Express Scripts Sends Letter to Caremark Stockholders

    ST. LOUIS, Jan. 4 /PRNewswire-FirstCall/ -- Express Scripts, Inc.
 ( ESRX) today sent the following letter to Caremark Rx, Inc. (
 CMX) stockholders:
     January 4, 2007
 
 
                        PROTECT YOUR CAREMARK INVESTMENT
                      VOTE AGAINST THE PROPOSED CVS MERGER
 
     Dear Caremark Stockholder:
     On November 1, 2006, Caremark Rx, Inc. and CVS Corporation announced a
 transaction whereby CVS would acquire all of the outstanding shares of
 Caremark with little to no premium for Caremark stockholders. The
 transaction has been negatively received by both Caremark and CVS
 investors.
     Our company, Express Scripts, Inc., has made a superior proposal to
 acquire all of the outstanding shares of Caremark for $29.25 in cash and
 0.426 shares of Express Scripts stock for each share of Caremark stock.
 Based on the Express Scripts 2006 year-end closing stock price, our offer
 of $59.75 per share, or $26.1 billion in the aggregate, represents a 16%
 premium to the value of the CVS offer. Furthermore, the Express Scripts
 offer represents a 25% premium over the average closing stock price of
 Caremark between November 1st, the day its proposed acquisition by CVS was
 announced, and December 15th, the last day of trading before Express
 Scripts' proposed transaction with Caremark was announced.
     Express Scripts believes that the proposed acquisition of Caremark by
 CVS will have a lasting negative impact on your investment in Caremark. In
 the face of our superior offer, we expect Caremark's Board of Directors to
 negotiate a transaction with Express Scripts. Before voting your shares,
 carefully consider whether a combination of CVS and Caremark is really in
 your best near- and long-term financial interests as a Caremark
 stockholder.
        ISN'T THE CAREMARK-CVS "MERGER OF EQUALS" REALLY JUST A TAKEOVER
                           WITH LITTLE TO NO PREMIUM?
     As a Caremark stockholder, you are being asked to surrender your
 ownership of Caremark, but in return you are getting:
       -- Little to no premium for your shares in a transaction packaged as a
          "Merger of Equals" in order to deflect scrutiny.  In fact, Caremark
          is being sold and Caremark stockholders are not being appropriately
          compensated.
 
       -- High integration and execution risk, because CVS possesses limited
          experience in acquiring and integrating a large pharmacy benefit
          manager.
 
       -- A highly uncertain prospect of realizing cost savings and other
          benefits that any stockholder would demand when being asked to accept
          only stock in a sale to CVS.
 
       -- Uncertainty of value in the CVS offer that contains no cash.
 
     Contrast this with the Express Scripts offer, which delivers:
 
       -- A significant premium and a significantly higher absolute value for
          each Caremark share than the CVS transaction.
 
       -- Greater certainty of value through a significant cash payment for
          your Caremark shares.
 
       -- Substantial upside potential through an increase in the value of the
          combined company's stock price resulting from EPS growth driven by
          estimated annualized cost synergies of $500 million.
 
       -- A proven track record of creating additional value for stockholders
          by integrating and optimizing the performance of our acquired
          businesses, including PBMs.
 
       -- A combination that we expect will be neutral to GAAP earnings per
          share in the first full year following closing, and significantly
          accretive thereafter.  Excluding transaction-related amortization,
          beginning the first full year following closing, the Express Scripts
          transaction is significantly accretive to earnings per share.
 
 
            THE EXPRESS SCRIPTS TRANSACTION IS EXPECTED TO GENERATE
                     SIGNIFICANT AND DELIVERABLE SYNERGIES
     We are confident that a combination of Express Scripts and Caremark
 will generate significant and deliverable cost synergies of approximately
 $500 million -- 25% more than the announced synergies claimed by CVS and
 Caremark. Express Scripts has completed five successful acquisitions since
 1998, and has a proven track record of integrating and optimizing the
 performance of acquired businesses, thereby creating additional value for
 stockholders. We believe that the approximately $500 million in cost
 savings we have identified are highly achievable, and we are confident that
 we can successfully integrate Express Scripts and Caremark in a way that
 would quickly maximize the benefits for our respective stockholders.
       -- Approximately 70-80% of the anticipated cost savings are expected to
          come from increased purchasing power resulting from lower retail and
          home delivery drug costs, lower specialty pharmacy drug costs and
          increased manufacturer discounts.
 
