Filed Pursuant to Rule 424(b)(5)

Registration No. 333-221565

CALCULATION OF REGISTRATION FEE

 

Title of each Class of Securities to be Registered		Proposed Maximum Aggregate Offering Price		Amount of Registration Fee(1)
2.600 % Senior Notes due 2020 Floating Rate Senior Notes due 2020 3.050 % Senior Notes due 2022		$1,400,000,000		$174,300

(1)	The filing fee is calculated in accordance with Rule 457(r) under the Securities Act of 1933.

 

PROSPECTUS    SUPPLEMENT

(TO PROSPECTUS DATED NOVEMBER 14, 2017)

 

 

 

EXPRESS SCRIPTS HOLDING COMPANY

$500,000,000 2.600% Senior Notes due 2020

$400,000,000 Floating Rate Senior Notes due 2020

$500,000,000 3.050% Senior Notes due 2022

 

 

We are offering $500,000,000 aggregate principal amount of our 2.600% Senior Notes due 2020 (the “2020 fixed rate notes”), $400,000,000 aggregate principal amount of our Floating Rate Senior Notes due 2020 (the “2020 floating rate notes”) and $500,000,000 aggregate principal amount of our 3.050% Senior Notes due 2022 (the “2022 fixed rate notes” and, together with the 2020 fixed rate notes, the “fixed rate notes” and the fixed rate notes together with the 2020 floating rate notes, collectively, the “notes”). We will pay interest on the fixed rate notes on May 30 and November 30 of each year, beginning on May 30, 2018. We will pay interest on the 2020 floating rate notes on March 1, May 30, August 30 and November 30 of each year, beginning on March 1, 2018. The 2020 floating rate notes will bear interest at a floating rate equal to three-month LIBOR plus 0.750%. See “Description of the Notes—Principal, Maturity and Interest—Floating Rate Notes.”

We may redeem some or all of the fixed rate notes at our option at any time and from time to time at the applicable redemption prices described in this prospectus supplement under “Description of the Notes—Optional Redemption—Fixed Rate Notes.” We may redeem some or all of the 2020 floating rate notes at our option on December 3, 2018 or at any time thereafter at a redemption price equal to 100% of the principal amount of the 2020 floating rate notes to be redeemed plus accrued and unpaid interest on the principal amount being redeemed to the date of redemption. See “Description of the Notes—Optional Redemption—Floating Rate Notes.” We must offer to repurchase the notes upon the occurrence of a change of control triggering event at the price described in the accompanying prospectus under “Description of Debt Securities—Purchase of Debt Securities Upon a Change of Control Triggering Event.”

The notes will be jointly and severally and fully and unconditionally guaranteed on a senior unsecured basis by Express Scripts, Inc. and Medco Health Solutions, Inc. See “Description of the Notes—Guarantees.” The notes and guarantees will be our and our subsidiary guarantors’ general unsecured obligations and will rank equally in right of payment with our and our subsidiary guarantors’ other senior indebtedness from time to time outstanding. The notes will be effectively subordinated to our and our subsidiary guarantors’ secured indebtedness to the extent of the value of the collateral securing such indebtedness. The notes will be structurally subordinated in right of payment to the obligations (including trade payables) of our subsidiaries that are not guarantors. The notes will not be listed on any securities exchange.

 

 

Investing in the notes involves risks. See “Risk Factors” beginning on page S-11 of this prospectus supplement to read about important factors you should consider before buying the notes.

Neither the Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

 

 

		Price to Public(1)				Underwriting Discounts and Commissions				Proceeds to Express Scripts Holding Company(1)
Per 2020 fixed rate note			99.977	%			0.450	%			99.527	%
2020 fixed rate notes total		$	499,885,000			$	2,250,000			$	497,635,000
Per 2020 floating rate note			100.000	%			0.450	%			99.550	%
2020 floating rate notes total		$	400,000,000			$	1,800,000			$	398,200,000
Per 2022 fixed rate note			99.793	%			0.600	%			99.193	%
2022 fixed rate notes total		$	498,965,000			$	3,000,000			$	495,965,000
Total		$	1,398,850,000			$	7,050,000			$	1,391,800,000

 

(1)

Plus accrued interest, if any, from and including November 30, 2017 if settlement occurs after that date to the date of delivery. Delivery of the notes to investors in registered book-entry form only through the facilities of The Depository Trust Company (“DTC”) will be made on or about November 30, 2017. Beneficial interests in the notes will be shown on, and transfers thereof will be effected only through, records maintained by DTC and its direct and indirect participants, including Clearstream Banking, société anonyme, and Euroclear Bank S.A./N.V., as operator of the Euroclear system.

 

 

Joint Book-Running Managers

 

BofA Merrill Lynch		Citigroup		Mizuho Securities
Credit Suisse		J. P. Morgan		Morgan Stanley
RBC Capital Markets				Wells Fargo Securities

Co-Managers

 

Credit Agricole CIB		Scotiabank		SMBC Nikko
SunTrust Robinson Humphrey		TD Securities		US Bancorp
		Loop Capital Markets

 

 

The date of this prospectus supplement is November 20, 2017.

TABLE OF CONTENTS

 

		Page
PROSPECTUS SUPPLEMENT
ABOUT THIS PROSPECTUS SUPPLEMENT			S-ii
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS			S-iii
SUMMARY			S-1
THE OFFERING			S-3
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA			S-7
RISK FACTORS			S-11
USE OF PROCEEDS			S-16
CAPITALIZATION			S-17
DESCRIPTION OF THE NOTES			S-18
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS TO NON-U.S. HOLDERS			S-31
UNDERWRITING (CONFLICTS OF INTEREST)			S-34
LEGAL MATTERS			S-40
EXPERTS			S-40
WHERE YOU CAN FIND MORE INFORMATION			S-40
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE			S-41
PROSPECTUS
ABOUT THIS PROSPECTUS			ii
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS			ii
EXPRESS SCRIPTS HOLDING COMPANY			1
RISK FACTORS			1
USE OF PROCEEDS			1
RATIO OF EARNINGS TO FIXED CHARGES			2
DESCRIPTION OF SECURITIES			2
DESCRIPTION OF CAPITAL STOCK			2
DESCRIPTION OF DEBT SECURITIES			4
DESCRIPTION OF WARRANTS			16
DESCRIPTION OF SUBSCRIPTION RIGHTS			17
DESCRIPTION OF PURCHASE CONTRACTS AND PURCHASE UNITS			18
SELLING SECURITY HOLDERS			19
PLAN OF DISTRIBUTION			19
LEGAL MATTERS			19
EXPERTS			19
WHERE YOU CAN FIND MORE INFORMATION			19

 

S-i

ABOUT THIS PROSPECTUS SUPPLEMENT

This document is in two parts. The first part consists of this prospectus supplement, which describes the specific terms of the offering. The second part consists of the accompanying prospectus, which gives more general information, some of which may not be applicable to the offering.

If the description of the offering varies between this prospectus supplement and the accompanying prospectus, you should rely on the information in this prospectus supplement. You should rely only on the information contained or incorporated by reference in this prospectus supplement, the accompanying prospectus and in any related free writing prospectus we file with the SEC.

We have not, and the underwriters have not, authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference herein and therein is accurate only as of their respective dates. Our business, financial condition, results of operations and prospects may have changed since those dates.

In this prospectus supplement, unless otherwise specified or the context requires otherwise, we use the terms “Express Scripts,” the “Company,” “we,” “us” and “our” to refer to Express Scripts Holding Company and its subsidiaries on a consolidated basis.

 

S-ii

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Information we have included or incorporated by reference in this prospectus supplement and the accompanying prospectus contains or may contain forward-looking statements. These forward-looking statements include, among others, statements of our plans, objectives, expectations (financial or otherwise) or intentions.

Our forward-looking statements involve risks and uncertainties. Our actual results may differ materially from those projected or suggested in any forward-looking statements. We do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Any number of factors could cause our actual results to differ materially from those contemplated by any forward-looking statements, including, but not limited to, the risks associated with the following:

 

•

our ability to remain profitable in a very competitive marketplace depends upon our continued ability to attract and retain clients while maintaining our margins, differentiate our products and services from those of our competitors, and develop and cross-sell new products and services to our existing clients;

 

•

our failure to anticipate and appropriately adapt to changes or trends within the rapidly changing healthcare industry;

 

•

changes in applicable laws, rules or regulations, or their interpretation or enforcement, or the enactment of new laws, rules or regulations, which apply to our business practices (past, present or future) or require us to spend significant resources for compliance;

 

•

a failure in the security or stability of our technology infrastructure, or the infrastructure of one or more of our key vendors;

 

•

our failure to execute on, or other issues arising under, certain key client contracts;

 

•

significant changes within the pharmacy provider marketplace, including the loss of or adverse change in our relationship with one or more key pharmacy providers;

 

•

changes to the healthcare industry designed to manage healthcare costs or alter healthcare financing practices or changes to government policies in general;

 

•

a significant failure or disruption in service within our operations or the operations of our vendors;

 

•

changes relating to Medicare Part D, our failure to comply with Centers for Medicare & Medicaid Services (“CMS”) regulatory requirements, our failure to comply with CMS contractual requirements applicable to us as a Medicare Part D prescription drug plan sponsor or our failure to otherwise execute on our strategies related to Medicare Part D;

 

•

our failure to effectively execute on strategic transactions or successfully integrate the business operations or achieve the anticipated benefits from any acquired businesses;

 

•

a failure to adequately protect confidential health information received and used in our business operations;

 

•

the termination, loss or unfavorable modification of our relationship with one or more key pharmaceutical manufacturers, or the significant reduction in payments made or discounts provided by pharmaceutical manufacturers;

 

S-iii

•

results in pending and future litigation, including derivative and other class action claims related to our dispute with Anthem, Inc., investigations or other proceedings which could subject us to significant monetary damages or penalties and/or require us to change our business practices, or the costs incurred in connection with such proceedings;

 

•

our failure to attract and retain talented employees, or to manage succession and retention for our Chief Executive Officer or other key executives;

 

•

changes in drug pricing or industry pricing benchmarks;

 

•

the impact of our debt service obligations on the availability of funds for other business purposes, the terms of and our required compliance with covenants relating to our indebtedness and our access to the credit markets in general;

 

•

the delay, reduction, suspension or cancellation of government spending or appropriations relating to our business;

 

•

general economic conditions; and

 

•

other risks described from time to time in our filings with the SEC.

These and other relevant factors, including those risk factors identified in our Annual Report on Form 10-K, our Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 and our other filings under the Securities Exchange Act of 1934, as amended (“Exchange Act”), parts of which are incorporated by reference in this prospectus supplement, should be carefully considered when reviewing any forward-looking statement. See “Where You Can Find More Information” and “Incorporation of Certain Information by Reference.” We note these factors for investors as permitted under the Private Securities Litigation Reform Act of 1995. Investors should understand it is impossible to predict or identify all such factors or risks. As such, you should not consider either the foregoing list, or the risks identified in our SEC filings, to be a complete discussion of all potential risks or uncertainties.

