Catalyst Health Signs PBM Deal - Analyst Blog
March 21 2012 - 1:07PM
Zacks
On Monday, Catalyst Health Solutions Inc.
(CHSI) announced a long-term agreement with Regence Rx Inc. to
exclusively provide pharmacy benefit management (“PBM”) service to
the latter’s clients through its PBM unit - Catalyst Rx. Catalyst
Health will also take over Regence’s PBM staff, technology and
internal client service assets. Moreover, the two companies will
jointly create a pharmacy center of excellence in Northwestern
U.S.
The deal will be effective from May 1, 2012 to December 31, 2017
and carries an option for an extension till December 2021. The PBM
services covered by the agreement include claim settlement, mail
and specialty drug management, rebate contracting, member services,
network administration, data reporting, analytics, client service
and sales support services. However, Regence will carry on offering
clinical and contracting services to its clientele.
Both Catalyst Health and Regence will be mutually benefited by
the agreement. Regence will be able to enhance its customer service
on the back of Catalyst Health’s efficiency in the PBM business,
its large operating scale, well-established provider network and
product development capabilities. On the flip side, the PBM
business of Catalyst Health will get a boost as Regence Health
Plans cover over 1.2 million policyholders.
Cambia Health Solutions Inc.’s subsidiary – Regence’s forte lies
in providing affordable PBM services. Apart from PBM, the company
also offers related clinical and contracting support services to
the members of other Medicaid and Blue Cross and Blue Shield
plans.
Catalyst Health has many similar alliances for its fast growing
PBM business. In February 2012, the company announced the extension
of Catalyst Rx’s alliance with WellCare Health Plans
Inc. (WCG). Catalyst Rx provides pharmacy benefit
services to the company.
Catalyst’s PBM business is benefiting from the rising health
care costs. Expenditure on prescription drugs is one of the fastest
growing components of healthcare costs and employers and government
agencies are turning to PBM companies to control the spending on
prescription drugs.
Currently, Catalyst Health carries a Zacks #2 Rank (a short-term
Buy rating). Considering the fundamentals, we also maintain our
long-term Neutral recommendation on the shares.
CATALYST HEALTH (CHSI): Free Stock Analysis Report
WELLCARE HEALTH (WCG): Free Stock Analysis Report
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