Joins Two of the Country's Fastest Growing, Innovative and Highly
Complementary PBMs; Combination Will Offer Comprehensive Suite of
Best-in-Class Services and Customized Solutions Increased Size and
Scale Will Enable $13 Billion Combined Company to Better Serve
Clients and Capitalize on Significant Growth Opportunities
Transaction Expected to be Highly Accretive to 2013 Results LISLE,
IL and ROCKVILLE, MD, April 18, 2012 /CNW/ - SXC Health Solutions
Corp. and Catalyst Health Solutions, Inc. today announced that
their Boards of Directors have unanimously approved a definitive
merger agreement under which SXC and Catalyst will combine in a
cash and stock transaction valued at approximately $4.4
billion. Under the terms of the agreement, Catalyst
shareholders will receive $28.00 in cash and 0.6606 shares of SXC
stock for each Catalyst share, which implies a purchase price of
$81.02 per Catalyst share and a premium of approximately 28% based
on the closing stock prices of SXC and Catalyst on April 17, 2012.
The transaction will join SXC's industry-leading pharmacy benefit
management (PBM) tools, technology and expertise with Catalyst's
local and collaborative client-centric PBM business model, creating
a leading independent provider of PBM solutions. Together,
SXC and Catalyst will provide plan sponsors, members and physicians
with a comprehensive suite of customized solutions to reduce
pharmacy and healthcare costs and improve patient outcomes.
Upon completion of the transaction, the combined company will be an
organization with $13 billion in revenue, which will be
headquartered in Lisle, Illinois and will maintain a presence in
Rockville, Maryland. SXC is also committed to Catalyst's
industry-recognized approach to client service and intends to
maintain and expand Catalyst's proven "Centers of Excellence"
strategy. The transaction is expected to be highly accretive to
SXC's non-GAAP earnings in 2013, which excludes transaction-related
amortization expected to be approximately $200 million in the first
twelve months after closing. The combined company expects to
achieve approximately $125 million of annual cost synergies over
the first 18 to 24 months after closing through improved scale and
operating leverage. The combined company expects to incur
approximately $40-45 million of transition expenses to achieve
these annual synergies. SXC expects annual interest expense
to be approximately $70 million due to financing the transaction
with $1.7 billion in debt. Upon closing, the combined company
will have a strong balance sheet and attractive cash flow, giving
it substantial financial flexibility to pursue continued growth
initiatives while paying down debt. "This is an extremely
compelling combination that brings together SXC's industry-leading
tools and technology with Catalyst's full-service PBM,
best-in-class service and growing client base to create a company
that is even better positioned to compete in the marketplace," said
Mark Thierer, Chairman and Chief Executive Officer of SXC, who will
continue in that role in the combined company. "SXC and
Catalyst have become two of the fastest growing independent PBMs
because we share a client-centered approach to lowering healthcare
costs and improving the lives of our members. By joining
forces, we will be able to accelerate our shared goal of providing
affordable and high quality healthcare solutions that enhance value
for employer, health plan and government customers." Mr. Thierer
continued, "The combined company's increased scale and unique value
proposition, which is centered on flexibility and customized
offerings, will create significant opportunities to broaden our
ability to serve the needs of our clients and members, further
enhancing our growth potential and creating value for all of our
shareholders." "Catalyst has long been a distinguished leader in
our industry, and the combined company will continue to provide the
same high quality, localized approach and service to customers for
which Catalyst is known," said David T. Blair, Chairman and Chief
Executive Officer of Catalyst. "This transaction will create
significant benefits for our clients through a broader range of
product offerings, more effective cost management, and increased
investment in innovative programs and technologies." Mr. Blair
continued, "Catalyst has achieved enormous success over the past 10
years and, while we are confident in our future prospects as a
standalone company, the opportunities presented by this combination
are more compelling. This transaction provides attractive and
immediate value to Catalyst shareholders, as well as the ability to
participate in the significant upside potential of the combined
company. In addition, this transaction enhances our ability
to serve the needs of our clients and positions the combined
company for long-term success in our rapidly evolving industry."
Mr. Thierer will serve as Chairman and CEO of the combined
organization, and Jeff Park will be its EVP and Chief Financial
Officer. Mr. Blair has committed to provide ongoing support
to the combined company to ensure a seamless and successful
integration. Following the close of the transaction, the SXC Board
of Directors will include two current Catalyst directors. Strategic
Benefits of the Transaction -- Highly Complementary Businesses with
Best-In-Class Services and Solutions. SXC's industry-leading PBM
tools and technology and specialty pharmacy offerings are
complementary to Catalyst's market-leading client service and
clinical model that emphasizes local solutions and member choice.
