Express Scripts Holding Company (ESRX): Seven States Wasting the Least Money on Medications

Lucky seven?
Can the information behind these seven least wasteful states lead investors to ideas for finding luck in the stock market? I think so.

While these states fare better in the analysis, every one of them still shows more than $1,000 per capita in annual wasteful spending on medications. Combined with the other 43 states, the amount wasted by Americans by poor medication spending decisions totals $418 billion. That reflects a big pool of potential savings for companies that specialize in holding down those costs.

Pharmacy benefits managers, or PBMs, specialize in this very thing. Leading PBMs include Express Scripts Holding Company (NASDAQ:ESRX), CVS Caremark Corporation (NYSE:CVS), UnitedHealth Group Inc. (NYSE:UNH)‘s OptumRx subsidiary, Catamaran Corp (USA) (NASDAQ:CTRX), and DST Systems, Inc. (NYSE:DST)‘ Argus Health Systems. Several of these stocks have performed very well over the last three years.

CTRX data by YCharts.

These aren’t exactly apples-to-apples comparisons, though. Express Scripts Holding Company (NASDAQ:ESRX) and Catamaran Corp (USA) (NASDAQ:CTRX) focus primarily on PBM services, but the others do not. CVS Caremark Corporation (NYSE:CVS) operates one of the largest retail pharmacy chains in the U.S. UnitedHealth Group Inc. (NYSE:UNH) is the largest managed care company in the nation. DST Systems, Inc. (NYSE:DST) provides financial and customer communications services.

For investors hoping to capitalize on the opportunities in controlling wasteful medication spending, Express Scripts and Catamaran present the most focused options. Express Scripts brings scale and in-depth analysis capabilities as the largest PBM in the country. Catamaran ranks as the fourth-largest PBM and appears to have even more room to grow than its larger counterpart. However, its stock is also the pricier of the two, with a forward price-to-earnings multiple of 22 compared to Express Scripts’ forward P/E of 12.

Both Express Scripts Holding Company (NASDAQ:ESRX) and Catamaran Corp (USA) (NASDAQ:CTRX) should be solid picks over the long run. I like the prospects for the PBM industry over the coming years. These investment opportunities shouldn’t be wasted.

The article 7 States Wasting the Least Money on Medications originally appeared on Fool.com and is written by Keith Speights.

Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool recommends Catamaran, Express Scripts, and UnitedHealth Group. The Motley Fool owns shares of Catamaran and Express Scripts.

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