 

S-iv

 

S-1

 

S-2

 

S-3

 

S-4

 

S-5

 

S-6

 

S-7

 

S-8

 

S-9

 

S-10

RISK FACTORS

An investment in the notes involves certain risks. Before making an investment decision, you should carefully read and consider the risk factors described below as well as the matters discussed under “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and our Quarterly Report on Form 10-Q for the nine months ended September 30, 2017 and the other information included or incorporated by reference in this prospectus supplement and the accompanying prospectus, as the same may be updated from time to time by our future filings with the SEC under the Exchange Act. Our business, financial condition or results of operations could be materially adversely affected by any of these risks. You may lose all or part of your investment. In addition, please read “Cautionary Statement Regarding Forward-Looking Statements” in this prospectus supplement where we describe additional uncertainties associated with our business and the forward-looking statements included or incorporated by reference in this prospectus supplement and the accompanying prospectus. Please note that additional risks not presently known to us or that we currently deem immaterial may also impair our business and operations.

Risks Related to the Offering

Higher levels of indebtedness and increased debt service obligations will effectively reduce the amount of funds available for other business purposes and may adversely affect us.

We have a significant amount of indebtedness. As of September 30, 2017, after giving pro forma effect to the offering and the anticipated use of proceeds therefrom, we would have had approximately $15,898.0 million of indebtedness outstanding. We intend to use the net proceeds from the offering (i) to repay approximately $400 million in outstanding principal amount of the Term Loan, (ii) to fund a portion of the purchase price of the eviCore acquisition and (iii) for general corporate purposes, which may include repurchases of our common stock under our share repurchase program pursuant to open market transactions, block trades, privately negotiated transactions, accelerated share repurchase programs or other means or a combination of the aforementioned. See “Summary—Recent Developments—Proposed Acquisition of eviCore;—Financing Transactions.” Accordingly, it is likely that most of the proceeds from the offering will not be used to make any investments that could potentially increase our earnings or enhance our ability to service our increased levels of indebtedness.

We may also incur additional long-term debt and working capital lines of credit to meet future financing needs, subject to certain restrictions in the agreements governing our indebtedness, including the notes, our existing revolving facility, our existing term facility and our existing senior notes, which would increase our total debt.

Interest costs related to the notes will be substantial and our increased level of indebtedness could reduce funds available for acquisitions, capital expenditures or other business purposes, impact our ratings, restrict our financial and operating flexibility or create competitive disadvantages compared to other companies with lower debt levels.

Our ability to make payments of principal and interest on our indebtedness, including the notes, depends upon our future performance, which will be subject to general economic conditions and financial, business and other factors affecting our consolidated operations, many of which are beyond our control. If we are unable to generate sufficient cash flow from operations in the future to service our debt and meet our other cash requirements, we may be required, among other things:

 

•

to seek additional financing in the debt or equity markets;

 

•

to refinance or restructure all or a portion of our indebtedness, including the notes;

 

S-11

•

to sell selected assets or businesses; or

 

•

to reduce or delay planned capital or operating expenditures.

Such measures might not be sufficient to enable us to service our debt, including the notes, and meet our other cash requirements. In addition, any such financing, refinancing or sale of assets might not be available at all or on economically favorable terms.

As a holding company, we require cash from our subsidiaries to make payments on the notes.

The issuer of the notes is a holding company. As a holding company, our cash flow and ability to service our indebtedness, including the notes, is dependent upon the earnings of our subsidiaries and the distribution of those earnings to us or upon the payment of funds to us by those subsidiaries. Our subsidiaries are separate and distinct legal entities that have no obligation, contingent or otherwise, to pay any amounts due pursuant to the notes (other than in respect of the guarantees of the notes by the guarantors) or to make funds available to us. The payment of dividends and the making of loans and advances to us by our subsidiaries may be subject to contractual or statutory restrictions, is contingent upon the earnings of those subsidiaries and is subject to various business considerations. As a holding company, if we are unable to obtain cash from our subsidiaries, we may be unable to fund required payments in respect of the notes.

Upon a change of control triggering event with respect to a particular series of notes, we may not be able to repurchase all of such notes, which would result in a default under the indenture in respect of such notes.

Upon the occurrence of a change of control triggering event in respect of a particular series of notes, we will be required to offer to repurchase the notes of such series at a price of 101% of the aggregate principal amount of the notes repurchased plus accrued and unpaid interest. For more information, see “Description of Debt Securities—Purchase of Debt Securities Upon a Change of Control Triggering Event” in the accompanying prospectus. However, we may not have sufficient funds to repurchase such notes. In addition, our ability to repurchase notes may be limited by law or the terms of other agreements relating to our indebtedness. The failure to make such repurchase would result in a default under the notes. A change of control may also require us to make an offer to repurchase certain of our other indebtedness and may give rise to a default under our credit facilities. We may not have sufficient funds to repurchase all of the affected indebtedness and repay the amounts owing under our credit facilities.

Redemption may adversely affect your return on the notes.

The notes are redeemable at our option, and therefore we may choose to redeem the notes at times when prevailing interest rates are relatively low. As a result, you may not be able to reinvest the proceeds you receive from the redemption of such notes in a comparable security at an effective interest rate as high as the interest rate on your notes being redeemed.

An increase in interest rates could result in a decrease in the relative value of the fixed rate notes.

In general, as market interest rates rise, notes bearing interest at a fixed rate generally decline in value because the premium, if any, over market interest rates will decline. Consequently, if you purchase the fixed rate notes and market interest rates increase, the market values of your fixed rate notes may decline. We cannot predict the future level of market interest rates.

Increased regulatory oversight, changes in the method pursuant to which the LIBOR rates are determined and potential phasing out of LIBOR after 2021 may adversely affect the value of the 2020 floating rate notes.

On July 27, 2017, the Financial Conduct Authority (the “FCA”) announced that it will no longer persuade or compel banks to submit LIBOR rates after 2021 (the “FCA Announcement”). It is not possible to

 

S-12

predict the effect of the FCA Announcement, any changes in the methods pursuant to which the LIBOR rates are determined and any other reforms to LIBOR that will be enacted in the U.K. and elsewhere, which may adversely affect the trading market for LIBOR-based securities, including the 2020 floating rate notes, or result in the phasing out of LIBOR as a reference rate for securities. In addition, any changes announced by the FCA, including the FCA Announcement, the ICE Benchmark Administration Limited or any other successor governance or oversight body, or future changes adopted by such body in the method pursuant to which the LIBOR rates are determined may result in a sudden or prolonged increase or decrease in the reported LIBOR rates. If that were to occur, the level of interest payments on the 2020 floating rate notes would be affected and, to the extent that the value of your 2020 floating rate notes is affected by reported LIBOR rates, the value of the 2020 floating rate notes may be affected. Further, if three-month LIBOR is not available on an interest determination date for the 2020 floating rate notes, the terms of the 2020 floating rate notes may require that we use three-month LIBOR in effect with respect to the immediately preceding interest period for the 2020 floating rate notes, which may result in different than expected interest payments and could affect the value of the 2020 floating rate notes.

The amount of interest payable on the 2020 floating rate notes is set only once per period based on three-month LIBOR on the applicable interest determination date, which rate may fluctuate substantially.

In the past, the level of three-month LIBOR has experienced significant fluctuations. You should note that historical levels, fluctuations and trends of three-month LIBOR are not necessarily indicative of future levels. Any historical upward or downward trend in three-month LIBOR is not an indication that three-month LIBOR is more or less likely to increase or decrease at any time during an interest period for the 2020 floating rate notes, and you should not take the historical levels of three-month LIBOR as an indication of its future performance. You should further note that although the actual three-month LIBOR on an interest payment date for the 2020 floating rate notes or at other times during an interest period may be higher than three-month LIBOR on the applicable interest determination date for the 2020 floating rate notes, you will not benefit from three-month LIBOR at any time other than on the interest determination date for such interest period for the 2020 floating rate notes. As a result, changes in three-month LIBOR may not result in a comparable change in the market value of the 2020 floating rate notes. In addition, increases in three-month LIBOR as of any interest determination date will require us to make higher interest payments on the 2020 floating rate notes.

The limited covenants in the indentures governing the notes and the terms of the notes will not provide protection against significant events that could adversely impact your investment in the notes.

The indentures governing the notes will not:

 

•

restrict our ability to issue additional unsecured debt;

 

•

require us to maintain any financial ratios or specific levels of net worth, revenues, income, cash flow or liquidity and, accordingly, does not protect holders of the notes in the event that we experience significant adverse changes in our financial condition or results of operations;

 

•

restrict our subsidiaries’ ability to issue securities or otherwise incur indebtedness that would be senior to our equity interests in our subsidiaries;

 

•

restrict our ability to repurchase or prepay our securities;

 

•

restrict our or our subsidiaries’ ability to make investments or to repurchase or pay dividends or make other payments in respect of our common stock or other securities ranking junior to the notes; or

 

•

restrict our or our subsidiaries’ ability to incur additional indebtedness, including secured indebtedness, that could effectively rank senior to the notes and to engage in sale-leaseback arrangements, subject to certain limits.

 

S-13

Furthermore, the definition of “Change of Control Triggering Event” in the indentures governing the notes will contain only limited protections. We and our subsidiaries could engage in many types of transactions, such as certain acquisitions, refinancings or recapitalizations, that could substantially affect our capital structure and the value of the notes.

As a result of the foregoing, when evaluating the terms of the notes, you should be aware that the terms of the indentures and the notes will not restrict our ability to engage in, or otherwise be a party to, a variety of corporate transactions, circumstances and events that could have an adverse impact on your investment in the notes.

The notes are unsecured.

The notes are unsecured. While the indentures governing the notes do contain some restrictions on our ability to incur secured indebtedness, the amount of secured indebtedness that we can incur could be substantial. Holders of any secured indebtedness will have claims that are prior to your claims as holders of the notes, to the extent of the value of the assets securing such indebtedness, in the event of any bankruptcy, liquidation or similar proceeding involving us.

The notes are structurally subordinated to all liabilities of our subsidiaries that do not guarantee the notes.

The notes will not be guaranteed by certain of our current and future subsidiaries, and under certain circumstances subsidiaries guaranteeing the notes may be released from their guarantees. See “Description of the Notes—Guarantees.” Accordingly, claims of holders of the notes will be structurally subordinated to the claims of creditors of such non-guarantor subsidiaries, including trade creditors. All obligations of such non-guarantor subsidiaries will have to be satisfied before any of the assets of such subsidiaries would be available for distribution, upon a liquidation or otherwise, to us or a guarantor of the notes.

On October 26, 2017, in connection with us entering into the Credit Agreement, all of the guarantors under the base indenture governing our outstanding senior notes, other than ESI and Medco, were released from their obligations thereunder and from their guarantees of the outstanding senior notes issued thereunder. See “Summary—Recent Developments—Financing Transactions.” As of September 30, 2017, after giving pro forma effect to the release of the guarantors as described in the immediately preceding sentence, our non-guarantor subsidiaries would have had an aggregate of approximately $5,490.6 million of total liabilities outstanding.

Federal and state fraudulent transfer laws may permit a court to void the guarantees, and, if that occurs, you may not receive any payments on the notes or in respect of such guarantees.

