Catalyst Health Solutions, Inc. (NASDAQ: CHSI) announces its
financial results for the fourth quarter and year ended December
31, 2009. For 2009, the Company reported revenue of $2.9 billion
and net income of $65.2 million, or $1.48 per diluted share
compared to revenue of $2.5 billion and net income of $50.4
million, or $1.16 per diluted share in the prior year.
“We are pleased with the Company’s financial performance,”
stated David T. Blair, Chief Executive Officer of Catalyst. “The
Company continues to produce significant revenue and earnings
growth driven by strong client retention, expanding operating
margins and new business additions. All new client implementations
are proceeding smoothly and business volumes are meeting management
expectations.”
The Company successfully implemented and began administering
pharmacy benefit management services for the Michigan Public
Schools Employees Retirement System (“MPSERS”) on January 1, 2010.
MPSERS is comprised of approximately 190,000 members, including
non-Medicare and Medicare-eligible retirees and their
dependents.
The Company confirms its previously stated guidance for 2010 of
$3.3 billion to $3.6 billion in revenue and earnings between $1.80
and $1.88 per diluted share. Earnings for 2010 are expected to be
weighted to the third and fourth quarters due to implementation and
transition expenses associated with the recent client additions and
management expects revenue to be at the high end of its guidance
range.
Fourth Quarter
Results
Revenue for the fourth quarter increased by $60.5 million, or
8.8%, to $747.9 million from $687.4 million in the prior year’s
comparable quarter. The increase in revenue is due to the increase
in prescription volume and price inflation on brand drugs, offset
by the impact of the increase in generic utilization. Total
unadjusted claims processed in the fourth quarter increased to 14.6
million from 13.6 million for the same period in 2008. The increase
in prescription volume was primarily due to the addition of new
clients and the growth of existing clients. Generic utilization
increased to 68.0% from 65.5% in the fourth quarter of 2008.
Gross profit for the fourth quarter increased $10.2 million, to
$50.5 million or 6.8% of revenue compared to $40.3 million, or 5.9%
of revenue, in the fourth quarter of the prior year. The increase
in gross profit is primarily due to the increase in revenue, higher
generic utilization, continued realization of the economics of our
mail service pharmacy, the contribution of performance management
fees, higher formulary compliance, and improved contract
performance related to drug manufacturer rebates and pharmacy
reimbursements.
Fourth quarter operating income increased 39.5% to $29.2 million
from $20.9 million in the fourth quarter of 2008. The increase in
operating income was primarily due to the increase in gross profit,
offset by a $2.0 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, facilities and vendor costs to serve and implement new
clients and investments in expanding capacity at our mail service
operations. Additionally, the growth in selling, general and
administrative expenses reflects the consolidation of the operating
expenses from the Company’s recent acquisition.
Net income for the fourth quarter of 2009 was $18.0 million, or
$0.41 per diluted share, compared to the prior year’s net income of
$14.2 million, or $0.33 per diluted share.
Full Year
Results
Revenue for the year ended December 31, 2009 increased 13.8%, to
$2.9 billion from $2.5 billion in the prior year. The increase in
revenue is due to the increase in prescription volume and price
inflation on brand drugs, offset by the impact of the increase in
generic utilization. Total unadjusted claims processed increased to
56.2 million for the year ended December 31, 2009 from 52.0 million
for the same period in 2008. The increase in prescription volume
was primarily due to the addition of new clients and the growth of
existing clients.
Gross profit for 2009 increased by $42.5 million to $185.8
million, or 6.4% of revenue, compared to $143.3 million, or 5.6% of
revenue, in the prior year. The increase in gross profit is
primarily due to the increase in revenue, higher generic
utilization, continued realization of the economics of our mail
service pharmacy, the contribution of performance management fees,
higher formulary compliance, and improved contract performance
related to drug manufacturer rebates and pharmacy
reimbursements.
Operating income increased by $29.3 million to $104.7 million in
2009 from $75.4 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 a $13.2 million increase in selling, general
and administrative expenses. The increase in selling, general and
administrative expenses was associated with initiatives to support
the Company’s continued growth, such as additional employee,
facilities and vendor costs to serve and implement new clients and
investments in expanding capacity at our mail service operations.
The growth in selling, general and administrative expenses
primarily reflects the consolidation of the operating expenses from
the Company’s recent acquisitions.
Net income for the year ended December 31, 2009 increased 29.3%
to $65.2 million, or $1.48 per diluted share, compared to $50.4
million, or $1.16 per diluted share, in the prior year.
About Catalyst Health Solutions, Inc.
(www.chsi.com):
Catalyst Health Solutions, 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 6 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 in 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” as
defined in the Private Securities Litigation Reform Act of 1995.
These statements involve a number of risks and uncertainties that
might materially affect our results, particularly those risks
referred to in our Annual Report on Form 10-K for the year ended
December 31, 2008 under “Item 1A. 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. does not undertake
any obligation to update forward-looking statements, whether as a
result of new information, future events, or other
developments.
CATALYST HEALTH SOLUTIONS, INC. and
Subsidiaries CONSOLIDATED STATEMENTS OF
OPERATIONS (In thousands, except per share data)
(Unaudited) For the three months
For the twelve months ended December 31, ended
December 31, 2009 2008 2009
2008
Revenue (excludes member
co-payments of $211,832, $195,623, $810,576 and $753,547 for the
three and twelve months ended December 31, 2009 and 2008,
respectively)
$ 747,900 $ 687,400 $ 2,894,380 $ 2,543,379
Direct expenses 697,368 647,120 2,708,616 2,400,125 Selling,
general and administrative expenses 21,353
19,365 81,036 67,822 Total
operating expenses 718,721 666,485
2,789,652 2,467,947 Operating income
29,179 20,915 104,728 75,432 Interest income 76 607 780 4,542
Interest expense (197 ) (76 ) (560 ) (311 ) Other income (loss)
— (2 ) 2 — Income
before income taxes 29,058 21,444 104,950 79,663 Income tax expense
11,098 7,264 39,785
29,269 Net income $ 17,960 $ 14,180 $
65,165 $ 50,394 Net income per share, basic $
0.41 $ 0.33 $ 1.51 $ 1.18 Net income per share, diluted $ 0.41 $
0.33 $ 1.48 $ 1.16 Weighted average shares of common stock
outstanding, basic 43,349 42,848 43,128 42,527 Weighted average
shares of common stock outstanding, diluted 44,253 43,615 43,942
43,588
CATALYST HEALTH SOLUTIONS, INC. and
Subsidiaries CONSOLIDATED SELECTED INFORMATION
(In thousands) (Unaudited)
For the three months For the twelve
months ended December 31, ended December 31,
2009 2008 2009
2008 Retail prescriptions 14,089 13,093 54,124 50,150 Total
mail prescriptions 537 540 2,050
1,871 Total prescriptions 14,626 13,633 56,174
52,021 Total adjusted prescriptions(1) 15,700 14,713 60,274 55,763
Adjusted mail order penetration
%(2)
10 % 11 % 10 % 10 % Generic utilization % 68 % 66 % 67 % 65 %
Gross profit
$ 50,532 $ 40,280 $ 185,764 $ 143,254 Operating income 29,179
20,915 104,728 75,432 Depreciation & amortization 2,866 2,929
11,924 10,074
(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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