       -- The remaining 20-30% are expected to come from operating efficiencies
          including lower SG&A and lower direct processing costs.
     Express Scripts expects the combined company will generate substantial
 free cash flow, which will enable it to consistently and rapidly reduce
 acquisition-related debt and return to historical leverage levels.
                          SIGNIFICANT UPSIDE POTENTIAL
  THE GROWTH STORIES OF EXPRESS SCRIPTS AND CVS CAN BE CONTRASTED IN TWO LINES
     As you weigh the uncertainty and future potential of the proposed CVS-
 Caremark transaction, we urge you to consider this fact: The total return
 for stockholders of Express Scripts has considerably outperformed the total
 return for stockholders of CVS over the past 10 years.
     Graph:  http://www.newscom.com/cgi-bin/prnh/20070104/NYTH086
 
     * Data through December 15, 2006, the last day of trading before the
       Express Scripts offer was announced.
     As the above chart illustrates, if you had invested $100 in Express
 Scripts in 1997, you would have had $1,531 as of December 15, 2006.
 Contrast this with an investment in CVS. If you had invested the same
 amount of money in CVS, you would only have had $315.
     If you consider what your return on an investment in Express Scripts
 versus CVS would have been over the last five and ten years, Express
 Scripts has outperformed CVS by 80% and 1,166%, respectively.
          THERE IS A STRONG AND COMPELLING STRATEGIC RATIONALE FOR AN
                      EXPRESS SCRIPTS-CAREMARK COMBINATION
     We believe that an Express Scripts-Caremark combination is compelling
 -- both strategically and financially -- for both Caremark and Express
 Scripts stockholders. It would:
       -- Create the world's preeminent PBM, uniquely positioned to generate
          substantial stockholder value.
 
       -- Continue to offer the high-quality service that plan sponsors and
          patients have come to expect over the years.
 
       -- Extend our position as the recognized leader in generic utilization
          and other drug cost management programs.
     Advantages in these areas allow us to deliver greater savings to plan
 sponsors and patients. An Express Scripts-Caremark combination will benefit
 from the unique growth opportunities in the industry, as well as from
 broader and more comprehensive specialty management capabilities.
     On January 3, 2007, we filed the premerger notification and report form
 pursuant to the Hart-Scott-Rodino Antitrust Improvements Act in connection
 with the acquisition of shares of Caremark and anticipate obtaining
 regulatory clearance in a timely manner.
              SEND A MESSAGE TO THE CAREMARK BOARD AND MANAGEMENT
     CVS is offering Caremark stockholders little to no premium for their
 shares and is trying to convince Caremark stockholders to accept shares
 from a company with a long history of underperformance when compared to
 Express Scripts.
     We urge you -- the owners of Caremark -- to reject the CVS proposal as
 inadequate and allow your Board to engage in a discussion with Express
 Scripts about our clearly superior proposal.
     We strongly recommend that you reject the CVS proposal.
 
     Sincerely,
 
     /s/ George Paz
     George Paz
     President, Chief Executive Officer and Chairman of the Board
 
 
      If you have any questions or need assistance in voting your shares,
                                please contact:
 
                            MacKenzie Partners, Inc.
 