Federal and state fraudulent transfer and conveyance statutes may apply to the issuance of the notes and the incurrence of the guarantees. Under federal bankruptcy law and comparable provisions of state fraudulent transfer or conveyance laws, which may vary from state to state, the notes or guarantees could be voided as a fraudulent transfer or conveyance if (1) we or any of the guarantors, as applicable, issued the notes or incurred the guarantees with the intent of hindering, delaying or defrauding creditors or (2) we or any of the guarantors, as applicable, received less than reasonably equivalent value or fair consideration in return for either issuing the notes or incurring the guarantees and, in the case of (2) only, one of the following is also true at the time thereof:

 

•

we or any of the guarantors, as applicable, were insolvent or rendered insolvent by reason of the issuance of the notes or the incurrence of the guarantees;

 

•

the issuance of the notes or the incurrence of the guarantees left us or any of the guarantors, as applicable, with an unreasonably small amount of capital to carry on the business;

 

•

we or any of the guarantors intended to, or believed that we or such guarantor would, incur debts beyond our or such guarantor’s ability to pay as they mature; or

 

S-14

•

we or any of the guarantors was a defendant in an action for money damages, or had a judgment for money damages docketed against us or such guarantor if, in either case, after final judgment, the judgment is unsatisfied.

If a court were to find that the issuance of the notes or the incurrence of a guarantee was a fraudulent transfer or conveyance, the court could void the payment obligations under the notes or such guarantee or subordinate the notes or such guarantee to our or the applicable guarantors’ presently existing and future indebtedness, or require the holders of the notes to repay any amounts received with respect to the notes or any such guarantee. If it is found that a fraudulent transfer or conveyance has occurred, you may not receive any repayment on the notes or in respect of the applicable guarantee. Further, if the notes or guarantees are voided, it could result in an event of default with respect to our and our subsidiaries’ other debt and that could result in acceleration of such debt.

We cannot be certain of the standards that a court would use to determine whether or not we or the guarantors were solvent at the relevant time or, regardless of the standard that a court uses, that the issuance of the notes and the guarantees would not be further subordinated to our or any of our guarantors’ other debt. Generally, however, an entity would be considered insolvent if, at the time it incurred indebtedness:

 

•

the sum of its debts, including contingent liabilities, was greater than the fair saleable value of all its assets;

 

•

the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or

 

•

it could not pay its debts as they become due.

Although each guarantee will contain a provision that the obligations of the applicable guarantor under its note guarantee will be limited so as not to constitute a fraudulent conveyance or fraudulent transfer under applicable law, this provision may not be effective to protect such guarantee from being voided under fraudulent transfer law.

There are currently no established trading markets for the notes. We cannot assure you that active trading markets for the notes will develop.

Each series of notes is a new issue of securities with no established trading market. We currently do not intend to apply to list the notes on any securities exchange or to seek their admission to trading on any automated quotation system. We have been advised by the underwriters that they presently intend to establish a secondary market in each series of the notes after completion of the offering. However, they are under no obligation to do so and may discontinue any secondary market for any series of the notes at any time without any notice. We cannot assure you as to the liquidity of the trading market for any series of the notes or that an active public market for any series of the notes will develop. If an active public trading market for a series of notes does not develop, the market price and liquidity of such notes will be adversely affected. See “Underwriting (Conflicts of Interest).”

 

S-15

USE OF PROCEEDS

We estimate the net proceeds from the offering will be approximately $1,389.3 million after deducting underwriting discounts and commissions and other estimated offering expenses payable by us. We intend to use the net proceeds from the offering (i) to repay approximately $400 million in outstanding principal amount of the Term Loan, (ii) to fund a portion of the purchase price of the eviCore acquisition and (iii) for general corporate purposes, which may include repurchases of our common stock under our share repurchase program pursuant to open market transactions, block trades, privately negotiated transactions, accelerated share repurchase programs or other means or a combination of the aforementioned. See “Summary—Recent Developments—Proposed Acquisition of eviCore; —Financing Transactions.”

Certain of the underwriters or their affiliates are lenders with respect to the Term Loan, a portion of the outstanding principal amount of which will be repaid with the net proceeds of the offering. See “Underwriting (Conflicts of Interest)—Conflicts of Interest.”

 

S-16

CAPITALIZATION

The following table sets forth our cash and cash equivalents and capitalization as of September 30, 2017, on an actual basis and on an as adjusted basis to give effect to the offering and the anticipated use of the net proceeds therefrom (after deducting underwriting discounts and commissions and other estimated offering expenses payable by us). As adjusted amounts will vary from amounts set forth below depending on several factors, including potential changes in our use of proceeds from the offering.

You should read the data set forth in the table below in conjunction with “Use of Proceeds” and “Summary Historical Consolidated Financial Data” appearing elsewhere in this prospectus supplement, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our unaudited financial statements and the accompanying notes, which are incorporated by reference into this prospectus supplement from our Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 and our Current Report on Form 8-K filed on November 14, 2017.

 

		As of September 30, 2017
		Actual				As Adjusted
		(in millions)
Cash and cash equivalents		$	3,395.9			$	4,385.2
Debt(1):
Revolving Facility(2)		$	—			$	—
Term Loan(2)(3)			2,619.1				2,220.0
7.125% senior notes due 2018			845.9				845.9
2.250% senior notes due 2019			996.6				996.6
7.250% senior notes due 2019			336.6				336.6
4.125% senior notes due 2020			503.2				503.2
2.600% senior notes due 2020 offered hereby			—				496.7
Floating rate senior notes due 2020 offered hereby			—				397.5
3.300% senior notes due 2021			496.6				496.6
4.750% senior notes due 2021			1,241.0				1,241.0
3.900% senior notes due 2022			986.3				986.3
3.050% senior notes due 2022 offered hereby			—				495.1
3.000% senior notes due 2023			993.3				993.3
3.500% senior notes due 2024			989.4				989.4
4.500% senior notes due 2026			1,482.6				1,482.6
3.400% senior notes due 2027			1,489.6				1,489.6
6.125% senior notes due 2041			444.2				444.2
4.800% senior notes due 2046			1,483.4				1,483.4
Total debt			14,907.8				15,898.0
Total stockholders’ equity			15,922.3				15,921.4
Total Capitalization		$	30,830.1			$	31,819.4

 

(1)	Amount is shown net of unamortized discounts, premiums and net financing costs.

 

(2)	On October 26, 2017, we entered into the Credit Agreement, which provided for the Revolving Facility and continued the outstanding Term Loan. At October 26, 2017, no amounts were drawn under the Revolving Facility.

 

(3)	We make quarterly principal payments on the Term Loan. The Term Loan had an average interest rate of 2.48% as of September 30, 2017.

 

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DESCRIPTION OF THE NOTES

The following description of certain material terms of the notes offered hereby does not purport to be complete. This description adds information to the description of the general terms and provisions of the debt securities in the accompanying prospectus. To the extent this summary differs from the summary in the accompanying prospectus, you should rely on the description of notes in this prospectus supplement.

The $500,000,000 aggregate principal amount of our 2.600% Senior Notes due 2020 (the “2020 fixed rate notes”), the $400,000,000 aggregate principal amount of our Floating Rate Senior Notes due 2020 (the “2020 floating rate notes”) and the $500,000,000 aggregate principal amount of our 3.050% Senior Notes due 2022 (the “2022 fixed rate notes” and, together with the 2020 fixed rate notes, collectively, the “fixed rate notes,” and the fixed rate notes, together with the 2020 floating rate notes, collectively, the “notes”) will be issued under and governed by an indenture dated as of November 21, 2011 (the “base indenture”) among us, the guarantors and Wells Fargo Bank, National Association, as trustee (the “trustee”), as supplemented by supplemental indentures in respect of each series of the notes to be entered into among us, the guarantors and the trustee (together with the base indenture, the “indenture”). Although for convenience the 2020 fixed rate notes, the 2020 floating rate notes and the 2022 fixed rate notes are referred to as “notes,” each will be issued as a separate series and will not together have any class voting rights. Accordingly, for purposes of this Description of the Notes, references to “notes” shall be deemed to refer to each series of notes separately, and not to the 2020 fixed rate notes, the 2020 floating rate notes and the 2022 fixed rate notes on any combined basis. Unless otherwise defined herein, capitalized terms used in the following description are defined in the indenture. As used in the following description, the terms “we,” “us,” “our,” and “Express Scripts” refer to Express Scripts Holding Company and not to any of its subsidiaries, unless the context requires otherwise.

We urge you to read the indenture (including definitions of terms used therein) because it, and not this description, defines your rights as a beneficial holder of the notes. The following description of material terms of the indenture and the notes is a summary only. This description is subject to, and qualified in its entirety by reference to, the actual provisions of the notes and the indenture, which are or will be filed with the SEC. For information about how to obtain copies of the indenture from us, see “Where You Can Find More Information.”

General

The aggregate principal amount of the 2020 fixed rate notes offered hereby will initially be limited to $500,000,000 and will mature on November 30, 2020. The aggregate principal amount of the 2020 floating rate notes offered hereby will initially be limited to $400,000,000 and will mature on November 30, 2020. The aggregate principal amount of the 2022 fixed rate notes offered hereby will initially be limited to $500,000,000 and will mature on November 30, 2022. We may, without the consent of the holders of the applicable series of notes, increase such principal amounts in the future, on the same terms and conditions as the notes of the applicable series being offered hereby (except for the issue date, issue price and, in some cases, the first interest payment date); provided, however, that in the event any subsequently issued notes are not fungible with the applicable series of notes for U.S. federal income tax purposes, such subsequently issued notes will be issued with a separate CUSIP number so that they are distinguishable from the applicable series of notes. All notes will be issued only in fully registered form without coupons in minimum denominations of $2,000 and any integral multiple of $1,000.

The notes will be our senior unsecured obligations and will rank equally in right of payment with all of our other existing and future senior indebtedness, including our guarantees of debt issued by ESI and Medco. The notes will be jointly and severally and fully and unconditionally guaranteed by certain of our domestic wholly owned subsidiaries, each of which is a guarantor or other obligor in respect of our obligations under our existing revolving credit facility, our existing term loan facility and our existing senior notes. On the issue date, the initial guarantors of the notes will be ESI and Medco. The notes will be effectively subordinated to any secured indebtedness we and our subsidiaries may have or incur in the future to the extent of the collateral securing the same and will be structurally subordinated to the obligations (including trade accounts payable) of our subsidiaries that do not guarantee the notes. At September 30, 2017, we had outstanding approximately

 

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$14,907.8 million of senior unsecured indebtedness and no secured indebtedness, and our non-guarantor subsidiaries had approximately $5,490.6 million of liabilities.

The indenture will not contain any covenants or provisions that would afford the holders of the notes protection in the event of a highly leveraged or other transaction that is not in the best interests of noteholders, except to the limited extent described in the accompanying prospectus under “Description of Debt Securities—Covenants.”

