May 5 2010
Catalyst Health Solutions, Inc. (NASDAQ:CHSI) announces its financial results for the first quarter ended March 31, 2010. The Company reports quarterly net income of $17.4 million, up 26% from $13.8 million in the prior year. Quarterly earnings per diluted share increased to $0.39. Revenue for the quarter ended March 31, 2010, increased 18% to $832.3 million from $703.3 million in the prior year.
“We are pleased with the Company's performance”
"We are pleased with the Company's performance," stated David T. Blair, Chief Executive Officer of Catalyst. "The Company delivered significant earnings growth while executing on key strategic initiatives." During the quarter, the Company successfully implemented new clients, renewed key customer contracts, achieved higher generic utilization and formulary compliance and secured additional business.
Catalyst began administering pharmacy benefit management services for the Michigan Public Schools Employees Retirement System ("MPSERS") effective January 1, 2010. MPSERS is comprised of approximately 190,000 members, including non-Medicare and Medicare-eligible retirees and their dependents. Catalyst is pleased to report that the trustees of the Hotel Employees and Restaurant Employees International Union (H.E.R.E.I.U.)/Culinary Health Fund voted to renew a three year extension, which covers 185,000 plan participants, and that the Company was also awarded a new service contract with the State of Louisiana Office of Group Benefits effective July 1, 2010, which covers approximately 225,000 members.
Additionally, the Company sold new business representing approximately 150,000 lives with mid-year effective dates. "We are pleased by the steady sales momentum across all of our market segments," added Blair. The strong growth in sales reflects our commitment to delivering the most effective and lowest cost pharmacy solutions. The Company's generic dispensing rate increased 3.3 percentage points to 70.0% from the first quarter 2009.
Management confirms that it is tracking towards its previously stated financial guidance and expects sequential earnings growth for the remainder of 2010 to reach $1.80 to $1.88 earnings per share.
First Quarter Results
Revenue for the first quarter increased by $129.0 million, or 18.3%, to $832.3 million from $703.3 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 first quarter increased to 16.1 million from 13.8 million for the same period in 2009. The increase in prescription volume was primarily due to the addition of new clients. Generic utilization increased to 70% from 67% in the first quarter of 2009.
Adjusting for the difference in days supply between mail-order and retail, total prescription volume was 17.5 million in the first quarter of 2010.
Gross profit for the first quarter increased $9.5 million, to $50.6 million or 6.1% of revenue compared to $41.1 million, or 5.8% of revenue, in the first 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, offset by expenses associated with client implementations.
First quarter operating income increased 30.4% to $28.4 million from $21.8 million in the first quarter of 2009. 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 reflects the consolidation of the operating expenses from the Company's recent acquisition.
Net income for the first quarter of 2010 was $17.4 million, or $0.39 per diluted share, compared to the prior year's net income of $13.8 million, or $0.32 per diluted share.
Source:
Catalyst Health Solutions, Inc.