Catalyst Health Solutions, Inc. (NASDAQ: CHSI), a pharmacy
benefit management company, today announced its financial results
for the fourth quarter and year ended December 31, 2010. For 2010,
the Company reported revenue of $3.8 billion and net income of
$81.0 million, or $1.82 per diluted share compared to revenue of
$2.9 billion and net income of $65.2 million, or $1.48 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 drive significant growth by executing a broad
marketing strategy, leveraging its infrastructure, securing and
integrating new acquisitions and controlling overhead expenses. All
new client implementations proceeded smoothly and the integration
of FutureScripts is progressing as planned.”
In the fourth quarter of 2010, the Company further executed on
its client focused strategy with the expansion of its Generic
Advantage Plan, which deploys a series of customizable solutions
that drives higher generic utilization and aligns incentives for
members, clients and pharmacies.
“As we look forward to 2011, the Company will adhere to those
operating principles that have served it well: high client
retention, organic sales growth, accretive acquisitions and new
product innovations,” added Blair.
In conjunction with the closing of the FutureScripts
acquisition, the Company introduced an adjusted earnings per
diluted share metric, which excludes the impact of acquisition
related intangible amortization. Management believes that this
non-GAAP financial measure provides useful supplemental information
regarding the performance of our business operations and
facilitates comparisons to our historical operating results.
Financial Guidance
The Company confirms its previously stated guidance for 2011 of
$4.6 billion to $4.8 billion in revenue and adjusted earnings per
diluted share between $2.20 and $2.39 per diluted share. Earnings
for 2011 will be weighted to the third and fourth quarters due to
implementation and transition expenses associated with the
integration of FutureScripts.
Fourth Quarter Results
Revenue for the fourth quarter increased by $368.7 million, or
49.3%, to $1.1 billion from $747.9 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 20.6
million from 14.6 million for the same period in 2009. The increase
in prescription volume was primarily due to the addition of new
clients, the growth of existing clients and the acquisition of
FutureScripts. Generic utilization increased to 73% from 68% in the
fourth quarter of 2009.
Gross profit for the fourth quarter increased by $15.6 million
to $66.1 million, compared to $50.5 million in the fourth quarter
of the prior year, a 30.9% increase. The increase in gross profit
is primarily due to the increase in revenue, higher generic
utilization, 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 $8.2 million to $37.4
million from $29.2 million in the fourth quarter of 2009. The
increase in operating income was primarily due to the increase in
gross profit, offset by a $7.4 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. Additionally, the growth in selling, general and
administrative expenses, reflect the consolidation of the operating
expenses from the Company’s recent acquisitions and the associated
transaction related fees.
Net income for the fourth quarter of 2010 was $22.6 million, or
$0.51 per diluted share, compared to the prior year’s net income of
$18.0 million, or $0.41 per diluted share. As shown in the attached
table, adjusted earnings per diluted share for the fourth quarter
of 2010 was $0.56 compared to the prior year’s adjusted earnings
per diluted share of $0.43, or a 30.2% increase.
Full Year Results
Revenue for the year ended December 31, 2010 increased 30.0%, to
$3.8 billion from $2.9 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
70.2 million for the year ended December 31, 2010 from 56.2 million
for the same period in 2009. The increase in prescription volume
was primarily due to the addition of new clients, the growth of
existing clients and the consolidation of the Company’s recent
acquisitions.
Gross profit for 2010, increased by $48.4 million to $234.2
million, compared to $185.8 million in the prior year, a 26.1%
increase. The increase in gross profit is primarily due to the
increase in revenue, higher generic utilization, 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 $27.8 million to $132.5 million in
2010 from $104.7 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 $20.7 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.
Additionally, the growth in selling, general and administrative
expenses, reflect the consolidation of the operating expenses from
the Company’s recent acquisitions and the associated transaction
related fees.
Net income for the year ended December 31, 2010 increased 24.2%
to $81.0 million, or $1.82 per diluted share, compared to $65.2
million, or $1.48 per diluted share, in the prior year. As shown in
the attached table, adjusted earnings per diluted share for the
year ended December 31, 2010 was $1.93 compared to the prior year’s
adjusted earnings per diluted share of $1.55, or a 24.5%
increase.
Non-GAAP Financial Information
This press release includes certain non-GAAP financial
information as defined by Securities and Exchange Commission
Regulation G. Pursuant to the requirements of this regulation,
reconciliations of this non-GAAP financial information to Catalyst
Health Solutions, Inc. financial statements as prepared under
generally accepted accounting principles (GAAP) are included in
this press release. Catalyst’s management believes providing
investors with this information give additional insights into its
results of operations. While Catalyst’s management believes that
these non-GAAP financial measures are useful in evaluating its
operations, this information should be considered as supplemental
in nature and not as a substitute for the related financial
information prepared in accordance with GAAP.