Guarantees

The notes will be jointly and severally and fully and unconditionally guaranteed by certain of our domestic wholly owned subsidiaries, each of which is a guarantor or other obligor in respect of our obligations under our existing revolving credit facility, our existing term loan facilities and our existing senior notes. Commencing on the issue date, the notes will be guaranteed by ESI and Medco. The notes will also be guaranteed in the future by certain subsidiaries under the circumstances described in the accompanying prospectus under “Description of Debt Securities—Covenants—Additional Guarantors,” including any subsidiary that becomes a guarantor of obligations under our existing revolving credit facility or our existing term loan facility, provided that the notes will not be guaranteed by any subsidiaries that are “controlled foreign corporations” (or any subsidiaries of such “controlled foreign corporations”) as defined in the Internal Revenue Code of 1986, as amended (the “Code”).

Each guarantor’s guarantee of the notes:

 

•

will be a general unsecured obligation of that guarantor;

 

•

will be pari passu in right of payment with all existing and future senior indebtedness of that guarantor, but will be effectively subordinated to all of that guarantor’s future secured indebtedness to the extent of the value of the collateral that secures such indebtedness; and

 

•

will be senior in right of payment to all existing and future subordinated indebtedness of that guarantor.

Not all of our subsidiaries will guarantee the notes. In the event of a bankruptcy, liquidation or reorganization of any of these non-guarantor subsidiaries, the non-guarantor subsidiaries will pay the holders of their debt and their trade creditors before they will be able to distribute any of their assets to us. As of September 30, 2017, our non-guarantor subsidiaries held 55% of our consolidated assets and had total liabilities of $5,490.6 million. For the nine months ended September 30, 2017 and the year ended December 31, 2016, the non-guarantor subsidiaries generated 62% and 42%, respectively, of our consolidated total revenues and 88% and 21%, respectively, of our consolidated operating income.

The obligations of each guarantor will be limited as necessary to prevent the guarantees from constituting a fraudulent conveyance under applicable law. If a guarantee is rendered voidable, it could be subordinated by a court to all other indebtedness (including guarantees and other contingent liabilities) of the guarantor, and, depending on the amount of such indebtedness, a guarantor’s liability on its guarantee could be reduced to zero. See “Risk Factors—Risks Related to the Offering—Federal and state fraudulent transfer laws may permit a court to void the guarantees, and, if that occurs, you may not receive any payments on the notes or in respect of such guarantees.”

The indenture provides for the release of all or some of the subsidiary guarantors of the notes in certain circumstances, including:

 

•

all or substantially all of the equity interests or assets of such guarantor are sold, transferred or otherwise disposed of, other than to us, one of our subsidiaries or one of our affiliates;

 

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•

such guarantor is not a borrower, issuer or guarantor under, and has not granted any then-existing lien to secure any obligations pursuant to, our existing revolving credit facility or our existing term loan facility or, in each case, any refinancing or replacement thereof, or any other indebtedness having an aggregate principal amount outstanding in excess of 15% of our consolidated net worth, and is released or discharged from each guarantee and lien granted by such guarantor with respect to all of such indebtedness other than obligations arising under the indenture and any securities issued under the indenture, except discharges or releases by or as a result of payment under such guarantees; or

 

•

under the circumstances described in the accompanying prospectus under “Description of Debt Securities—Covenants—Additional Guarantors.”

No guarantor currently has any guarantee with respect to, or has incurred or granted any lien to secure, debt of an amount in excess of 15% of our consolidated net worth, other than guarantees of obligations under our existing revolving credit facility, our existing term loan facility and our existing senior notes. Therefore, unless such other debt is hereafter so incurred, guaranteed or secured by a guarantor, if such guarantor is released from its guarantees with respect to our existing revolving credit facility, our existing term loan facility and our existing senior notes, then such guarantor may be released from its guarantee of the notes.

Our existing revolving credit facility and our existing term loan facility provide that a guarantor shall be automatically released from its guarantee obligations upon the consummation of any transaction permitted by the Credit Agreement as a result of which such guarantor ceases to be a domestic subsidiary of the Company.

Principal, Maturity and Interest

Fixed Rate Notes

The 2020 fixed rate notes will mature on November 30, 2020 unless we redeem such notes prior to that date, as described below under “—Optional Redemption.” Interest on the 2020 fixed rate notes will accrue at the rate of 2.600% per year, and will be paid on the basis of a 360-day year of twelve 30-day months. We will pay interest on the 2020 fixed rate notes semi-annually in arrears on May 30 and November 30 of each year, beginning on May 30, 2018, to the holder in whose name each such note is registered on the day that is 15 days prior to the relevant interest payment date, whether or not such day is a business day.

The 2022 fixed rate notes will mature on November 30, 2022 unless we redeem such notes prior to that date, as described below under “—Optional Redemption.” Interest on the 2022 fixed rate notes will accrue at the rate of 3.050% per year, and will be paid on the basis of a 360-day year of twelve 30-day months. We will pay interest on the 2022 fixed rate notes semi-annually in arrears on May 30 and November 30 of each year, beginning on May 30, 2018, to the holder in whose name each such note is registered on the day that is 15 days prior to the relevant interest payment date, whether or not such day is a business day.

If any interest payment date or stated maturity date in respect of the fixed rate notes falls on a day that is not a business day in The City of New York, we will make the required payment of principal, premium, if any, and/or interest on the next business day as if it were made on the date payment was due, and no interest will accrue on the amount so payable for the period from and after that interest payment date or the stated maturity, as the case may be, to the next business day.

Floating Rate Notes

The 2020 floating rate notes will mature on November 30, 2020 unless we redeem such notes prior to that date, as described below under “—Optional Redemption.” We will pay interest on the 2020 floating rate notes quarterly in arrears on March 1, May 30, August 30 and November 30 of each year, beginning on March 1,

 

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2018, to holders of record on the LIBOR business day (as defined below) immediately before the relevant interest payment date. The amount of accrued interest that we will pay for any interest period can be calculated by multiplying the face amount of the 2020 floating rate notes then outstanding by an accrued interest factor. This accrued interest factor is computed by adding the interest factor calculated for each day from and including November 30, 2017, or from and including the most recent interest payment date to which interest has been paid and provided for, to but excluding the applicable interest payment date. The interest factor for each day is computed by dividing the interest rate on the 2020 floating rate notes applicable to that day by 360.

The rate of interest on the 2020 floating rate notes will be reset quarterly by the calculation agent (the “calculation agent”). The trustee will initially act as the calculation agent. The calculation agent will set the initial interest rate on the 2020 floating rate notes on November 30, 2017 and reset the interest rate on the 2020 floating rate notes on each interest payment date of the 2020 floating rate notes, each of which is referred to as an “interest reset date.” The interest rate on the 2020 floating rate notes in effect on any particular day will be the interest rate determined with respect to the latest interest reset date that occurs on or before that day. If any interest reset date would otherwise be a day that is not a LIBOR business day, the interest reset date will be postponed to the next day that is a LIBOR business day, except that, if that day falls in the next succeeding calendar month, the interest reset date will be the immediately preceding LIBOR business day. A “LIBOR business day” is any day (1) that is not a Saturday or Sunday, (2) on which dealings in deposits in U.S. dollars are transacted in the London interbank market and (3) that is not a day on which banking institutions are generally authorized or obligated by law to close in The City of New York or the city of London.

The interest rate on the 2020 floating rate notes for a particular interest period will be a per annum rate equal to three-month LIBOR as determined on the interest determination date plus 0.750%. The “interest determination date” for an interest period with respect to the 2020 floating rate notes will be the second LIBOR business day preceding the interest reset date. Promptly upon determination, the calculation agent will inform the trustee and us of the interest rate for the 2020 floating rate notes for the next interest period. If any interest determination date would fall on a day that is not a LIBOR business day, the interest determination date will be postponed to the next succeeding LIBOR business day, except that, if that day falls in the next succeeding calendar month, the interest determination date will be the immediately preceding LIBOR business day.

If any interest payment date, other than the maturity date, for the 2020 floating rate notes falls on a day that is not a LIBOR business day, then such interest payment date will be postponed to the next day that is a LIBOR business day, except that, if that LIBOR business day falls in the next succeeding calendar month, then, unless it relates to interest payable at maturity, such interest payment date will be the immediately preceding LIBOR business day. If the maturity date of the 2020 floating rate notes falls on a day that is not a LIBOR business day, then the related payment of principal and interest will be made on the next day that is a LIBOR business day with the same effect as if made on the date that the payment was first due, and no interest will accrue on the amount so payable for the period from the maturity date.

“three-month LIBOR” shall mean the rate determined by the calculation agent in accordance with the following provisions:

 

(1)

With respect to any interest determination date, three-month LIBOR will be the rate for deposits in U.S. dollars having a maturity of three months commencing on the first day of the applicable interest period that appears on the Designated LIBOR Page as of 11:00 a.m., London time, on that interest determination date. If no such rate appears, then three-month LIBOR, with respect to that interest determination date, will be determined in accordance with the provisions described in clause (2) below.

 

(2)

With respect to an interest determination date on which no rate appears on the Designated LIBOR Page, as specified in clause (1) above, the calculation agent will request the principal London offices of each of four major reference banks in the London interbank market, as selected by us, to

 

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provide the calculation agent with its offered quotation for deposits in U.S. dollars for the period of three months, commencing on the first day of the applicable interest period, to prime banks in the London interbank market at approximately 11:00 a.m., London time, on that interest determination date and in a principal amount that is representative for a single transaction in U.S. dollars in such market at such time. If at least two quotations are provided, then three-month LIBOR on such interest determination date will be the arithmetic mean of such quotations. If fewer than two such quotations are provided, then three-month LIBOR on such interest determination date will be the arithmetic mean of the rates quoted at approximately 11:00 a.m., New York City time, on such interest determination date by three major banks in The City of New York selected by us for loans in U.S. dollars to leading European banks, having a three-month maturity and in a principal amount that is representative for a single transaction in U.S. dollars in such market at such time; provided, however, that if the banks selected by the calculation agent are not providing quotations in the manner described in this sentence, three-month LIBOR determined as of such interest determination date will be three-month LIBOR in effect with respect to the immediately preceding interest period.

“Designated LIBOR Page” means the Reuters screen “LIBOR01” page, or any successor page on Reuters selected by us, or if we determine that no such successor page shall exist on Reuters, an equivalent page on any successor service selected by us.

Upon request from any holder of 2020 floating rate notes, the calculation agent will provide the interest rate in effect for the 2020 floating rate notes for the current interest period and, if it has been determined, the interest rate to be in effect for the next interest period.

All percentages resulting from any calculation of the interest rate for the 2020 floating rate notes will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upward (e.g., 9.876545% (or .09876545) would be rounded to 9.87655% (or .0987655)), and all U.S. dollar amounts used in or resulting from such calculation on the 2020 floating rate notes will be rounded to the nearest cent (with one-half cent being rounded upward). Each calculation of the interest rate on the 2020 floating rate notes by the calculation agent will (in the absence of manifest error) be final and binding on the holders of the 2020 floating rate notes, the trustee and us.

The interest rate on the 2020 floating rate notes will in no event be higher than the maximum rate permitted by New York law as the same may be modified by United States law of general application. In addition, the interest rate on the 2020 floating rate notes will in no event be lower than zero.

