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So far so good.

For pharmacy benefits manager Express Scripts (NASDAQ:ESRX), margins are still widening as the pharmacy benefit manager wrings efficiencies from an ambitious acquisition that closed a year ago.

But investors trying to value the St. Louis company might ask: with organic growth so limited, and few second-tier players left to acquire, where will future improvement come from? Last year’s deal may offer a clue.

As a PBM, Express Scripts manages the drug-benefit programs employers offer their workers. It saves money for corporate clients by using its superior purchasing power to squeeze better prices from drug makers, and also by encouraging (okay, pressuring) plan members to use low-cost generics.

Getting bigger tends to give bolster a PBM’s buying muscle, and also yields scale efficiencies in back-office chores like claims processing.

Here’s the revenue bump Express got after closing its $4.68 billion acquisition of WellPoint’s (NYSE:WLP) NextRx business on Dec. 1, 2009:

Earnings haven’t advanced as swiftly, because it takes time to integrate a major new acquisition and harvest expected synergies.

As the charts make clear, Express Scripts has managed only minimal growth in terms of home-grown revenues, excluding the contribution from acquisitions.

Because acquisitions are the company’s principal growth driver, margins move higher in years when revenues were nearly flat, then get compressed when a purchase pushes revenues up.

Ditto for the NextRx deal: margins will improve in 2011 once the new assets are fully integrated.

This all matters, since CEO George Paz likes acquisitions. A few years ago, you may recall, he launched an ultimately unsuccessful $26 billion hostile buyout bid for a much-larger rival, Caremark.

Caremark eventually was acquired by drugstore chain CVS, which has subsequently struggled to make the combination pay off.

Here’s a comparison of the shares of Express Scripts, rival Medco Health Solutions (NYSE:MHS), and the S&P 500. While the broad market has gone nowhere over the past five years, the nation’s two leading independent PBMs rang up hefty gains, with Express Scripts outperforming Medco.

Margins have been more stable at the historically less acquisitive Medco, but they’ve also been slimmer.

That probably explains why Express shares tend to command a slightly higher multiple.

In coming years, PBMs are expected to benefit from an aging U.S. population and other long term trends, including growing concerns about skyrocketing pharmaceutical costs. But the second and third-tier deals that have helped fuel Express’s expansion may be harder to find.

Or not. Express Scripts’ deal with WellPoint last year may have been the start of a new trend – one that could well give the St. Louis company new acquisition prospects.

In addition to the small number of independent PBMs, several managed-care organizations like Aetna (NYSE:AET), Cigna (NYSE:CI), and UnitedHealth (NYSE:UNH) have captive operations that perform the same job. In the past, those in-house operations have been big competitors of indies like Medco and Express. But they’ve not achieved adequate scale. When WellPoint sold its PBM unit to Express Scripts (and contracted to have Express provide ten years of pharmacy-benefit management services), it said it was shedding the business in part to obtain lower drug costs for WellPoint members.

If other managed-care providers decide to follow suit, Express Scripts might find some new growth opportunities.

Ycharts Pro calls Express Scripts underpriced. Despite the absence of a dividend, and the question marks currently surrounding the healthcare sector, that seems right.

Disclosure: none

Source: Express Scripts: WellPoint Deal Opens Up New Acquisition Avenue