Catalyst Health Solutions, Inc. (NASDAQ:CHSI), a pharmacy benefit
management company, today announced its financial results for the
quarter ended September 30, 2008. The Company reported revenue of
$653.0 million and net income of $12.6 million, or $0.29 per
diluted share compared to quarterly revenue of $498.4 million and
net income of $9.8 million, or $0.23 per diluted share in the prior
year. �We are pleased with the Company�s financial performance.
Third quarter revenue and earnings results were consistent with our
expectations,� said David T. Blair, Chief Executive Officer of
Catalyst Health Solutions. �While our primary focus this quarter
was on the successful implementation of new business and the
integration of our recent acquisitions, the Company also reached
$300 million in cumulative new sales. As our guidance reflects, new
sales combined with over 97% client retention provides us with
solid revenue visibility for the upcoming year.� Third Quarter
Results Revenue for the third quarter increased by $154.6 million,
or 31.0%, to $653.0 million from $498.4 million in the prior year�s
comparable quarter. Total claims processed in the third quarter
increased to 13.0 million from 10.7 million for the same period in
2007. The increase in prescription volume was primarily due to the
addition of new clients. Gross profit for the third quarter
increased $10.5 million, to $37.7 million or 5.8% of revenue
compared to $27.2 million, or 5.5% of revenue, in the third quarter
of the prior year. Third quarter operating income increased 36.2%
to $19.5 million from $14.3 million in the third quarter of 2007.
The increase in operating income was primarily due to the increase
in gross profit, offset by a $5.3 million increase in selling,
general and administrative expenses. The increase in selling,
general and administrative expenses was primarily associated with
initiatives to support the Company�s continued growth, such as
additional employee, facility and vendor costs to implement and
serve new clients, as well as consolidating the results from the
Company�s recent acquisitions. Net income for the third quarter of
2008 was $12.6 million, or $0.29 per diluted share, compared to the
prior year�s net income of $9.8 million, or $0.23 per diluted
share. Nine Month Results Revenue for the nine months ended
September 30, 2008 increased 40.0%, to approximately $1.9 billion
from $1.3 billion in the prior year. Total claims processed
increased to 38.3 million for the nine months ended September 30,
2008 from 30.0 million for the same period in 2007. The increase in
prescription volume was primarily due to the addition of new
clients. Gross profit for the first nine months of 2008, increased
by $21.7 million to $103.0 million, or 5.5% of revenue, compared to
$81.3 million, or 6.1% of revenue, in the first nine months of the
prior year. Operating income increased by $13.5 million to $54.5
million in the first nine months of 2008 from $41.0 million in the
same period of the prior year. The increase in operating income was
primarily due to the increase in gross profit offset by an increase
in selling, general and administrative expenses. The increase in
selling, general and administrative expenses was primarily
associated with initiatives to support the Company�s continued
growth, such as additional employee, facilities and vendor costs to
implement and serve new clients, as well as consolidating the
results from the Company�s recent acquisitions. Net income for the
first nine months of 2008 was $36.2 million, or $0.83 per diluted
share, compared to $27.7 million, or $0.64 per diluted share, in
the prior year. 2008 Financial Guidance The Company confirms that
it is tracking towards its previously stated guidance of $2.5
billion in revenue and earnings of $1.17 per diluted share
reflecting increases of 34% and 29%, respectively over 2007
results. Preliminary 2009 Financial Guidance Based on business
under contract, new sales commitments, and recent trends in
prescription utilization, management expects 2009 net income to
grow 15% to 25% over 2008. Net income for 2009 is projected between
$59.5 million and $64.0 million, which should equate to earnings
per share of $1.35 to $1.45. Revenues in 2009 are projected to be
approximately $3.0 billion. Factors that could contribute to
results exceeding the guidance described above include: new
business additions with 2009 effective dates; better than expected
integration of acquisitions; better than projected formulary
compliance; and increased generic drug utilization. In addition,
financial results may be impacted by general economic conditions
and the Company�s ability to execute on its strategic initiatives
to capture margins on mail order prescriptions and expand its
hospice business. About Catalyst Health Solutions, Inc.
(www.catalysthealthsolutions.com): Catalyst Health Solutions, Inc.