General

We will make payments in respect of the notes represented by the global notes (as defined below) (including principal, premium, if any, and interest) by wire transfer of immediately available funds to the accounts specified by DTC. We will make payments in respect of the notes represented by certificated notes (as defined below) (including principal, premium, if any, and interest) by wire transfer of immediately available funds to the accounts specified by the holders of certificated notes or, if no such account is specified, by mailing a check to each holder’s registered address. The notes represented by the global notes are expected to be eligible to trade in DTC’s Same-Day Funds Settlement System, and any permitted secondary market trading activity in such notes will, therefore, be required by DTC to be settled in immediately available funds. We expect that secondary trading in any certificated notes will also settle in immediately available funds. See “—Book-Entry.”

Neither we nor the trustee will impose any service charge for any transfer or exchange of a note. However, we may ask you to pay any taxes or other governmental charges in connection with a transfer or exchange of notes.

 

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Optional Redemption

Fixed Rate Notes

At any time prior to the maturity date (in the case of the 2020 fixed rate notes) or the par call date (in the case of the 2022 fixed rate notes), the fixed rate notes of such series will be redeemable, in whole or in part, at our option at any time and from time to time at a redemption price equal to the greater of:

 

•

100% of the aggregate principal amount of any such fixed rate notes being redeemed, plus accrued and unpaid interest on such fixed rate notes to the redemption date for such fixed rate notes; and

 

•

the sum of the present values of the remaining scheduled payments discounted to the redemption date for such fixed rate notes on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the treasury rate plus 15 basis points in the case of the 2020 fixed rate notes and 15 basis points in the case of the 2022 fixed rate notes, in each case plus unpaid interest on the fixed rate notes being redeemed accrued to the redemption date for such fixed rate notes.

At any time on or after the par call date for the 2022 fixed rate notes, the 2022 fixed rate notes will be redeemable, in whole or in part, at our option at any time and from time to time at a redemption price equal to 100% of the principal amount of such 2022 fixed rate notes to be redeemed plus accrued and unpaid interest on the principal amount being redeemed to the date of redemption for such 2022 fixed rate notes.

The term “comparable treasury issue” means the United States Treasury security or securities selected by an independent investment banker as having an actual or interpolated maturity comparable to the remaining term of the fixed rate notes of the applicable series being redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a comparable maturity to the remaining term of such fixed rate notes (assuming, for the purpose of this definition, that the 2020 fixed rate notes matured on the maturity date of such notes and the 2022 fixed rate notes matured on the par call date of such notes).

The term “comparable treasury price” means, with respect to any redemption date of fixed rate notes:

 

•

the average of five reference treasury dealer quotations for such redemption date, after excluding the highest and lowest such reference treasury dealer quotation; or

 

•

if the trustee obtains fewer than five reference treasury dealer quotations, the average of all reference treasury dealer quotations for such redemption date so obtained.

The term “independent investment banker” means one of the reference treasury dealers appointed by the trustee after consultation with us.

The term “reference treasury dealer” means each of Citigroup Global Markets Inc., Mizuho Securities USA LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and two other primary U.S. government securities dealers selected by us (in each case, or their affiliates and their respective successors); provided that if any of these reference treasury dealers resigns, then the respective successor will be a primary United States government securities dealer in The City of New York selected by us.

The term “reference treasury dealer quotations” means, with respect to each reference treasury dealer and any redemption date for fixed rate notes, the average, as determined by the trustee, of the bid and asked prices for the comparable treasury issue, expressed in each case as a percentage of its principal amount, quoted in writing to the trustee by such reference treasury dealer at approximately 3:30 p.m., New York City time, on the

 

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third business day preceding such redemption date (or in the case of a satisfaction and discharge, the third business day preceding deposit of the redemption amount).

The term “remaining scheduled payments” means, with respect to each fixed rate note to be redeemed, the remaining scheduled payments of principal and interest thereon that would be due, in the case of the 2020 fixed rate notes, if the 2020 fixed rate notes matured on the maturity date of such notes, and, in the case of the 2022 fixed rate notes, if the 2022 fixed rate notes matured on the par call date of such notes, in each case but for such redemption; provided, however, that, if that redemption date is not an interest payment date with respect to such fixed rate note, the amount of the next succeeding scheduled interest payment thereon will be reduced by the amount of interest accrued thereon to that redemption date.

The term “par call date” means October 31, 2022 (30 days prior to the maturity date of the 2022 fixed rate notes).

The term “treasury rate” means, with respect to any redemption date for fixed rate notes, the rate per year equal to the semiannual equivalent yield to maturity or interpolated (on a day count basis) of the comparable treasury issue, assuming a price for the comparable treasury issue (expressed as a percentage of its principal amount) equal to the comparable treasury price for such redemption date.

Floating Rate Notes

We may redeem some or all of the 2020 floating rate notes at our option on December 3, 2018 (the date that is the first business day after the date that is one year following the issue date of the 2020 floating rate notes) or at any time and from time to time thereafter at a redemption price equal to 100% of the principal amount of the 2020 floating rate notes to be redeemed plus accrued and unpaid interest on the principal amount being redeemed to the date of redemption.

General

If we choose to redeem all or less than all of any series of notes, then we will notify the trustee at least 20 days before the date fixed for redemption, or such shorter period as is satisfactory to the trustee, of the aggregate principal amount of that series of notes to be redeemed and the redemption date. The trustee will select, in the manner it deems fair and appropriate, the notes of that series to be redeemed in part. See also “—Book-Entry” and “—Global Clearance and Settlement Procedures” below.

We will give written notice of any redemption of any series of notes to holders of that series of notes to be redeemed at their addresses, as shown in the security register for the affected notes, not more than 60 nor less than 15 days prior to the date fixed for redemption. The notice of redemption will specify, among other items, the aggregate principal amount of the series of notes to be redeemed, the redemption date and the redemption price.

We will pay the interest installment due on any interest payment date that occurs on or before a redemption date to the holders of the affected series of notes as of the close of business on the applicable regular record date.

If any redemption date in respect of any series of notes falls on a day that is not a business day in The City of New York, we will make the required payment of principal, premium, if any, and/or interest on the next business day as if it were made on the date payment was due, and no interest will accrue on the amount so payable for the period from and after such redemption date to the next business day.

If we have given notice of the redemption of any series of notes as provided in the indenture and made funds irrevocably available for the redemption of such notes on or prior to the redemption date referred to in that notice, then those notes will cease to bear interest on that redemption date and the only remaining right of the holders of those notes will be to receive payment of the redemption price.

 

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The notes will not be subject to, or have the benefit of, a sinking fund.

Covenants

The covenants set forth in the accompanying prospectus under “Description of Debt Securities—Covenants” shall apply in respect of the notes of each series; provided that the reference to Express Scripts, Inc. in clause (g) of the covenant under “Description of Debt Securities—Covenants—Limitations on Liens” shall refer to Express Scripts Holding Company.

Modification, Amendment and Waiver

We, together with the trustee, may modify and amend the indenture and the terms of a series of notes with the consent of the holders of at least a majority in principal amount of the outstanding notes of the affected series; provided that no modification or amendment may, without the consent of each affected holder of the notes of the affected series:

 

•

change the stated maturity of the principal of, or any installment of interest on, any note;

 

•

reduce the principal of, or any premium, if any, or rate of interest on, any note;

 

•

reduce any amount payable upon the redemption of any note or, except as expressly provided in the indenture, change the time at which any note may be redeemed as described under “—Optional Redemption”;

 

•

change any place of payment where, or the currency in which, any principal of, or premium, if any, or interest on, any note is payable;

 

•

impair the right of any holder of the notes to receive payment of principal of or interest on such holder’s notes on or after the stated maturity or redemption date or to institute suit for the enforcement of any payment on or with respect to any note on or after the stated maturity or redemption date;

 

•

reduce the percentage in principal amount of outstanding notes the consent of whose holders is required for modification or amendment of the indenture, for waiver of compliance with certain provisions of the indenture or for waiver of certain defaults;

 

•

release any guarantor from any of its obligations under its guarantee or the indenture other than in accordance with the terms of the indenture; or

 

•

modify any of the above provisions.

The provisions relating to a change in control triggering event may not be waived or modified for any series of notes without the written consent of holders of at least a majority in principal amount of that series of notes outstanding. See “Description of Debt Securities—Purchase of Debt Securities Upon a Change of Control Triggering Event” in the accompanying prospectus.

The holders of at least a majority in principal amount of the outstanding notes of the affected series may, on behalf of the holders of all notes of that series, waive any past default under the indenture and its consequences, except a default in the payment of the principal of, or premium, if any, or interest on, any notes or in respect of a covenant or provision that under the indenture cannot be modified or amended without the consent of each holder of that series. In addition, the holders of at least a majority in principal amount of the outstanding

 

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notes of the affected series may, on behalf of the holders of all notes of that series, waive compliance with our covenants described in the accompanying prospectus under “Description of Debt Securities—Covenants—Limitations on Liens” and “Description of Debt Securities—Covenants—Limitations on Sale and Leaseback Transactions.”

In addition, we, together with the trustee, may modify and amend the indenture and the terms of the notes without seeking the consent of any holders of the notes to:

 

•

allow our or any guarantor’s successor to assume our or such guarantor’s obligations under the indenture and the notes pursuant to, in respect of the Company, the provisions described in the accompanying prospectus under the heading “Description of Debt Securities—Covenants—Merger, Consolidation and Sale of Assets”;

 

•

add to our covenants for the benefit of the holders of the notes or surrender any right or power we have under the indenture;

 

•

add any additional events of default;

 

•

secure the notes;

 

•

provide for a successor trustee with respect to the notes;

 

•

add or release a guarantor as required or permitted by the indenture;

 

•

cure any ambiguity, defect or inconsistency;

 

•

amend the provisions of the indenture relating to the transfer and legending of the notes; provided that (i) compliance with the indenture as so amended would not result in notes being transferred in violation of the Securities Act or any other applicable securities law and (ii) such amendment does not adversely affect the interests of the holders of any notes or owners of beneficial interests in notes; or

 

•

make any other amendment or supplement to the indenture as long as that amendment or supplement does not adversely affect the interests of the holders of any notes in any material respect.

No amendment to cure any ambiguity, defect or inconsistency in the indenture made solely to conform the indenture to the description of the notes contained in this prospectus supplement will be deemed to adversely affect the interests of the holders of the notes.

Defeasance and Covenant Defeasance

Except as prohibited by the indenture, if we deposit with the trustee sufficient money or United States government obligations, or both, to pay the principal of, and premium, if any, and interest on, the notes of any series on the scheduled due dates therefor, then at our option we may be discharged from certain of our obligations with respect to the notes of such series or elect that our failure to comply with certain restrictive covenants, including those described in the accompanying prospectus under “Description of Debt Securities—Purchase of Debt Securities Upon a Change of Control Triggering Event,” “Description of Debt Securities—Covenants—Merger, Consolidation and Sale of Assets,” “Description of Debt Securities—Covenants—Limitations on Liens,” “Description of Debt Securities—Covenants—Limitations on Sale and Leaseback Transactions,” and “Description of Debt Securities—Covenants—Additional Guarantors” will not be deemed to be or result in an event of default under the applicable notes.