With flexible and customized services and solutions, the combined
company will be better positioned to meet the needs of a more
diverse client base that includes large employers, managed care
organizations, state and local governments, hospice,
fee-for-service Medicaid, long-term care, and workers' compensation
clients, among others. -- Enhanced Size and Scale to Deliver More
Cost-Effective Solutions. The combined company will leverage its
enhanced size and scale to create more efficiency in the supply
chain and generate greater cost savings for plan sponsors and
members. The combined company will cover approximately 25 million
members, with annual prescription volume of more than 200 million
adjusted PBM scripts. -- Strong Position in Key Growth Areas.
Together, SXC and Catalyst will be uniquely positioned to
capitalize on key areas of growth in the evolving healthcare
market, including positive trends in drug utilization, greater
member engagement, specialty pharmacy benefit programs, new
biosimilar introductions, home delivery, generic utilization, and
increases in the number of insured lives. -- Well Positioned for
Healthcare Reform.With the impending U.S. Supreme Court decision
surrounding the Affordable Care Act, the combined company is well
positioned to capitalize on the changes, regardless of the outcome.
SXC has a strong fee-for-service Medicaid offering, as well as a
complete Medicare and Managed Medicaid product line. Additionally,
the company's technology tool set is being used today to help build
out health exchanges, ACO's and PCMH models throughout the country.
Transaction Terms Under the terms of the agreement, Catalyst
shareholders will receive $28.00 in cash and 0.6606 shares of SXC
stock for each Catalyst share they own upon closing of the
transaction. Based on the closing price of SXC on April 17,
2012, the stock component is valued at $53.02 per share, which
brings the total consideration per share to Catalyst shareholders
to $81.02. Upon closing of the transaction, SXC shareholders
are expected to own approximately 65% of the combined company, and
Catalyst shareholders are expected to own approximately 35%.
Financing and Approvals SXC has secured fully committed financing
from J.P. Morgan Chase Bank, N.A. for the cash portion of the
transaction. The transaction, which is subject to approval by SXC
and Catalyst shareholders, U.S. antitrust approval and other
customary closing conditions, is expected to close in the second
half of 2012. Financial Guidance SXC and Catalyst will each release
first quarter 2012 unaudited financial results on May 3,
2012. Both companies today reaffirmed their full-year 2012
guidance excluding the costs related to this proposed transaction,
which for SXC is expected to be approximately $25 million. Advisors
J.P. Morgan acted as lead financial advisor and Barclays acted as
financial advisor to SXC, and Sidley Austin LLP acted as its legal
counsel. Goldman, Sachs & Co. acted as lead financial
advisor and Citi acted as financial advisor to Catalyst, and
Milbank, Tweed, Hadley & McCloy acted as its legal counsel.
Conference Call SXC and Catalyst will host a conference call today
Wednesday, April 18, 2012, at 8:30 a.m. Eastern time to discuss the
combination. To participate, call (888) 231-8191 fifteen
minutes prior to the scheduled start time. A replay will be
available for one week following the call until Wednesday, May 2,
2012 at midnight ET. In addition, an audio web cast of the
call will be available live and will be archived on the investor
relations portions of both company's web sites. To access the
replay, call (855) 859-2056 and enter access code 73167559. A live
audio webcast of the conference call will be available at
www.sxc.com, www.catalysthealthsolutions.com, and www.newswire.ca.
Please connect at least 15 minutes prior to the conference call to
ensure adequate time for any software download that may be required
to join the webcast. About SXC Ranked number one on the 2011
Fortune 100 List of Fastest Growing Companies, SXC Health Solutions
Corp. is a leading provider of pharmacy benefits management (PBM)
services and Health Care Information Technology (HCIT) solutions to
the healthcare benefits management industry. SXC's product
offerings and solutions combine a wide range of PBM services and
software applications, application service provider (ASP)
processing services and professional services, designed for many of
the largest organizations in the pharmaceutical supply chain, such
as health plans, employers, federal, provincial, and, state and
local governments, pharmacy benefit managers, retail pharmacy
chains and other healthcare intermediaries. SXC is headquartered in
Lisle, Ill., with multiple locations in the U.S. and Canada. For
more information please visit www.sxc.com. About Catalyst Catalyst
Health Solutions, Inc., the fastest growing national PBM in the
U.S., 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. Catalyst's subsidiaries include Catalyst Rx, a
full-service PBM serving more than 18 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 a fully integrated
prescription mail service facility. Catalyst's clients include
self-insured employers, including state and local governments,
managed care organizations, unions, hospices, third-party
administrators and individuals. SXC Forward-Looking Statements
Certain statements included in this communication, including those
that express management's expectations or estimates of SXC's or the
combined company's future performance, constitute "forward-looking
statements" within the meaning of applicable securities laws.