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 (PBM)
serving more than 7 million lives in the United States and Puerto
Rico; HospiScript Services, LLC, one of the largest providers of
PBM services to the hospice industry; FutureScripts, LLC, a
full-service PBM serving approximately one million lives in the
mid-Atlantic region, 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, and in our Quarterly Report on Form 10-Q for the
quarter ended September 30, 2010 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, our Forms 10-Q,
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, 2010 2009 2010
2009 Revenue (excludes member co-payments of $288,517,
$211,832, $1,025,306 and $810,576 for the three months and twelve
months ended December 31, 2010 and 2009, respectively) $ 1,116,617
$ 747,900 $ 3,764,092 $ 2,894,380 Direct expenses 1,050,482 697,368
3,529,843 2,708,616 Selling, general and administrative expenses
28,714 21,353 101,745 81,036 Total operating expenses 1,079,196
718,721 3,631,588 2,789,652 Operating income 37,421 29,179 132,504
104,728 Interest and other income 63 76 937 782 Interest expense
(1,288) (197) (3,027) (560) Income before income taxes 36,196
29,058 130,414 104,950 Income tax expense 13,644 11,098 49,457
39,785 Net income $ 22,552 $ 17,960 $ 80,957 $ 65,165 Net
income per share, basic $ 0.51 $ 0.41 $ 1.85 $ 1.51 Net income per
share, diluted $ 0.51 $ 0.41 $ 1.82 $ 1.48 Weighted average shares
of common stock outstanding, basic 44,019 43,349 43,855 43,128
Weighted average shares of common stock outstanding, diluted 44,634
44,253 44,536 43,942
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, 2010
2009 2010 2009 Retail prescriptions
19,614 14,148 67,081 54,183 Total mail prescriptions 957 478 3,164
1,991 Total prescriptions 20,571 14,626 70,245 56,174 Total
adjusted prescriptions(1) 22,485 15,582 76,573 60,156
Adjusted mail order penetration %(2)
13% 9% 12% 10% Generic utilization % 73% 68% 71% 67%
Gross profit
$ 66,135 $ 50,532 $ 234,249 $ 185,764 Operating income 37,421
29,179 132,504 104,728 Depreciation & amortization 7,055 2,866
17,306 11,924 (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.
CATALYST HEALTH SOLUTIONS, INC.
and Subsidiaries
Adjusted Earnings Per Share
Reconciliation
(Unaudited)
We are providing diluted earnings per share excluding the
impact of the acquisitions related intangible amortization in order
to compare our underlying financial performance to prior periods.
Catalyst’s management believes that this non-GAAP financial measure
provides useful supplemental information regarding the performance
of our business operations and facilitates comparisons to our
historical operating results.
For the three
months For the twelve months ended December 31,
ended December 31, 2010 2009
2010 2009 GAAP diluted earnings per share $
0.51 $ 0.41 $ 1.82 $1.48 Adjustment for amortization of:
FutureScripts related intangible assets
(1)
0.03 – 0.04 – All other acquisition related intangible assets (2)
0.02 0.02 0.07 0.07
Diluted earnings per share, as
adjusted
$ 0.56 $ 0.43 $ 1.93 $ 1.55 (1) This adjustment represents
the per share effect of the FutureScripts related intangible
amortization. Intangible amortization of $250 thousand ($156
thousand net of tax) and $300 thousand ($186 thousand net of tax)
is included in selling, general and administrative expense for the
three months and twelve months ended December 31, 2010,
respectively. Intangible amortization of $2.3 million ($1.4 million
net of tax) and $2.7 million ($1.7 million net of tax) is included
as a reduction of revenue for the three months and twelve months
ended December 31, 2010. (2) This adjustment represents the
per share effect of all other acquisition related intangible
amortization. Intangible amortization of $1.3 million ($0.8 million
net of tax) and $1.2 million ($0.8 million net of tax) is included
in selling, general and administrative expense for the three months
ended December 31, 2010 and 2009, respectively. Intangible
amortization of $5.1 million ($3.2 million net of tax) and $4.8
million ($3.0 million net of tax) is included in selling, general
and administrative expense for the twelve months ended December 31,
2010 and 2009, respectively.
CATALYST HEALTH SOLUTIONS,
INC. and Subsidiaries 2011 Adjusted Earnings
Per Share Guidance Information (Unaudited)
Estimated Year ended December 31, 2011 Low End
High End GAAP diluted earnings per share $ 2.00 $
2.19
Adjustment for amortization of:
FutureScripts related intangible assets
(1)
0.12 0.12
All other acquisition related intangible
assets (2)
0.08 0.08
Diluted earnings per share, as
adjusted
$ 2.20 $ 2.39 (1) This adjustment represents the expected
per share effect of the FutureScripts related intangible
amortization. For the year ended December 31, 2011, intangible
amortization is expected to be approximately $10.0 million ($6.2
million net of tax). (2) This adjustment represents the
expected per share effect of the all other acquisition related
intangible amortization. For the year ended December 31, 2011,
intangible amortization is expected to be approximately $5.4
million ($3.4 million net of tax).
Catalyst Health Solutions, (MM) (NASDAQ:CHSI)
Historical Stock Chart
From May 2024 to Jun 2024
Catalyst Health Solutions, (MM) (NASDAQ:CHSI)
Historical Stock Chart
From Jun 2023 to Jun 2024