 

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Governing Law

The notes and the indenture will be governed by, and construed in accordance with, the laws of the State of New York.

Book-Entry

DTC will act as securities depositary for the notes. The notes will be issued only as fully registered securities registered in the name of Cede & Co., the DTC’s nominee or such other name as may be requested by an authorized representative of DTC. One or more fully registered global note certificates (“global notes”), representing the total aggregate principal amount of the notes of each series, will be issued and will be deposited with DTC or its custodian and will bear a legend regarding the restrictions on exchanges and registration of transfer referred to below.

Investors may elect to hold interests in the global notes through either DTC in the United States or Clearstream Banking, societe anonyme (“Clearstream, Luxembourg”) or Euroclear Bank S.A./N.V., as operator of the Euroclear System (the “Euroclear System”), in Europe if they are participants of such systems, or indirectly through organizations which are participants in such systems. Clearstream, Luxembourg and the Euroclear System will hold interests on behalf of their participants through customers’ securities accounts in Clearstream, Luxembourg’s and the Euroclear System’s names on the books of their respective depositaries, which in turn will hold such interests in customers’ securities accounts in the depositaries’ names on the books of DTC. Citibank, N.A. will act as depositary for Clearstream, Luxembourg and JPMorgan Chase Bank, N.A. will act as depositary for the Euroclear System (in such capacity, the “United States depositaries”).

DTC advises that it is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds securities that its participants deposit with DTC. DTC also facilitates the settlement among participants of securities transactions, including transfers and pledges, in deposited securities through electronic computerized book-entry changes in participants’ accounts, thereby eliminating the need for physical movement of securities certificates. Direct participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is owned by a number of its direct participants and by the New York Stock Exchange, NYSE American and the Financial Industry Regulatory Authority. Access to DTC’s system is also available to others, including securities brokers and dealers, banks and trust companies that clear transactions through or maintain a direct or indirect custodial relationship with a direct participant, either directly or indirectly. The rules applicable to DTC and its participants are on file with the SEC.

Clearstream, Luxembourg advises that it is incorporated under the laws of Luxembourg as a professional depositary. Clearstream, Luxembourg holds securities for its participating organizations (“Clearstream participants”) and facilitates the clearance and settlement of securities transactions between Clearstream participants through electronic book-entry changes in accounts of Clearstream participants, thereby eliminating the need for physical movement of certificates. Clearstream, Luxembourg provides to Clearstream participants, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Clearstream, Luxembourg interfaces with domestic markets in several countries. As a professional depositary, Clearstream, Luxembourg is subject to regulation by the Luxembourg Commission for the Supervision of the Financial Sector (Commission de Surveillance du Secteur Financier). Clearstream participants are recognized financial institutions around the world, including underwriters, securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations and may include the underwriters. Indirect access to Clearstream, Luxembourg is also available to others, such as banks, brokers, dealers and trust companies that clear through, or maintain a custodial relationship with, a Clearstream participant, either directly or indirectly.

 

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Distributions with respect to interests in the notes held beneficially through Clearstream, Luxembourg will be credited to cash accounts of Clearstream participants in accordance with its rules and procedures, to the extent received by the United States depositary for Clearstream, Luxembourg.

The Euroclear System advises that it was created in 1968 to hold securities for participants of the Euroclear System (“Euroclear participants”) and to clear and settle transactions between Euroclear participants through simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical movement of certificates and any risk from lack of simultaneous transfers of securities and cash. The Euroclear System includes various other services, including securities lending and borrowing and interfaces with domestic markets in several countries. The Euroclear System is operated by Euroclear Bank S.A./N.V. (the “Euroclear operator”). All operations are conducted by the Euroclear operator, and all Euroclear securities clearance accounts and Euroclear System cash accounts are accounts with the Euroclear operator. Euroclear participants include banks (including central banks), securities brokers and dealers and other professional financial intermediaries and may include the underwriters. Indirect access to the Euroclear System is also available to other firms that clear through or maintain a custodial relationship with a Euroclear participant, either directly or indirectly.

Securities clearance accounts and cash accounts with the Euroclear operator are governed by the terms and conditions governing use of Euroclear and the related operating procedures of the Euroclear System, and applicable Belgian law (collectively, the “terms and conditions”). The terms and conditions govern transfers of securities and cash within the Euroclear System, withdrawals of securities and cash from the Euroclear System and receipts of payments with respect to securities in the Euroclear System. All securities in the Euroclear System are held on a fungible basis without attribution of specific certificates to specific securities clearance accounts. The Euroclear operator acts under the terms and conditions only on behalf of Euroclear participants and has no records of or relationship with persons holding through Euroclear participants.

Distributions with respect to notes held beneficially through the Euroclear System will be credited to the cash accounts of Euroclear participants in accordance with the terms and conditions, to the extent received by the United States depositary for the Euroclear System.

We will issue the notes of a series in definitive certificated form (“certificated notes”) if DTC notifies us that it is unwilling or unable to continue as depositary or DTC ceases to be a clearing agency registered under the Exchange Act and a successor depositary is not appointed by us within 90 days or an event of default has occurred and is ongoing. If we determine at any time that the notes of a series shall no longer be represented by global security certificates, we will inform DTC of such determination who will, in turn, notify participants of their right to withdraw their beneficial interest from the global security certificates, and if such participants elect to withdraw their beneficial interests, we will issue certificates in definitive form in exchange for such beneficial interests in the global security certificates. Any global note, or portion thereof, that is exchangeable pursuant to this paragraph will be exchangeable for note certificates, as the case may be, registered in the names directed by DTC. We expect that these instructions will be based upon directions received by DTC from its participants with respect to ownership of beneficial interests in the global security certificates.

As long as DTC or its nominee is the registered owner of the global security certificates, DTC or its nominee, as the case may be, will be considered the sole owner and holder of the global security certificates and all notes represented by these certificates for all purposes under the notes and the indenture. Except in the limited circumstances referred to above, owners of beneficial interests in global security certificates:

 

•

will not be entitled to have the notes represented by these global security certificates registered in their names; and

 

•

will not be considered to be owners or holders of the global security certificates or any notes represented by these certificates for any purpose under the notes or the indenture.

 

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All payments on the notes represented by the global security certificates and all transfers and deliveries of related notes will be made to DTC or its nominee, as the case may be, as the holder of the securities.

Ownership of beneficial interests in the global security certificates will be limited to participants or persons that may hold beneficial interests through institutions that have accounts with DTC or its nominee. Ownership of beneficial interests in global security certificates will be shown only on, and the transfer of those ownership interests will be effected only through, records maintained by DTC or its nominee, with respect to participants’ interests, or any participant, with respect to interests of persons held by the participant on their behalf. Payments, transfers, deliveries, exchanges and other matters relating to beneficial interests in global security certificates may be subject to various policies and procedures adopted by DTC from time to time. Neither we nor the trustee will have any responsibility or liability for any aspect of DTC’s or any participant’s records relating to, or for payments made on account of, beneficial interests in global security certificates, or for maintaining, supervising or reviewing any of DTC’s records or any participant’s records relating to these beneficial ownership interests.

Although DTC has agreed to the foregoing procedures in order to facilitate transfers of interests in the global security certificates among participants, DTC is under no obligation to perform or continue to perform these procedures, and these procedures may be discontinued at any time. We will not have any responsibility for the performance by DTC or its direct participants or indirect participants under the rules and procedures governing DTC.

The information in this section concerning DTC, its book-entry system, Clearstream, Luxembourg and the Euroclear System has been obtained from sources that we believe to be reliable, but we have not attempted to verify the accuracy of this information.

Global Clearance and Settlement Procedures

Initial settlement for the notes will be made in immediately available funds. Secondary market trading between DTC participants will occur in the ordinary way in accordance with DTC rules and will be settled in immediately available funds using DTC’s Same-Day Funds Settlement System. Secondary market trading between Clearstream participants and/or Euroclear participants will occur in accordance with the applicable rules and operating procedures of Clearstream, Luxembourg and the Euroclear System, as applicable.

Cross-market transfers between persons holding directly or indirectly through DTC on the one hand, and directly or indirectly through Clearstream participants or Euroclear participants, on the other, will be effected through DTC in accordance with DTC rules on behalf of the relevant European international clearing system by its United States depositary; however, such cross-market transactions will require delivery of instructions to the relevant European international clearing system by the counterparty in such system in accordance with its rules and procedures and within its established deadlines (European time). The relevant European international clearing system will, if the transaction meets its settlement requirements, deliver instructions to its United States depositary to take action to effect final settlement on its behalf by delivering or receiving securities in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Clearstream participants and Euroclear participants may not deliver instructions directly to their respective United States depositaries.

Because of time-zone differences, credits of notes received in Clearstream, Luxembourg or the Euroclear System as a result of a transaction with a DTC participant will be made during subsequent securities settlement processing and dated the business day following the DTC settlement date. Such credits or any transactions in such notes settled during such processing will be reported to the relevant Euroclear participant or Clearstream participant on such business day. Cash received in Clearstream, Luxembourg or the Euroclear System as a result of sales of the notes by or through a Clearstream participant or a Euroclear participant to a DTC participant will be received with value on the DTC settlement date but will be available in the relevant

 

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Clearstream, Luxembourg or the Euroclear System cash account only as of the business day following settlement in DTC.

Although DTC, Clearstream, Luxembourg and the Euroclear System have agreed to the foregoing procedures in order to facilitate transfers of notes among participants of DTC, Clearstream, Luxembourg and the Euroclear System, they are under no obligation to perform or continue to perform such procedures and such procedures may be discontinued or changed at any time.

 

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UNITED STATES FEDERAL INCOME TAX

CONSIDERATIONS TO NON-U.S. HOLDERS

The following is a general discussion of United States federal income tax considerations relating to the ownership and disposition of the notes. Unless otherwise stated, this discussion is limited to the tax consequences to non-U.S. holders (as defined below) who purchase the notes for cash at the original offering price and who hold such notes as capital assets. This discussion does not address specific tax consequences that may be relevant to particular persons (including, among others, financial institutions, banks, insurance companies, real estate investment trusts, regulated investment companies, controlled foreign corporations, passive foreign investment companies, foreign governments, retirement plans, dealers or traders in securities or currencies, brokers, tax-exempt entities, partnerships or other pass-through entities, investors holding the notes as part of an “integrated,” “hedging,” or “conversion” transaction or as a position in a “straddle” for U.S. federal income tax purposes, grantor trusts, holders that have a taxable year other than a calendar year, U.S. expatriates and holders subject to the U.S. federal alternative minimum tax). In addition, this discussion does not describe any tax consequences arising under United States federal gift and estate or other federal tax laws or under the tax laws of any state, local or foreign jurisdiction. This discussion is based upon the Code, the Treasury Department regulations promulgated thereunder (the “Treasury Regulations”), and administrative and judicial interpretations thereof, all as of the date hereof and all of which are subject to change, possibly on a retroactive basis, or subject to different interpretation.

Prospective investors are urged to consult their own tax advisors concerning the tax consequences to them of owning and disposing of the notes in light of their own circumstances.