(formerly HealthExtras, Inc.) is built on strong, innovative
principles in the management of prescription drug benefits and
provides an unbiased, client-centered philosophy resulting in
industry-leading client retention rates. The Company's subsidiaries
include Catalyst Rx, a full-service pharmacy benefit manager
serving more than five million lives in the United States and
Puerto Rico; HospiScript Services, LLC, one of the largest
providers of pharmacy benefit management services to the hospice
industry; and Immediate Pharmaceutical Services, Inc., a
fully-integrated prescription mail service facility based out of
Avon Lake, Ohio. The Company's clients include self-insured
employers including state and local governments, managed care
organizations, unions, hospices, third-party administrators and
individuals. This press release may contain forward-looking
statements within the meaning of Section 21E of the Securities
Exchange Act of 1934. These forward-looking statements involve a
number of risks and uncertainties. Factors that we have identified
that might materially affect our results are discussed in our
Annual Report on Form 10-K for the year ended December 31, 2007
under "Item 1.A Risk Factors." Readers are urged to carefully
review and consider the various disclosures made in our Annual
Report on Form 10-K and our other filings with the Securities and
Exchange Commission that attempt to advise interested parties of
the risks and uncertainties that may affect our business. � �
CATALYST HEALTH SOLUTIONS, INC. and Subsidiaries � CONSOLIDATED
STATEMENTS OF OPERATIONS (In thousands, except per share data)
(Unaudited) � For the three months ended September 30, For the nine
months ended September 30, � 2008 � � � 2007 � � 2008 � � � 2007 �
Revenue (excludes member co-payments of $193,334, $164,792,
$557,924 and $464,223 for the three and nine months ended September
30, 2008 and 2007, respectively) $ 653,033 � $ 498,393 � $
1,855,979 � $ 1,325,769 � Direct expenses 615,378 471,212 1,753,005
1,244,513 Selling, general and administrative expenses � 18,168 � �
12,874 � � 48,457 � � 40,265 � Total operating expenses � 633,546 �
� 484,086 � � 1,801,462 � � 1,284,778 � Operating income 19,487
14,307 54,517 40,991 Interest income 863 1,826 3,935 4,614 Interest
expense (163 ) (36 ) (235 ) (125 ) Other income � 1 � � � � � 2 � �
1 � Income before minority interest and income taxes 20,188 16,097
58,219 45,481 Minority interest � � � � � � � � � � 31 � Income
before income taxes 20,188 16,097 58,219 45,450 Income tax expense
� 7,591 � � 6,346 � � 22,005 � � 17,791 � Net income $ 12,597 � $
9,751 � $ 36,214 � $ 27,659 � � Net income per share, basic $ 0.30
$ 0.23 $ 0.85 $ 0.67 Net income per share, diluted $ 0.29 $ 0.23 $
0.83 $ 0.64 Weighted average shares of common stock outstanding,
basic 42,633 41,724 42,420 41,372 Weighted average shares of common
stock outstanding, diluted 43,716 43,122 43,535 42,926 � � CATALYST
HEALTH SOLUTIONS, INC. and Subsidiaries � CONSOLIDATED SELECTED
INFORMATION (In thousands) (Unaudited) � For the three months ended
September 30, For the nine months ended September 30, 2008 � � 2007
� 2008 � 2007 Retail prescriptions 12,524 10,330 36,989 29,011
Total mail prescriptions 514 � 392 � 1,330 � 1,005 � Total
prescriptions 13,038 10,722 38,319 30,016 Total adjusted
prescriptions(1) 14,067 11,505 40,978 32,026 Adjusted mail order
penetration %(2) 11 % 10 % 10 % 9 % Generic utilization % 65 % 61 %
65 % 60 % Gross profit 37,655 27,181 102,974 81,256 Operating
income 19,487 14,307 54,517 40,991 Depreciation & amortization
2,726 2,047 7,145 5,826 (1) Adjusted prescription volume equals the
number of mail-order prescriptions multiplied by 3, plus retail
prescriptions. Mail-order prescriptions are multiplied by 3 to
adjust for the fact that they include approximately 3 times the
number of product days supplied compared with retail prescriptions.
(2) The percentage of adjusted mail-order prescriptions to total
adjusted prescriptions.
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