Forward-looking statements are necessarily based upon a number of
estimates and assumptions that, while considered reasonable by
management at this time, are inherently subject to significant
business, economic and competitive uncertainties and contingencies.
SXC cautions that such forward-looking statements involve known and
unknown risks, uncertainties and other risks that may cause SXC's
actual financial results, performance, or achievements to be
materially different from SXC's estimated future results,
performance or achievements expressed or implied by those
forward-looking statements. Numerous factors could cause actual
results to differ materially from those in the forward-looking
statements, including without limitation, SXC's ability to achieve
increased market acceptance for SXC's product offerings and
penetrate new markets; consolidation in the healthcare industry;
the existence of undetected errors or similar problems in SXC's
software products; SXC's ability to identify and complete
acquisitions, manage SXC's growth and integrate acquisitions; SXC's
ability to compete successfully; potential liability for the use of
incorrect or incomplete data; the length of the sales cycle for
SXC's healthcare software solutions; interruption of SXC's
operations due to outside sources; SXC's dependence on key
customers; maintaining SXC's intellectual property rights and
litigation involving intellectual property rights; SXC's ability to
obtain, use or successfully integrate third-party licensed
technology; compliance with existing laws, regulations and industry
initiatives and future change in laws or regulations in the
healthcare industry; breach of SXC's security by third parties;
SXC's dependence on the expertise of SXC's key personnel; SXC's
access to sufficient capital to fund SXC's future requirements; and
potential write-offs of goodwill or other intangible assets. This
list is not exhaustive of the factors that may affect any of SXC's
forward-looking statements. Other factors that should be considered
are discussed from time to time in SXC's filings with the U.S.
Securities and Exchange Commission (the "SEC"), including the risks
and uncertainties discussed under the captions "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" in SXC's 2011 Annual Report on Form 10-K and
subsequent Form 10-Qs, which are available at www.sec.gov.
Investors are cautioned not to put undue reliance on forward-
looking statements. All subsequent written and oral forward-looking
statements attributable to SXC or persons acting on SXC's behalf
are expressly qualified in their entirety by this cautionary
statement. SXC disclaims any intent or obligation to update
publicly these forward-looking statements, whether as a result of
new information, future events or otherwise. Certain of the
assumptions made in preparing forward-looking information and
management's expectations include: maintenance of SXC's existing
customers and contracts, SXC's ability to market SXC's products
successfully to anticipated customers, the impact of increasing
competition, the growth of prescription drug utilization rates at
predicted levels, the retention of SXC's key personnel, SXC's
customers continuing to process transactions at historical levels,
that SXC's systems will not be interrupted for any significant
period of time, that SXC's products will perform free of major
errors, SXC's ability to obtain financing on acceptable terms and
that there will be no significant changes in the regulation of
SXC's business. Catalyst Forward Looking Statements Certain
statements included herein may contain certain forward-looking
statements including, without limitation, statements concerning
Catalyst's operations, economic performance and financial
condition. The words "believe," "expect," "anticipate,"
"will," "could," "would," "should," "may," "plan," "estimate,"
"intend," "predict," "potential," "continue," and the negatives of
these words and other similar expressions generally identify
forward-looking statements. In addition to Catalyst's
expectations or estimates of a combined company's future
performance or matters relating to the proposed transaction, these
forward-looking statements may include statements addressing
Catalyst's operations and Catalyst's financial performance.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which, among other things, speak only
as of their dates. These forward-looking statements are based
largely on Catalyst's current expectations and are based on a
number of risks and uncertainties, including, without limitation,
(i) general adverse economic conditions, (ii) changes in
governmental laws and regulations, (iii) Catalyst's ability to
compete effectively in the pharmacy benefit management industry,
(iv) Catalyst's relationships with key clients, pharmacy
network affiliations and various pharmaceutical manufacturers and
rebate intermediaries, (v) changes in industry pricing
benchmarks, (vi) uncertainties relating to the transition and
integration of completed and future acquisitions and/or expansion
opportunities, (vii) Catalyst's current level of indebtedness
and any future indebtedness Catalyst may incur;
(viii) disruption in Catalyst's operations,
(ix) unanticipated changes in Catalyst's ability to execute