For purposes of this discussion, a “non-U.S. holder” is a beneficial owner of the notes (other than a partnership or entity or arrangement treated as a partnership for United States federal income tax purposes) that is not a U.S. holder (as defined herein). A “U.S. holder” is a beneficial owner of a note that is, for United States federal income tax purposes: (i) a citizen or individual resident of the United States; (ii) a corporation (or other entity taxable as a corporation) created or organized under the laws of the United States or any political subdivision thereof; (iii) an estate, the income of which is subject to United States federal income tax regardless of the source; or (iv) a trust (A) with respect to which a court within the United States is able to exercise primary supervision over the trust’s administration and one or more United States persons (as defined in the Code) have the authority to control all its substantial decisions, or (B) that has in effect a valid election under applicable Treasury Regulations to be treated as a United States person (as defined in the Code).

If a partnership (including any entity treated as a partnership for U.S. federal income tax purposes) holds the notes, the U.S. federal income tax consequences to the partners of such partnership will depend on the activities of the partnership and the status of the partners. A partnership considering acquiring the notes, and each partner in such partnership, should consult its independent tax advisor about the consequences to the partners of the purchase, ownership and disposition of such notes by the partnership.

Payments of Interest

Subject to the discussion below under “Foreign Account Tax Compliance Act,” payments of principal and interest on the notes by us or any of our agents to a non-U.S. holder generally will not be subject to United States federal withholding tax, provided that in the case of interest:

(1) the non-U.S. holder does not actually or constructively own 10% or more of the total combined voting power of all classes of our stock entitled to vote;

(2) the non-U.S. holder is not a “controlled foreign corporation” that is related to us, directly or indirectly, through stock ownership for United States federal income tax purposes;

 

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(3) either (A) the beneficial owner of the notes certifies to us or our agent on Internal Revenue Service (“IRS”) Form W-8BEN or W-8BEN-E (or successor form), under penalties of perjury, that it is not a United States person (as defined in the Code), provides its name, address and certain other required information or certain other certification requirements are satisfied, and renews the certificate periodically as required by the Treasury Regulations or (B) a securities clearing organization, or certain other financial institutions holding the note on behalf of the non-U.S. holder certifies, under penalties of perjury, to us or our paying agent on IRS Form W-8IMY (or successor form) that the certification described under (A) above has been received by it and furnishes us or our paying agent with a copy thereof; and certain other conditions are satisfied; and

(4) neither we nor our paying agent has actual knowledge or reason to know that the beneficial owner of the note is not entitled to exemption from withholding tax.

If a non-U.S. holder cannot satisfy the requirements of the exemption described above, payments of interest made to such non-U.S. holder will be subject to a 30% withholding tax unless such holder provides us or our agent, as the case may be, with a properly executed:

(1) IRS Form W-8BEN or W-8BEN-E (or successor form) claiming an exemption from or reduction in withholding under the benefit of an applicable tax treaty; or

(2) IRS Form W-8ECI (or successor form) stating that interest paid or accrued on the notes is not subject to withholding tax because it is effectively connected with such holder’s conduct of a trade or business in the United States,

and each form is renewed periodically as required by the Treasury Regulations.

If interest on the note is effectively connected with the conduct of a trade or business in the United States by a non-U.S. holder (and, if certain tax treaties apply, is attributable to a permanent establishment maintained by the non-U.S. holder within the United States), such non-U.S. holder, although exempt from the withholding tax discussed above, will be subject to United States federal income tax on such interest on a net income basis. In addition, if such non-U.S. holder is a foreign corporation, it may be subject to a branch profits tax equal to 30% (or lower applicable treaty rate) of its effectively connected earnings and profits for the taxable year, subject to adjustments. For this purpose, interest on a note will be included in such foreign corporation’s earnings and profits.

Disposition of Notes

Subject to the discussion below under “Foreign Account Tax Compliance Act,” no withholding of United States federal income tax generally will be required with respect to any gain or income realized by a non-U.S. holder upon the sale, exchange or disposition of a note.

A non-U.S. holder will not be subject to United States federal income tax on gain realized on the sale, exchange or other disposition of a note unless (a) the non-U.S. holder is an individual who is present in the United States for a period or periods aggregating 183 or more days in the taxable year of the disposition and certain other conditions are met, or (b) such gain or income is effectively connected with the conduct of a trade or business in the United States (and, if certain tax treaties apply, is attributable to a permanent establishment maintained by the non-U.S. holder within the United States).

To the extent that the amount realized on any sale, exchange or disposition of a note is attributable to accrued but unpaid interest, such amount will be treated as interest for United States federal income tax purposes.

To the extent that gain on any sale, exchange or disposition of a note is effectively connected with the non-U.S. holder’s conduct of a U.S. trade or business (and, in the case of certain tax treaties, is attributable to a

 

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permanent establishment or fixed base within the United States), such non-U.S. holder will be subject to U.S. federal income tax on such gain on a net basis and, if it is a foreign corporation, may also be subject to an additional 30% U.S. branch profits tax (or lower applicable treaty rate).

Information Reporting and Backup Withholding

A non-U.S. holder may be required to comply with certain certification procedures to establish that the holder is not a United States person (as defined in the Code) in order to avoid backup withholding tax with respect to payments of principal and interest on, or the proceeds of the sale or other disposition of, a note. Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against such non-U.S. holder’s United States federal income tax liability; provided the required information is furnished to the IRS. In certain circumstances, the name and address of the beneficial owner and the amount of interest paid on a note, as well as the amount, if any, of tax withheld, may be reported to the IRS. Copies of these information returns may also be made available under the provisions of a specific treaty or agreement to the tax authorities of the country in which the non-U.S. holder resides.

Foreign Account Tax Compliance Act

Sections 1471 through 1474 of the Code and the Treasury Regulations promulgated thereunder (commonly referred as the “Foreign Account Tax Compliance Act” or “FATCA”) generally impose withholding at a rate of 30% in certain circumstances on (i) interest payable on, and (ii) after December 31, 2018, gross proceeds from the disposition of, the notes held by or through certain financial institutions (including investment funds), unless such institution certifies that it has entered into, and complies with, an agreement with the IRS to report, on an annual basis, information with respect to certain interests in, and accounts maintained by, the institution that are owned by certain U.S. persons or by certain non-U.S. entities that are wholly or partially owned by U.S. persons and to withhold on certain payments. An intergovernmental agreement between the United States and applicable foreign country may modify these requirements. Similarly, (i) interest payable on, and (ii) after December 31, 2018, gross proceeds from the disposition of, the notes held by an investor that is a non-financial non-U.S. entity that does not qualify under certain exemptions generally will be subject to withholding at a rate of 30%, unless such entity either (y) certifies that such entity does not have any “substantial United States owners” or (z) provides certain information regarding the entity’s “substantial United States owners,” which will in turn be provided to the United States Department of the Treasury. Prospective investors should consult their tax advisors regarding the possible implications of these rules on an investment in the notes.

 

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UNDERWRITING (CONFLICTS OF INTEREST)

Under the terms and subject to the conditions contained in an underwriting agreement dated November 20, 2017, we have agreed to sell to the underwriters named below, for which Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Mizuho Securities USA LLC are acting as representatives, the following principal amount of each series of notes set forth opposite its name below.

 

Underwriters		Principal Amount of 2020 Fixed Rate Notes				Principal Amount of 2020 Floating Rate Notes				Principal Amount of 2022 Fixed Rate Notes
Merrill Lynch, Pierce, Fenner & Smith                       Incorporated		$	77,500,000			$	62,000,000			$	77,500,000
Citigroup Global Markets Inc.			75,000,000				60,000,000				75,000,000
Mizuho Securities USA LLC			75,000,000				60,000,000				75,000,000
Credit Suisse Securities (USA) LLC			35,000,000				28,000,000				35,000,000
J.P. Morgan Securities LLC			35,000,000				28,000,000				35,000,000
Morgan Stanley & Co. LLC			35,000,000				28,000,000				35,000,000
RBC Capital Markets, LLC			35,000,000				28,000,000				35,000,000
Wells Fargo Securities, LLC			35,000,000				28,000,000				35,000,000
Credit Agricole Securities (USA) Inc.			15,000,000				12,000,000				15,000,000
Scotia Capital (USA) Inc.			15,000,000				12,000,000				15,000,000
SMBC Nikko Securities America, Inc.			15,000,000				12,000,000				15,000,000
SunTrust Robinson Humphrey, Inc.			15,000,000				12,000,000				15,000,000
TD Securities (USA) LLC			15,000,000				12,000,000				15,000,000
U.S. Bancorp Investments, Inc.			15,000,000				12,000,000				15,000,000
Loop Capital Markets LLC			7,500,000				6,000,000				7,500,000
Total		$	500,000,000			$	400,000,000			$	500,000,000

The underwriting agreement provides that the underwriters are obligated to purchase all of the notes if any are purchased. The underwriting agreement also provides that if an underwriter defaults, under certain circumstances the purchase commitments of non-defaulting underwriters may be increased or the offering may be terminated.

The underwriters propose to offer the notes initially at the applicable public offering prices as set forth on the cover page of this prospectus supplement and may offer the notes to selected dealers at that price, less a concession of 0.250% of the principal amount in the case of the 2020 fixed rate notes, 0.250% of the principal amount in the case of the 2020 floating rate notes and 0.350% of the principal amount in the case of the 2022 fixed rate notes. Any underwriter may allow, and such dealers may reallow, a concession not in excess of 0.200% of the principal amount in the case of the 2020 fixed rate notes, 0.200% of the principal amount in the case of the 2020 floating rate notes and 0.250% of the principal amount in the case of the 2022 fixed rate notes. After the initial public offering of the notes, the underwriters may change the public offering price and concessions and discounts to dealers. The underwriters may offer and sell the notes through certain of their affiliates.

The following table shows the underwriting discounts and commissions that we will pay to the underwriters in connection with the offering expressed as a percentage of the principal amount of the notes.

 

		Paid by Express Scripts
Per 2020 fixed rate note			0.450	%
Per 2020 floating rate note			0.450	%
Per 2022 fixed rate note			0.600	%

 

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We estimate that our out-of-pocket expenses (not including underwriting discounts and commissions) for the offering will be approximately $2.5 million.

The notes are offered for sale in the United States and in jurisdictions outside the United States subject to applicable law.

We have agreed to indemnify the underwriters against liabilities under the Securities Act, or contribute to payments that the underwriters may be required to make in that respect.

Each series of notes is a new issue of securities with no established trading market. The underwriters have advised us that they intend to make a market in each series of notes as permitted by applicable law. They are not obligated, however, to make a market in the notes and any market-making may be discontinued at any time at their sole discretion and without notice. Accordingly, no assurance can be given as to the development or liquidity of any market for any series of notes.

In connection with the offering, the underwriters may engage in stabilizing transactions, over-allotment transactions, syndicate covering transactions and penalty bids in accordance with Regulation M under the Exchange Act.

 

•

Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed specified maximum prices.

 

•

Over-allotment involves sales by the underwriters of notes in excess of the number of notes the underwriters are obligated to purchase, which creates a syndicate short position.

