Catalyst Health Solutions Inc. (CHSI) has announced that it has completed the acquisition of the pharmacy benefit management (PBM) business of Walgreen Co. (WAG). The acquisition was announced on March 9, 2011, and the deal cost Catalyst Health $525 million in cash. Catalyst Health had earlier stated that it would update its financial guidance after the closure of the deal.
Although, the deal is anticipated to be EPS-neutral to Walgreen in fiscal 2012, it will help Catalyst Health better focus on its 7,700 drug stores, raise its membership to more than 18 million from the current level of 7 million, and expand its annual prescription volume to over 165 million from 80 million.
Catalyst Health is an active acquirer and has completed multiple acquisitions over the past few years. In May 2008, the company acquired HospiScript Services LLC and Concept Pharmaceuticals LLC for $101.1 million. Catalyst Health also designed Generic Advantage Plan to inform its members about obtaining competitively priced generic medications by comparing pricing through various fulfillment channels. Through the acquisition of Immediate Pharmaceutical Services (IPS) in August 2008 for $39.5 million, the company has been providing clients their own mail order pharmacy.
In September 2010, Catalyst Health acquired Independence Blue Cross (IBC) FutureScripts’ subsidiaries FutureScripts LLC and FutureScripts Secure LLC, for $225 million. Catalyst Health now maintains the FutureScripts brands, retains FutureScripts staff, offers IBC's pharmacy benefit services, under the 10-year contract, to approximately 1.0 million members, and manages over 14 million prescriptions annually. This acquisition will not only provide significant growth opportunities to the company but also drive improved outcomes for IBC’s clients and members.
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 recorded in the prior-year quarter.
Catalyst Health has successfully generated new clients, renewed key customer contracts, achieved higher generic utilization and formulary compliance, and secured additional businesses, which have contributed to its growth. Furthermore, Catalyst Health anticipates positive operating cash flow, which in combination with available cash resources, should be sufficient to meet its expenses.
CATALYST HEALTH (CHSI): Free Stock Analysis Report
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