its growth strategy, * generic utilization levels,
(xi) insufficient insurance coverage to cover costs associated
with litigation, (xii) Catalyst's ability to accurately
estimate how much future revenue Catalyst will generate, as well as
the level of implementation and transaction costs that Catalyst
will incur, under newly commenced PBM agreements and other risks
and uncertainties discussed in Catalyst's filings with the SEC,
including Catalyst's Annual Report on Form 10-K and quarterly
reports on Form 10-Q. Actual results could differ
materially from results referred to in the forward-looking
statements. In light of these risks and uncertainties, there
can be no assurances that the results referred to in the
forward-looking statements contained herein will, in fact,
occur. Catalyst undertakes no obligation to revise any
forward-looking statements in order to reflect events or
circumstances that may arise after the date hereof. Readers
are urged to carefully review and consider the various disclosures
made in Catalyst's other filings with the SEC that attempt to
advise interested parties of the risks and factors that may affect
Catalyst's business. Transaction Forward-Looking Statements In
addition, numerous factors could cause actual results with respect
to the proposed transaction to differ materially from those in the
forward-looking statements, including without limitation, the
possibility that the expected efficiencies and cost savings from
the proposed transaction will not be realized, or will not be
realized within the expected time period; the risk that the SXC and
Catalyst businesses will not be integrated successfully; the
ability to obtain governmental approvals of the proposed
transaction on the proposed terms and schedule contemplated by the
parties; the failure of shareholders of SXC or Catalyst to approve
the proposed transaction; disruption from the proposed transaction
making it more difficult to maintain business and operational
relationships; the risk of customer attrition; the possibility that
the proposed transaction does not close, including, but not limited
to, due to the failure to satisfy the closing conditions; and the
ability to obtain the financing contemplated to fund a portion of
the consideration to be paid in the proposed transaction and the
terms of such financing. Important Additional Information This
communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval. This communication is being made in
respect of the proposed transaction involving Catalyst and
SXC. The proposed transaction will be submitted to the
shareholders of Catalyst and the shareholders of SXC for their
consideration. In connection therewith, the parties intend to
file relevant materials with the SEC, including a joint proxy
statement/prospectus that will be mailed to shareholders.
Such documents, however, are not currently available. BEFORE
MAKING ANY VOTING OR INVESTMENT DECISIONS, INVESTORS AND SECURITY
HOLDERS OF CATALYST AND/OR SXC ARE URGED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS REGARDING THE PROPOSED TRANSACTION AND ANY
OTHER RELEVANT DOCUMENTS THAT WILL BE FILED WITH THE SEC CAREFULLY
AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.
Investors and security holders may obtain free copies of the proxy
statement/prospectus and other documents containing important
information about Catalyst and SXC, once such documents are filed
with the SEC, through the website maintained by the SEC at
www.sec.gov. Copies of the documents filed with the SEC by
SXC will be available free of charge on SXC's website at
www.sxc.com under the heading "Investor Information" or by
contacting SXC's Investor Relations Department at
630-577-3100. Copies of the documents filed with the SEC by
Catalyst will be available free of charge on Catalyst's website at
www.catalysthealthsolutions.com under the heading "Investor
Information" or by contacting Catalyst's Investor Relations
Department at 301-548-2900. SXC, Catalyst and certain of their
respective directors, executive officers and other members of
management and employees may be deemed to be participants in the
solicitation of proxies in connection with the proposed
transaction. Information about the directors and executive
officers of SXC is set forth in its proxy statement for its 2012
annual meeting of stockholders, which was filed with the SEC on
April 2, 2012. Information about the directors and executive
officers of Catalyst is set forth in its proxy statement for its
2011 annual meeting of shareholders, which was filed with the SEC
on April 28, 2011. These documents can be obtained free of
charge from the sources indicated above. Other information
regarding the participants in the proxy solicitation and a
description of their direct and indirect interests, by security
holdings or otherwise, will be contained in the joint proxy
statement/prospectus and other relevant materials to be filed with
the SEC when they become available. SXC Health Solutions Corp.
CONTACT: For SXC Health Solutions Corp.:Tony PerkinsInvestor
Relations, 630-577-4871tony.perkins@sxc.comCatalyst Health
Solutions Media:Christopher T. Burns, 240-268-9666Senior Vice
President, Marketingcburns@chsi.comCatalyst Investor Relations:Tim
Pearson, 301-548-2900Chief Financial Officer
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