010

Gross profit of $3.4 billion, up 7% from 2010

EBITDA of $2.7 billion, up 10% from 2010

EBITDA per adjusted claim of $3.54, up 11% from 2010

Cash flow from operations of $2.2 billion, including merger-related costs, up 4% from 2010

Claims utilization and in-group attrition expected to be consistent with 2011 levels.

Client retention, based on prescription volume, expected to be greater than 97%.

Through strong support from clients, greater than 95% of its clients’ prescription volume moved forward into 2012 without Walgreens as a network provider.

As a result of the preceding factors and sales activity to date, which included three new signature wins, the Company expects claims growth to be in a range of 0% to 2%.

Revenues⁽¹⁾

Cost of revenues ⁽¹⁾

Gross profit

Selling, general and administrative

Operating income

Other (expense) income:

Interest income

Interest expense and other

Income before income taxes

Provision for income taxes

Net income from continuing operations

Net (loss) from discontinued operations, net of tax

Net income

Weighted average number of common shares outstanding during the period:

Basic

Diluted

Basic earnings (loss) per share:

Continuing operations

Discontinued operations

Net earnings

Diluted earnings (loss) per share:

Continuing operations

Discontinued operations

Net earnings

Includes retail pharmacy co-payments of $1,412.6 million and $1,493.0 million for the three months ended December 31, 2011 and 2010, respectively and $5,786.6 million and $6,181.4 million for the years ended December 31, 2011 and 2010, respectively.

Assets

Current assets:

Cash and cash equivalents

Restricted cash and investments

Receivables, net

Inventories

Prepaid expenses

Deferred taxes

Other current assets

Total current assets

Property and equipment, net

Goodwill

Other intangible assets, net

Other assets

Total assets

Liabilities and Stockholders’ Equity

Current liabilities:

Claims and rebates payable

Accounts payable

Accrued expenses

Current maturities of long-term debt

Total current liabilities

Long-term debt

Other liabilities

Total liabilities

Stockholders’ Equity:

Preferred stock, 5,000,000 shares authorized, $0.01 par value per share; and no shares issued and outstanding

Common stock, 1,000,000,000 shares authorized, $0.01 par value per share; shares issued: 690,650,000 and 690,231,000, respectively; shares outstanding: 484,582,000 and 528,069,000, respectively

Additional paid-in capital

Accumulated other comprehensive income

Retained earnings

Common stock in treasury at cost, 206,068,000 and 162,162,000 shares, respectively

Total stockholders’ equity

Total liabilities and stockholders' equity

Cash flows from operating activities:

Net income

Net loss from discontinued operations, net of tax

Net income from continuing operations

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

Deferred income taxes

Employee stock-based compensation expense

Bad debt expense

Deferred financing fees

Other, net

Changes in operating assets and liabilities:

Receivables

Inventories

Other current and noncurrent assets

Claims and rebates payable

Other current and noncurrent liabilities

Net cash provided by operating activities—continuing operations

Net cash provided by operating activities—discontinued operations

Net cash flows provided by operating activities

Cash flows from investing activities:

Purchases of property and equipment

Purchase of short-term investments

Proceeds from sale of short-term investments

Proceeds from the sale of business

Other

Net cash used in investing activities—continuing operations

Net cash used in investing activities—discontinued operations

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from long-term debt, net of discounts

Treasury stock acquired

Deferred financing fees

Net proceeds from employee stock plans

Tax benefit relating to employee stock compensation

Repayment of long-term debt

Other

Net cash provided by (used in) financing activities

Effect of foreign currency translation adjustment

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Network

Home Delivery & Specialty ⁽¹⁾

Total claims

Total adjusted claims⁽²⁾

Depreciation and Amortization (D&A):

Revenue amortization⁽³⁾

Cost of revenues depreciation

Selling, general and administrative depreciation

Selling, general and administrative amortization

Total D&A

Generic Fill Rate

Network

Home Delivery

Overall

Gross profit, as reported

Amortization of NextRx-related intangible assets ⁽³⁾

Non-recurring NextRx integration-related costs ⁽⁴⁾

Non-recurring benefit related to client contract amendment ⁽⁵⁾

Accrual related to client contractual dispute⁽¹¹⁾

Adjusted gross profit

Selling, general and administrative expenses, as reported

Amortization of legacy intangible assets ⁽⁶⁾

Amortization of NextRx-related intangible assets ⁽³⁾

Non-recurring Medco transaction-related costs ⁽⁷⁾

Non-recurring NextRx integration-related costs ⁽⁴⁾

Adjusted selling, general and administrative expenses

Net income from continuing operations, as reported

Provision for income taxes

Depreciation and amortization

Interest expense, net

EBITDA from continuing operations, as reported

Non-recurring Medco transaction-related costs ⁽⁷⁾

Non-recurring NextRx integration-related costs ⁽⁴⁾

Non-recurring benefit related to client contract amendment ⁽⁵⁾

Accrual related to client contractual dispute⁽¹¹⁾

Adjusted EBITDA from continuing operations

Total adjusted claims

Adjusted EBITDA per adjusted claim

EPS from continuing operations, as reported

Non-recurring/transaction-related items:

Medco transaction-related costs ⁽⁷⁾

Medco financing costs ⁽⁹⁾

NextRx integration-related costs ⁽⁴⁾

Benefit related to client contract amendment ⁽⁵⁾

Accrual related to client contractual dispute⁽¹¹⁾

Amortization of:

Legacy intangible assets ⁽⁶⁾

NextRx-related intangible assets ⁽³⁾

EPS from continuing operations, adjusted

EPS from discontinued operations, as reported

Non-recurring items:

Impairment and other charges ⁽¹⁰⁾

EPS from discontinued operations, adjusted

Total EPS, adjusted

These claims include home delivery, specialty and other claims including: (a) drugs distributed through patient assistance programs (b) drugs we distribute to other PBM's clients under limited distribution contracts with pharmaceutical manufacturers and (c) FreedomFP claims.

Total adjusted claims reflect home delivery claims multiplied by 3, as home delivery claims typically cover a time period 3 times longer than retail claims.

Amortization of NextRx-related intangible assets include amounts in both revenues and selling, general and administrative expense. Revenue amortization is related to the customer contract with WellPoint which consummated upon closing of the NextRx acquisition in 2009. Under U.S. GAAP standards, amortization of intangibles that arise in connection with consideration given to a customer by a vendor is characterized as a reduction of revenues. Intangible amortization of $28.5 million ($17.9 million and $18.1 million net of tax, respectively) is included as a reduction to revenue for the three months ended December 31, 2011 and 2010 and $114.0 million ($71.9 million net of tax) is included as a reduction to revenue for the years ended December 31, 2011 and 2010.

Integration-related costs include those costs directly related to the acquisition of NextRx, primarily comprised of transition services, integration, site closures and severance costs. $31.8 million ($20.2 million net of tax) is included in cost of revenues for the three months ended December 31, 2010 and $94.5 million ($59.6 million net of tax) is included in cost of revenues for the year ended December 31, 2010.

Non-recurring benefit relating to an amendment of a client contract. $30.0 million ($18.9 million net of tax) is included as an increase to revenue for year ended December 31, 2010. This amount was originally accrued in the NextRx opening balance sheet and in accordance with business combination accounting guidance the reversal of the accrual was recorded in revenue, since it relates to client guarantees, upon amendment of the contract during the second quarter of 2010.

This adjustment represents the effect of Express Scripts' legacy intangible amortization, prior to the acquisition of NextRx. Intangible amortization of $8.5 million ($5.3 million and $5.4 million net of tax) is included in selling, general and administrative expense for three months ended December 31, 2011 and 2010, respectively. $34.2 million ($21.6 million net of tax) is included in selling, general and administrative expense for the year ended December 31, 2011 and 2010.

Non-recurring transaction-related costs include those directly related to the proposed acquisition of Medco Health Solutions, Inc., and is primarily composed of professional fees. $42.2 million ($26.4 million net of tax), included in selling, general and administrative expense for the three months ended December 31, 2011 and $62.5 million ($39.4 million net of tax) is included in selling, general and administrative expense for the year ended December 31, 2011.

EBITDA is earnings before taxes, depreciation and amortization, net interest and other income (expense); or alternatively calculated as operating income plus depreciation and amortization. EBITDA is presented because it is a widely accepted indicator of a company's ability to service indebtedness and is frequently used to evaluate a company's performance. EBITDA, however, should not be considered as an alternative to net income, as a measure of operating performance, as an alternative to cash flow, as a measure of liquidity or as a substitute for any other measure computed in accordance with U.S. GAAP. In addition, this definition and calculation of EBITDA may not be comparable to that used by other companies.

Financing costs include fees related to the termination of a portion of the bridge loan, amortization of remaining bridge loan fees, commitment fees related to the new credit agreement and interest and fees on the senior notes secured in conjunction with the proposed acquisition of Medco Health Solutions, Inc. Costs of $63.1 million ($39.5 million net of tax) is included in interest expense in the three months ended December 31, 2011 and $105.0 million ($66.2 million) is included in interest expense in the year ended December 31, 2011.

The Company recorded charges of $36.5 million ($23.0 million net of tax) during the year ended December 31, 2010, the majority of which reflects one-time costs associated with discontinued operations, including goodwill and asset impairment, subsequent write-down of assets to fair market value and the loss on sale of the Phoenix Marketing Group ("PMG") business during the year. $23.0 million is included in "Net loss from discontinued operations, net of tax" on the income statement for the year ended December 31, 2010 , related to these charges.

In December 2011, the Company received a proposal from a client asserting claims regarding the contractual interpretation of certain contractual terms. The Company responded with an offer to settle these issues with a lump sum payment of $30 million. Based on authoritative accounting guidance, the Company determined that these communications indicate that a loss is both probable and estimable and we recorded an accrual of $30 million ($18.9 million net of tax) as an offset to revenues for the year ended December 31, 2011. While no final agreement has been reached on the matter, the parties are engaged in active discussions and continue to work to resolve the open issues.