                               105 Madison Avenue
                            New York, New York 10016
                         (212) 929-5500 (Call Collect)
                                       or
                         Call Toll-Free (800) 322-2885
                  Email: ExpressScripts@mackenziepartners.com
     Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal counsel to
 Express Scripts, and Citigroup Corporate and Investment Banking and Credit
 Suisse are acting as financial advisors. MacKenzie Partners, Inc. is acting
 as proxy advisor to Express Scripts.
     About Express Scripts
     Express Scripts, Inc. is one of the largest PBM companies in North
 America, providing PBM services to over 50 million members. Express Scripts
 serves thousands of client groups, including managed-care organizations,
 insurance carriers, employers, third-party administrators, public sector,
 and union-sponsored benefit plans.
     Express Scripts provides integrated PBM services, including network-
 pharmacy claims processing, home delivery services, benefit-design
 consultation, drug-utilization review, formulary management, disease
 management, and medical- and drug-data analysis services. The Company also
 distributes a full range of injectable and infusion biopharmaceutical
 products directly to patients or their physicians, and provides extensive
 cost- management and patient-care services.
     Express Scripts is headquartered in St. Louis, Missouri. More
 information can be found at www.express-scripts.com, which includes
 expanded investor information and resources.
     Safe Harbor Statement
     This press release contains forward-looking statements, including, but
 not limited to, statements related to the Company's plans, objectives,
 expectations (financial and otherwise) or intentions. Actual results may
 differ significantly from those projected or suggested in any
 forward-looking statements. Factors that may impact these forward-looking
 statements include but are not limited to:
       -- uncertainties associated with our acquisitions, which include
          integration risks and costs, uncertainties associated with client
          retention and repricing of client contracts, and uncertainties
          associated with the operations of acquired businesses
 
       -- costs and uncertainties of adverse results in litigation, including
          a number of pending class action cases that challenge certain of our
          business practices
 
       -- investigations of certain PBM practices and pharmaceutical pricing,
          marketing and distribution practices currently being conducted by the
          U.S. Attorney offices in Philadelphia and Boston, and by other
          regulatory agencies including the Department of Labor, and various
          state attorneys general
 
       -- changes in average wholesale prices ("AWP"), which could reduce
          prices and margins, including the impact of a proposed settlement in
          a class action case involving First DataBank, an AWP reporting
          service
 
       -- uncertainties regarding the implementation of the Medicare Part D
          prescription drug benefit, including the financial impact  to us to
          the extent that we participate in the program on a risk-bearing
          basis, uncertainties of client or member losses to other providers
          under Medicare Part D, and increased regulatory risk
 
       -- uncertainties associated with U.S. Centers for Medicare & Medicaid's
          ("CMS") implementation of the Medicare Part B Competitive Acquisition
          Program ("CAP"), including the potential loss of clients/revenues to
          providers choosing to participate in the CAP
 
       -- our ability to maintain growth rates, or to control operating or
          capital costs
 
       -- continued pressure on margins resulting from client demands for lower
          prices, enhanced service offerings and/or higher service levels, and
          the possible termination of, or unfavorable modification to,
          contracts with key clients or providers
 
       -- competition in the PBM and specialty pharmacy industries, and our
          ability to consummate contract negotiations with prospective clients,
          as well as competition from new competitors offering services that
          may in whole or in part replace services that we now provide to our
          customers
 
       -- results in regulatory matters, the adoption of new legislation or
          regulations (including increased costs associated with compliance
          with new laws and regulations), more aggressive enforcement of
          existing legislation or regulations, or a change in the
          interpretation of existing legislation or regulations
 
       -- increased compliance relating to our contracts with the DoD TRICARE
          Management Activity and various state governments and agencies
          the possible loss, or adverse modification of the terms, of
          relationships with pharmaceutical manufacturers, or changes in
          pricing, discount or other practices of pharmaceutical manufacturers
          or interruption of the supply of any pharmaceutical products
 
       -- the possible loss, or adverse modification of the terms, of contracts
          with pharmacies in our retail pharmacy network
 
       -- the use and protection of the intellectual property we use in our
          business
 
       -- our leverage and debt service obligations, including the effect of
          certain covenants in our borrowing agreements
 
       -- our ability to continue to develop new products, services and
          delivery channels
 
