Catamaran makes waves after strong third-quarter

Catamaran Corp. shares prices in 2014. Chart created by Mary Lee
Catamaran Corp. share prices in 2014.
Chart created by Mary Lee

By Mary Lee 

Catamaran Corporation cheered investors Thursday by reporting stronger-than-expected third-quarter earnings that reflected the benefit of the company’s growth-through-acquisition strategy.

Net income at the Schaumburg, Ill.-based provider of pharmacy benefit management services and healthcare information technology, advanced to $81.9 million, or 39 cents per diluted share, from $72.9 million, or 35 cents per diluted share, in the year-ago quarter.

Revenue rose 53 percent to $5.54 billion from $3.61 billion the year before, primarily due to growth in the core business, contribution from a recent acquisition as well as a partnership arrangement with Cigna Corp., and healthy results at Catamaran’s BriovaRx specialty pharmacy operations.

The company’s results were skewed by increased claim volume from new client implementations and the Restat acquisition. Adjusting for special items, earnings per share climbed 12 percent to 58 cents per share, compared to 52 cents a year ago– topping analyst expectations surveyed by Bloomberg, by two pennies.

“Our third quarter results demonstrate our continued ability to deliver strong financial results while investing in strategic growth initiatives,” said Mark Thierer, chairman and CEO of Catamaran Corp.

“The Catamaran team,” he continued, “was very productive in the third quarter, securing additional wins in the selling season, advancing strategic integration activities and proceeding with our business development strategy.”

As a pharmacy benefit manager, Catamaran helps organizations and communities take command of prescription drug costs, managing more than 350 million prescriptions each year on behalf of more than 32 million members. Catamaran makes use of economies of scale by using high tech equipment connecting pharmacists, physicians and caregivers with prescription data.

A big concern of Catamaran’s clients is the increasing use of high-cost specialty drugs, Thierer told investors in a conference call Thursday.

“We are committed to helping our clients address their specialty spend through our high-touch, member-centric Briova brand.”

Catamaran’s fast-growing specialty franchise, Briova, provides clients exclusive specialty arrangements, focused on open network populations and growing specialty through accretive acquisitions.

In early October, the health care company entered into a definitive agreement to purchase Salveo Specialty Pharmacy- a specialty pharmacy managing approximately $40 million in annualized drug spending. When the deal closes in the fourth quarter, officials said, Salveo’s geographical footprint in New York and California will leverage Briova’s presence.

“Catamaran remains active with mergers and acquisition activities,” Morgan Stanley analyst Ricky Goldwasser told clients in a note. And with about $900 million in cash, he said, the company still has the “potential to complete a deal that could potentially impact fiscal 2015 financial performance.”

Catamaran officials upgraded the company’s guidance Thursday, narrowing its earnings-per-share guidance, to a range of $2.20 to $2.25, up from its previous forecast of $2.12 to $2.22.

The positive report helped the company’s share price Thursday. In late-afternoon Nasdaq trading, Catamaran’s often-volatile shares were up $5.34, or 12.7 percent, at $47.46.