http://www.businesswire.com/news/home/20091103006708/en
Net Income Increases 37% to $0.39 per Diluted Share
Preliminary Financial Guidance Projects 25% Net Income Growth in 2010
ROCKVILLE, Md.--(Business Wire)--
Catalyst Health Solutions, Inc. (NASDAQ: CHSI), a pharmacy benefit management
company, today announced its financial results for the third quarter ended
September 30, 2009. The Company reported record quarterly net income of $17.2
million, up 37% compared to $12.6 million in the prior year. Earnings per
diluted share increased by $0.10 to $0.39 from $0.29. Revenue for the quarter
ended September 30, 2009, grew by $72.6 million to $725.6 million from $653.0
million in the prior year.
"We are pleased with our earnings growth," stated David T. Blair, Chief
Executive Officer of Catalyst. "We have expanded our margins both sequentially
and on a year over year basis, as we continue to benefit from various business
initiatives, including higher generic utilization across our client base,
improved formulary compliance, and the scaling of our mail operations."
The Company`s generic dispensing rate increased 2.4 percentage points to 67.4%
from the third quarter 2008. "Our clinically focused approach increases generic
utilization, a key driver of margin growth through aligned incentives with our
clients," noted Blair. The Company expects the sequential earnings growth trend
to continue for the remainder of 2009.
2010 Preliminary Financial Guidance
With the new sales commitments, trends in prescription utilization and proven
results from various business initiatives, the Company expects 2010 net income
to grow by approximately 25%. Net income for 2010 is projected between $81.0
million and $84.0 million, which equates to earnings per diluted share of $1.80
to $1.88 per share. Revenue in 2010 is projected between $3.3 billion and $3.6
billion. Total revenue will be directly impacted by the effective dates of new
business wins.
Factors that could contribute to results exceeding the guidance described above
include:
* New business additions with 2010 effective dates;
* Better than projected formulary compliance; and
* Increased generic drug utilization.
Financial results may also be impacted by general economic conditions and the
Company`s ability to execute on its growth and margin expansion plans.
Third Quarter Results
Revenue for the third quarter increased by $72.6 million, or 11.1%, to $725.6
million from $653.0 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 third quarter increased to 13.9 million from
13.1 million for the same period in 2008. The increase in prescription volume
was primarily due to the addition of new clients. Generic utilization increased
to 67.4% from 65.0% in the third quarter of 2008.
Adjusting for the difference in days supply between mail-order and retail, total
prescription volume was 14.9 million.
Gross profit for the third quarter increased $11.3 million, to $49.0 million or
6.7% of revenue compared to $37.7 million, or 5.8% of revenue, in the third
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.
Third quarter operating income increased 43.0% to $27.9 million from $19.5
million in the third quarter of 2008. 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 reflect the consolidation of the operating
expenses from the Company`s recent acquisitions.
Net income for the third quarter of 2009 was $17.2 million, or $0.39 per diluted
share, compared to the prior year`s net income of $12.6 million, or $0.29 per
diluted share.
Nine Months Results
Revenue for the nine months ended September 30, 2009 increased 15.7%, to
approximately $2.1 billion from $1.9 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 41.5 million for the nine months ended
September 30, 2009 from 38.4 million for the same period in 2008. The increase
in prescription volume was primarily due to the addition of new clients.
Adjusting for the difference in days supply between mail-order and retail, total
prescription volume was 44.6 million, an increase of 3.6 million, or 8.6%,
compared to 41.0 million in the prior year.
Gross profit for the first nine months of 2009, increased by $32.3 million to
$135.2 million, or 6.3% of revenue, compared to $103.0 million, or 5.5% of
revenue, in the first nine months 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.
Operating income increased by $21.0 million to $75.5 million in the first nine
months of 2009 from $54.5 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 an $11.2 million increase in selling, general and administrative
expenses. Additionally, 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 and investments in expanding capacity at our mail service
operations. The growth in selling, general and administrative expenses primarily
reflect the consolidation of the operating expenses from the Company`s recent
acquisitions.
Net income for the first nine months of 2009 was $47.2 million, or $1.08 per
diluted share, compared to $36.2 million, or $0.83 per diluted share, in the
prior year.
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, 2008 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 For the nine months
ended September 30, ended September 30,
2009 2008 2009 2008
Revenue (excludes member co-payments of $206,441, $193,334, $598,744 and $557,924 for the three months and nine months ended September 30, 2009 and 2008, respectively) $ 725,579 $ 653,033 $ 2,146,480 $ 1,855,979
Direct expenses 676,612 615,378 2,011,248 1,753,005
Selling, general and administrative expenses 21,102 18,168 59,683 48,457
Total operating expenses 697,714 633,546 2,070,931 1,801,462
Operating income 27,865 19,487 75,549 54,517
Interest income 102 863 704 3,935
Interest expense (113 ) (163 ) (363 ) (235 )
Other income 1 1 2 2
Income before income taxes 27,855 20,188 75,892 58,219
Income tax expense 10,625 7,591 28,687 22,005
Net income $ 17,230 $ 12,597 $ 47,205 $ 36,214
Net income per share, basic $ 0.40 $ 0.30 $ 1.10 $ 0.85
Net income per share, diluted $ 0.39 $ 0.29 $ 1.08 $ 0.83
Weighted average shares of common stock outstanding, basic 43,185 42,633 43,054 42,420
Weighted average shares of common stock outstanding, diluted 44,040 43,716 43,811 43,535
CATALYST HEALTH SOLUTIONS, INC.
and Subsidiaries
CONSOLIDATED SELECTED INFORMATION
(In thousands)
(Unaudited)
For the three months For the nine months
ended September 30, ended September 30,
2009 2008 2009 2008
Retail prescriptions 13,403 12,592 40,035 37,057
Total mail prescriptions 494 515 1,513 1,330
Total prescriptions 13,897 13,107 41,548 38,387
Total adjusted prescriptions(1) 14,885 14,137 44,574 41,047
Adjusted mail order penetration %(2) 10 % 11 % 10 % 10 %
Generic utilization % 67 % 65 % 67 % 64 %
Gross profit $ 48,967 $ 37,655 $ 135,232 $ 102,974
Operating income 27,865 19,487 75,549 54,517
Depreciation & amortization 3,479 2,726 9,058 7,145
(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.
Hai Tran, 301-548-2900
htran@chsi.com
Copyright Business Wire 2009
