CHSI Catalyst Health Solutions, (MM)

Catalyst Health Solutions Inc. (CHSI) has announced that Hai Tran will step down as its Chief Financial Officer (CFO) effective July 15, 2011 to pursue other opportunities.

Until a permanent CFO is selected, Catalyst Health has decided to elect Deirdre Kramer as its interim CFO following Tran’s exit.

Deirdre Kramer joined Catalyst Health in 2005 and currently acts as controller and senior vice president for finance in Catalyst Health. She has more than 15 years of experience in the health care and pharmacy benefit management industries. In her current role, she is responsible for the overall management of corporate accounting as well as financial planning and analysis.

In another news, Catalyst Health announced that it is expected to consummate the acquisition of Walgreens Health Initiatives Inc. (“WHI”) this month. Catalyst Health had announced the acquisition of the pharmacy benefit management (PBM) business of Walgreen Co. (WAG) on March 9 for $525 million in cash.

Catalyst Health also stated that it will update its financial guidance after the closure of the deal. In addition, Walgreen anticipated the deal to be EPS-neutral in fiscal 2012.

Subsequent to this deal, Walgreen will be able to better focus on its 7,700 drug stores. On the other hand, through this transaction Catalyst Health will raise its membership to more than 18 million from the current level of 7 million while annual prescription volume will expand from approximately 80 million to over 165 million.

Besides the acquisition of WHI, Catalyst Health had acquired the Independence Blue Cross’ (“IBC”) FutureScripts subsidiaries in September, 2010 for an all cash transaction of $225 million, which includes the value of a future tax benefit for Catalyst Health.

Catalyst Health now maintains the FutureScripts brand, retains FutureScripts’ staff and manages IBC’s pharmacy benefits services under the terms of a 10-year contract, to approximately 1 million members and manages over 14 million prescriptions annually.

In May, 2011, Catalyst Health posted strong first-quarter 2011 adjusted earnings of 52 cents per share, surpassing the Zacks Consensus Estimate of 50 cents. The results also compared favorably with earnings of 41 cents in the prior-year quarter.

Catalyst Health’s adjusted earnings in the reported quarter exclude the adjustment for WHI transaction related costs, amortization of FutureScripts related intangible assets and all other acquisition-related intangible assets.

Catalyst Health successfully generated new clients, renewed key customer contracts, achieved higher generic utilization and formulary compliance and secured additional business, which have contributed to growth. Furthermore, Catalyst Health anticipates positive operating cash flow, which combined with available cash resources, should be sufficient to meet its expenses.

Further, Catalyst Health relies on growth through acquisitions and has completed multiple acquisitions over the past few years. We believe that with the acquisition of FutureScripts subsidiaries, Catalyst Health will achieve a superb management team and will be able to control costs via delivering improved integrated health solutions.

This acquisition will also provide significant growth opportunities and drive improved outcomes for IBC’s clients and members. The acquisition of WHI will enable the company to expand its PBM business.

 
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