 

•

Syndicate covering transactions involve purchases of the notes in the open market after the distribution has been completed in order to cover syndicate short positions. A short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the notes in the open market after pricing that could adversely affect investors who purchase in the offering.

 

•

Penalty bids permit the representatives to reclaim a selling concession from a syndicate member when the notes originally sold by the syndicate member are purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.

These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of the notes or preventing or retarding a decline in the market price of the notes. As a result, the price of the notes may be higher than the price that might otherwise exist in the open market. These transactions, if commenced, may be discontinued at any time.

We expect that delivery of the notes will be made against payment thereof on or about November 30, 2017, which will be the seventh business day following the pricing of the notes (such settlement cycle being herein referred to as “T + 7”). Pursuant to Rule 15c6-1 under the Exchange Act, trades in the secondary market generally are required to settle in two business days, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade the notes on the date of pricing or the next five business days will be required, by virtue of the fact that the notes initially will settle T + 7, to specify an alternate settlement cycle at the time of any such trade to prevent a failed settlement. Purchasers of the notes who wish to trade the notes on the date of pricing of the notes or the next five business days should consult their own advisor.

Conflicts of Interest

The underwriters and their respective affiliates are full service financial institutions engaged in various activities which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities.

 

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The underwriters and their affiliates have provided, and may from time to time in the future provide, certain investment banking, commercial banking and financial advisory services to us and our affiliates, for which they have received or will receive customary compensation.

As described in “Use of Proceeds,” a portion of the net proceeds of this offering are intended to be used, after deducting underwriting discounts and commissions and related fees and expenses, to repay approximately $400 million in outstanding principal amount of the Term Loan. As a result, the underwriters or their affiliates that are lenders thereunder may receive a portion of the net proceeds of this offering. Because a portion of the net proceeds of this offering, not including underwriting discounts and commissions, may be received by certain of the underwriters or their affiliates that are lenders under the Term Loan, to the extent any one underwriter, together with its affiliates, receives more than 5% of the net proceeds of this offering, such underwriter would be deemed to have a “conflict of interest” with us in regard to this offering under FINRA Rule 5121. Pursuant to FINRA Rule 5121, the appointment of a qualified independent underwriter is not necessary in connection with this offering because the securities offered are investment grade rated. In addition, in accordance with FINRA Rule 5121, the underwriters that have a conflict of interest will not confirm sales to any account over which they exercise discretionary authority without the prior written consent of the account holder.

An affiliate of each of Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Mizuho Securities USA LLC, Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, RBC Capital Markets, LLC and Wells Fargo Securities, LLC is a lead arranger and joint bookrunner under our existing credit facility. In addition, an affiliate of each of Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Mizuho Securities USA LLC, Credit Agricole Securities (USA) Inc., Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, RBC Capital Markets, LLC, Scotia Capital (USA) Inc., SMBC Nikko Securities America, Inc., SunTrust Robinson Humphrey, Inc., TD Securities (USA) LLC, U.S. Bancorp Investments, Inc. and Wells Fargo Securities, LLC is a lender under our existing credit facility, and an affiliate of Citigroup Global Markets Inc. is administrative agent under the Credit Agreement. An affiliate of Wells Fargo Securities, LLC will serve as trustee under the indenture governing the notes. Certain of the underwriters may also participate in our Commercial Paper Program as dealers.

In addition, in the ordinary course of their business activities the underwriters and their affiliates may make or hold broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities activities may involve securities and/or instruments of ours or our affiliates. Certain of the underwriters or their affiliates that have a lending relationship with us routinely hedge, and certain other of those underwriters or their affiliates may hedge, their credit exposure to us consistent with their customary risk management policies. Typically, such underwriters and their affiliates would hedge such exposure by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in our securities, including potentially the notes offered hereby. Any such credit default swaps or short positions could adversely affect future trading prices of the notes offered hereby. The underwriters and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold or recommend to clients that they acquire long and/or short positions in such securities and instruments.

Notice to Prospective Investors in the European Economic Area

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”), no offer of notes may be made to the public in that Relevant Member State other than:

 

(a)

to any legal entity which is a qualified investor as defined in the Prospectus Directive;

 

(b)

to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as

 

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defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representatives; or

 

(c)

in any other circumstances falling within Article 3(2) of the Prospectus Directive,

provided that no such offer of notes shall require us or the representatives to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.

For the purpose of the above provisions, the expression “an offer to the public” in relation to any notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the notes to be offered so as to enable an investor to decide to purchase or subscribe the notes, as the same may be varied in the Relevant Member State by any measure implementing the Prospectus Directive in the Relevant Member State and the expression “Prospectus Directive” means Directive 2003/71/EC (including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State) and includes any relevant implementing measure in the Relevant Member State and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.

Notice to Prospective Investors in the United Kingdom

This prospectus supplement and the accompanying prospectus are only being distributed to, and are only directed at, persons in the United Kingdom that are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive that are also (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (ii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (each such person being referred to as a “relevant person”). This prospectus supplement and the accompanying prospectus and their contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other persons in the United Kingdom. Any person in the United Kingdom that is not a relevant person should not act or rely on this document or any of its contents.

Notice to Prospective Investors in Canada

The notes may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the notes must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus supplement (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor.

Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (“NI 33-105”), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with the offering.

 

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Notice to Prospective Investors in Hong Kong

The notes may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), or (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), and no advertisement, invitation or document relating to the notes may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to notes which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

Notice to Prospective Investors in Japan

The notes have not been and will not be registered under the Financial Instruments and Exchange Act. Accordingly, the notes may not be sold or offered, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Act and any other applicable laws, regulations and ministerial guidelines of Japan.

Notice to Prospective Investors in Singapore

This prospectus supplement has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus supplement and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the notes may not be circulated or distributed, nor may the notes be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the notes are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest in that trust shall not be transferable for six months after that corporation or that trust has acquired the notes under Section 275 except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA; (2) where no consideration is given for the transfer; or (3) by operation of law.

Notice to Prospective Investors in Switzerland

The notes may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (“SIX”) or on any other stock exchange or regulated trading facility in Switzerland. This prospectus supplement does not constitute a prospectus within the meaning of, and has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the

 

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disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this prospectus supplement nor any other offering or marketing material relating to the notes or the offering may be publicly distributed or otherwise made publicly available in Switzerland.

Neither this prospectus supplement nor any other offering or marketing material relating to the offering, the Company or the notes have been or will be filed with or approved by any Swiss regulatory authority. In particular, this prospectus supplement will not be filed with, and the offer of notes will not be supervised by, the Swiss Financial Market Supervisory Authority (“FINMA”), and the offer of notes has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes (“CISA”). The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of the notes.

 

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LEGAL MATTERS

The validity of the securities offered by this prospectus supplement will be passed on for us by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York. The underwriters are being represented by Cravath, Swaine  & Moore LLP, New York, New York.

EXPERTS

The financial statements incorporated in this prospectus supplement by reference to Express Scripts Holding Company’s Current Report on Form 8-K dated November 14, 2017 and management’s assessment of the effectiveness of internal control over financial reporting (which is included in Management’s Report on Internal Control over Financial Reporting) incorporated in this prospectus supplement by reference to the Annual Report on Form 10-K of Express Scripts Holding Company for the year ended December 31, 2016 have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports, proxy statements and other information with the SEC under the Exchange Act. You may inspect without charge any documents filed by us at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site, www.sec.gov, that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including Express Scripts Holding Company.

We have filed with the SEC a registration statement on Form S-3 relating to the notes covered by this prospectus supplement, which includes the base indenture of such notes filed as Exhibit 4.2 thereof. This prospectus supplement and the accompanying prospectus are part of the registration statement and do not contain all of the information in the registration statement.

 

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INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

The SEC allows us to “incorporate by reference” information into this prospectus supplement and the accompanying prospectus, which means that we can disclose important information to you by referring you to other documents filed separately with the SEC. The information incorporated by reference is considered part of this prospectus supplement, and information filed with the SEC between the date of this prospectus supplement and the date all of the securities offered hereby are sold or the offering is otherwise terminated will automatically be deemed to update and supersede this information. We incorporate by reference into this prospectus supplement and the accompanying prospectus the documents listed below (excluding any portions of such documents that have been “furnished” but not “filed” for purposes of the Exchange Act and applicable SEC rules):

 

•

our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed on February 14, 2017 (except for the financial statements included therein, which have been superseded by the financial statements included in our Current Report on Form 8-K filed on November 14, 2017);

 

•

our Quarterly Reports on Form 10-Q for the quarter ended March 31, 2017, filed on April 24, 2017, the quarter ended June 30, 2017, filed on July 25, 2017, and the quarter ended September 30, 2017, filed on October 24, 2017 (except for the financial statements included in such Quarterly Report, which have been superseded by the financial statements included in our Current Report on Form 8-K filed on November 14, 2017);

 

•

the portions of our Definitive Proxy Statement on Schedule 14A, filed on March 17, 2017, that are incorporated by reference into Part III of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed on February 14, 2017;

 

•

our Current Reports on Form 8-K filed on March 8, 2017, May 12, 2017, May 23, 2017, June 20, 2017, June 27, 2017, October 10, 2017 (except for the parts thereof furnished and not filed with the SEC), October 24, 2017 (except for the parts thereof furnished and not filed with the SEC), October 31, 2017; November 3, 2017, and November 14, 2017; and

 

•

the description of our common stock as contained in our Prospectus dated November 15, 2011 (filed November 18, 2011), including any amendment or report filed for the purpose of updating such description.

We also incorporate by reference any future filings we make with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act between the date of this prospectus supplement and the date all of the securities offered hereby are sold or the offering is otherwise terminated, with the exception of any information furnished under Item 2.02 or Item 7.01 of Form 8-K, which is not deemed filed and which is not incorporated by reference herein. Any such filings shall be deemed to be incorporated by reference and to be a part of this prospectus supplement from the respective dates of filing of those documents.

We will provide without charge upon written or oral request to each person, including any beneficial owner, to whom a prospectus is delivered, a copy of any and all of the documents that are incorporated by reference into this prospectus supplement but not delivered with this prospectus supplement (other than exhibits unless such exhibits are specifically incorporated by reference in such documents).

You may request a copy of these documents by writing or telephoning us at:

Investor Relations

Express Scripts Holding Company

One Express Way

St. Louis, Missouri 63121

(314) 810-3115

investor.relations@express-scripts.com

 

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Express Scripts Holding Company

$500,000,000 2.600% Senior Notes due 2020

$400,000,000 Floating Rate Senior Notes due 2020

$500,000,000 3.050% Senior Notes due 2022

 

 

 

 

 

PROSPECTUS    SUPPLEMENT

 

Joint Book-Running Managers

 

BofA Merrill Lynch		Citigroup		Mizuho Securities
Credit Suisse		J. P. Morgan		Morgan Stanley
RBC Capital Markets				Wells Fargo Securities

Co-Managers

 

Credit Agricole CIB		Scotiabank		SMBC Nikko
SunTrust Robinson Humphrey		TD Securities		US Bancorp
		Loop Capital Markets

November 20, 2017