By Zacks Equity Research

Express Scripts Holding Company (ESRX) recently launched an innovative online tool to facilitate better understanding among patients of the disease affecting them and the mechanism of the resultant therapy.

The visual and audible information provided by the online tool to the patients helps in improving their understanding. Express Script's new online offering, virtual coaching, targets patients suffering from serious diseases such as hepatitis C, hemophilia, multiple sclerosis apart from autoimmune deficiencies.

Express Scripts will provide virtual coaching to patients through its wholly-owned subsidiary, United BioSource Corporation, or UBC. UBC is a scientific and medical affairs organization with operations spanning across the globe. UBC, by providing integrated services, helps pharmaceutical and biotech companies to provide specialty prescription products and services to patients, doctors and pharmacists.

We believe that the introduction of the online tool will be warmly welcomed by patients. According to data released by National Council on Patient Information and Education more than 60% of patients fail to reproduce correctly the information provided to them by their doctors about the drugs prescribed to them after ten minutes. Virtual coaching aims to bring down this discrepancy.

We note that the introduction of the online tool is the latest in a series of positive news emanating from Express Scripts. In April 2012, Express Scripts acquired health care company Medco Health Solutions for $29.1 billion thereby, broadening its product portfolio.

Aided by the expanded product portfolio, Express Scripts performed exceptionally well in the second quarter of 2012 with revenue jumping 143.7%. The strong performance caused management to increase its adjusted earnings guidance for 2012 to $3.60-$3.75 per share (previous guidance: $3.36–$3.66).

Furthermore, the favorable resolution of Express Scripts' long-standing dispute with retail giant Walgreen (WAG) in July 2012 is another major positive for Express Scripts. Express Scripts will extend its services to over 64,000 pharmacies across the US following the inclusion of Walgreen in its network. Per the new agreement, Walgreen will start filling prescriptions from Express Scripts' customers from September 15, 2012. The favorable resolution has removed a major overhang on Express Scripts' shares.

Our Recommendation

In view of the positives mentioned above, we upgraded Express Scripts to "outperform" earlier this month. Our long term recommendation is in line with the Zacks #1 Rank ("strong buy" rating) carried by the stock in the short run.

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