       -- general developments in the health care industry, including the
          impact of increases in health care costs, changes in drug utilization
          and cost patterns and introductions of new drugs
 
       -- increase in credit risk relative to our clients due to adverse
          economic trends
 
       -- our ability to attract and retain qualified personnel
 
       -- other risks described from time to time in our filings with the SEC
     Risks and uncertainties relating to the proposed transaction that may
 impact forward-looking statements include but are not limited to:
       -- Express Scripts and Caremark may not enter into any definitive
          agreement with respect to the proposed transaction
 
       -- required regulatory approvals may not be obtained in a timely manner,
          if at all
 
       -- the proposed transaction may not be consummated
 
       -- the anticipated benefits of the proposed transaction may not be
          realized
 
       -- the integration of Caremark's operations with Express Scripts may be
          materially delayed or may be more costly or difficult than expected
 
       -- the proposed transaction would materially increase leverage and debt
          service obligations, including the effect of certain covenants in any
          new borrowing agreements.
     We do not undertake any obligation to release publicly any revisions to
 such forward-looking statements to reflect events or circumstances after
 the date hereof or to reflect the occurrence of unanticipated events.
     Important Information
     Express Scripts intends to file a proxy statement in connection with
 Caremark's special meeting of stockholders at which the Caremark
 stockholders will consider the CVS Merger Agreement and matters in
 connection therewith. Express Scripts stockholders are strongly advised to
 read that proxy statement and the accompanying GOLD proxy card when they
 become available, as they will contain important information. Stockholders
 will be able to obtain that proxy statement, any amendments or supplements
 to that proxy statement and other documents filed by Express Scripts with
 the Securities and Exchange Commission ("SEC") free of charge at the SEC's
 website (www.sec.gov) or by directing a request to MacKenzie Partners,
 Inc., at 800-322-2885 or by email at expressscripts@mackenziepartners.com.' target='_blank' title='expressscripts@mackenziepartners.com.'>expressscripts@mackenziepartners.com.
     In addition, this material is not a substitute for the prospectus/proxy
 statement Express Scripts and Caremark would file with the SEC if an
 agreement between Express Scripts and Caremark is reached or any other
 documents which Express Scripts may send to shareholders in connection with
 the proposed transaction. Investors are urged to read any such documents,
 when available, because they will contain important information. Such
 documents would be available free of charge at the SEC's website
 (www.sec.gov) or by directing a request to MacKenzie Partners, Inc., at
 800-322-2885 or by email at expressscripts@mackenziepartners.com.' target='_blank' title='expressscripts@mackenziepartners.com.'>expressscripts@mackenziepartners.com.
     Express Scripts and its directors, executive officers and other
 employees may be deemed to be participants in any solicitation of Express
 Scripts or Caremark shareholders in connection with the proposed
 transaction. Information about Express Scripts' directors and executive
 officers is available in Express Scripts' proxy statement, dated April 18,
 2006, for its 2006 annual meeting of stockholders. Additional information
 about the interests of potential participants will be included in any proxy
 statement filed in connection with the proposed transaction.
     This material relates to a business combination transaction with
 Caremark proposed by Express Scripts which may become the subject of a
 registration statement filed with the SEC. Investors and security holders
 are advised to read this document and all other applicable documents if and
 when they become available because they will include important information.
 Investors and security holders may obtain a free copy of any documents
 filed by Express Scripts with the SEC at the SEC's website (www.sec.gov) or
 by directing a request to MacKenzie Partners, Inc. at the telephone number
 and email address set forth above.
     Investor Contacts:
     Edward Stiften, Chief Financial Officer
     David Myers, Vice President, Investor Relations
     (314) 702-7173
 
     Media Contacts:
     Steve Littlejohn, Vice President, Public Affairs
     (314) 702-7556
 
     Joele Frank / Steve Frankel
     Joele Frank, Wilkinson Brimmer Katcher
     (212) 355-4449
 
 

SOURCE Express Scripts, Inc.