Catalyst Health Solutions, Inc. (NASDAQ:CHSI) announces its
financial results for the first quarter ended March 31, 2010. The
Company reports quarterly net income of $17.4 million, up 26% from
$13.8 million in the prior year. Quarterly earnings per diluted
share increased to $0.39. Revenue for the quarter ended March 31,
2010, increased 18% to $832.3 million from $703.3 million in the
prior year.
“We are pleased with the Company’s performance,” stated David T.
Blair, Chief Executive Officer of Catalyst. “The Company delivered
significant earnings growth while executing on key strategic
initiatives.” During the quarter, the Company successfully
implemented new clients, renewed key customer contracts, achieved
higher generic utilization and formulary compliance and secured
additional business.
Catalyst began administering pharmacy benefit management
services for the Michigan Public Schools Employees Retirement
System (“MPSERS”) effective January 1, 2010. MPSERS is comprised of
approximately 190,000 members, including non-Medicare and
Medicare-eligible retirees and their dependents. Catalyst is
pleased to report that the trustees of the Hotel Employees and
Restaurant Employees International Union (H.E.R.E.I.U.)/Culinary
Health Fund voted to renew a three year extension, which covers
185,000 plan participants, and that the Company was also awarded a
new service contract with the State of Louisiana Office of Group
Benefits effective July 1, 2010, which covers approximately 225,000
members.
Additionally, the Company sold new business representing
approximately 150,000 lives with mid-year effective dates. “We are
pleased by the steady sales momentum across all of our market
segments,” added Blair. The strong growth in sales reflects our
commitment to delivering the most effective and lowest cost
pharmacy solutions. The Company’s generic dispensing rate increased
3.3 percentage points to 70.0% from the first quarter 2009.
Management confirms that it is tracking towards its previously
stated financial guidance and expects sequential earnings growth
for the remainder of 2010 to reach $1.80 to $1.88 earnings per
share.
First Quarter
Results
Revenue for the first quarter increased by $129.0 million, or
18.3%, to $832.3 million from $703.3 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 first quarter increased to 16.1
million from 13.8 million for the same period in 2009. The increase
in prescription volume was primarily due to the addition of new
clients. Generic utilization increased to 70% from 67% in the first
quarter of 2009.
Adjusting for the difference in days supply between mail-order
and retail, total prescription volume was 17.5 million in the first
quarter of 2010.
Gross profit for the first quarter increased $9.5 million, to
$50.6 million or 6.1% of revenue compared to $41.1 million, or 5.8%
of revenue, in the first 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, offset by expenses associated with client
implementations.
First quarter operating income increased 30.4% to $28.4 million
from $21.8 million in the first quarter of 2009. The increase in
operating income was primarily due to the increase in gross profit,
offset by a $2.9 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 first quarter of 2010 was $17.4 million, or
$0.39 per diluted share, compared to the prior year’s net income of
$13.8 million, or $0.32 per diluted share.
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, 2009 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
ended March 31,
2010 2009 Revenue (excludes member co-payments of
$254,203 and $202,425 for the three months ended March 31, 2010 and
2009, respectively) $ 832,312 $ 703,272 Direct expenses 781,665
662,142 Selling, general and administrative expenses 22,209 19,319
Total operating expenses 803,874 681,461 Operating income 28,438
21,811 Interest income (expense), net (157) 193 Income before
income taxes 28,281 22,004 Income tax expense 10,860 8,186 Net
income $ 17,421 $ 13,818 Net income per share, basic $ 0.40
$ 0.32 Net income per share, diluted $ 0.39 $ 0.32 Weighted average
shares of common stock outstanding, basic 43,622 42,935 Weighted
average shares of common stock outstanding, diluted 44,415 43,631
CATALYST HEALTH SOLUTIONS, INC. and
Subsidiaries CONSOLIDATED SELECTED INFORMATION
(In thousands) (Unaudited) For the three
months
ended March 31,
2010 2009 Retail prescriptions 15,445 13,265
Total mail prescriptions 700 507 Total prescriptions 16,145 13,772
Total adjusted prescriptions(1) 17,545 14,786
Adjusted mail order penetration
%(2)
12% 10% Generic utilization % 70% 67%
Gross profit
$50,647 $41,130 Operating income 28,438 21,811 Depreciation &
amortization 3,113 2,745
(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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