Exhibit 99.1
Catalyst Health Solutions Reports Record Second Quarter 2009
Financial Results and Raises Guidance
Net Income Increases 35% to $0.37 per Diluted Share
Second Quarter Revenues Up 17% to $718 Million
ROCKVILLE, MD, August 4, 2009 – Catalyst Health Solutions, Inc. (NASDAQ: CHSI), a pharmacy benefit management company, today announced its financial results for the quarter ended June 30, 2009. The Company reported record quarterly net income of $16.2 million, up 35% compared to $12.0 million in the prior year. Earnings per diluted share increased by $0.09 to $0.37 from $0.28. Revenue for the quarter ended June 30, 2009, grew by 17% to $717.6 million from $614.3 million in the prior year.
“While we are extremely pleased with our year over year revenue growth of 17%, the Company’s earnings growth of 35% is most noteworthy,” stated David T. Blair, Chief Executive Officer of Catalyst. “Our increased margins are the direct result of higher generic utilization across our client base and the successful integration of IPS,” added Blair. Acquired in 2008, IPS is a mail service pharmacy provider which was instrumental to the Company increasing its mail order prescriptions by 24% during the past year. To accommodate increased volumes, IPS has expanded its operational processes, systems and personnel in Ohio.
The Company’s generic dispensing rate increased 3.0 percentage points to 67% from the second quarter 2008. “Effectively managing pharmacy costs is driving additional margins through our performance management fees which properly align incentives with our clients as well as driving new sales,” noted Blair. Earlier this quarter, the Company announced it had secured new PBM business cumulatively representing more than $250 million in annualized revenues.
2009 Financial Guidance
As a result of the strong financial performance this year, new sales commitments, and margin trends, the Company is increasing its earnings guidance to a range between $1.45 and $1.50 per share. The increased guidance represents diluted EPS growth of 25% to 29% over 2008 results.
Second Quarter Results
Revenue for the second quarter increased by $103.3 million, or 16.8%, to $717.6 million from $614.3 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 second quarter increased to 13.9 million from 12.4 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 67.0% from 64.0% in the second quarter of 2008.
Adjusting for the difference in days supply between mail-order and retail, total prescription volume was 14.9 million, an increase of 1.6 million, or 12.3%, compared to 13.3 million in the prior year. Adjusted mail order prescription volume was 1.5 million for the second quarter, a 24.0% increase over the 1.2 million adjusted mail order prescriptions in the prior year.
Gross profit for the second quarter increased $11.0 million, to $45.1 million or 6.3% of revenue compared to $34.1 million, or 5.6% of revenue, in the second quarter of the prior year. The increase in gross profit is primarily due to the increase in revenue, the realization of the economics of our mail service pharmacy, higher generic utilization, the contribution of performance management fees, enhanced drug manufacturer rebates, improved pharmacy reimbursement rates and higher formulary compliance.
Second quarter operating income increased 41.6% to $25.9 million from $18.3 million in the second quarter of 2008. The increase in operating income was primarily due to the increase in gross profit, offset by a $3.4 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, as well as consolidating the operating expenses from the Company’s recent acquisitions.
Net income for the second quarter of 2009 was $16.2 million, or $0.37 per diluted share, compared to the prior year’s net income of $12.0 million, or $0.28 per diluted share.
Six Month Results
Revenue for the six months ended June 30, 2009 increased 18.1%, to approximately $1.4 billion from $1.2 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 27.7 million for the six months ended June 30, 2009 from 25.3 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 29.7 million, an increase of 2.8 million, or 10.3%, compared to 26.9 million in the prior year. Adjusted mail order prescription volume was 3.1 million for the first six months of 2009, a 24.9% increase over the 2.4 million adjusted mail order prescriptions in the prior year.
Gross profit for the first six months of 2009, increased by $20.9 million to $86.3 million, or 6.1% of revenue, compared to $65.3 million, or 5.4% of revenue, in the first six months of the prior year. The increase in gross profit is primarily due to the increase in revenue, the realization of the economics of our mail service pharmacy, higher generic utilization, the contribution of performance management fees, enhanced drug manufacturer rebates, improved pharmacy reimbursement rates and higher formulary compliance.
Operating income increased by $12.7 million to $47.7 million in the first six months of 2009 from $35.0 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 $8.3 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, as well as consolidating the operating expenses from the Company’s recent acquisitions.
Net income for the first six months of 2009 was $30.0 million, or $0.69 per diluted share, compared to $23.6 million, or $0.54 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 six 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.
Contact: Catalyst Health Solutions, Inc.
Hai Tran, 301-548-2900
htran@chsi.com
SOURCE: Catalyst Health Solutions, Inc.
CATALYST HEALTH SOLUTIONS, INC.
and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| | | | | | | | | | | | | | | | |
| | | For the three months
ended June 30, | | | For the six months
ended June 30, | |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
Revenue (excludes member co-payments of $189,878, $173,978, $392,303 and $364,590 for the three months and six months ended June 30, 2009 and 2008, respectively) | | $ | 717,629 | | | $ | 614,302 | | | $ | 1,420,901 | | | $ | 1,202,946 | |
| | | | | | | | | | | | | | | | |
Direct expenses | | | 672,494 | | | | 580,176 | | | | 1,334,636 | | | | 1,137,627 | |
Selling, general and administrative expenses | | | 19,262 | | | | 15,860 | | | | 38,581 | | | | 30,289 | |
| | | | | | | | | | | | | | | | |
Total operating expenses | | | 691,756 | | | | 596,036 | | | | 1,373,217 | | | | 1,167,916 | |
| | | | | | | | | | | | | | | | |
Operating income | | | 25,873 | | | | 18,266 | | | | 47,684 | | | | 35,030 | |
Interest income | | | 279 | | | | 1,175 | | | | 602 | | | | 3,072 | |
Interest expense | | | (119 | ) | | | (36 | ) | | | (250 | ) | | | (72 | ) |
Other income | | | — | | | | — | | | | 1 | | | | 1 | |
| | | | | | | | | | | | | | | | |
Income before income taxes | | | 26,033 | | | | 19,405 | | | | 48,037 | | | | 38,031 | |
Income tax expense | | | 9,876 | | | | 7,392 | | | | 18,062 | | | | 14,414 | |
| | | | | | | | | | | | | | | | |
Net income | | $ | 16,157 | | | $ | 12,013 | | | $ | 29,975 | | | $ | 23,617 | |
| | | | | | | | | | | | | | | | |
Net income per share, basic | | $ | 0.38 | | | $ | 0.28 | | | $ | 0.70 | | | $ | 0.56 | |
Net income per share, diluted | | $ | 0.37 | | | $ | 0.28 | | | $ | 0.69 | | | $ | 0.54 | |
Weighted average shares of common stock outstanding, basic | | | 43,039 | | | | 42,402 | | | | 42,987 | | | | 42,310 | |
Weighted average shares of common stock outstanding, diluted | | | 43,770 | | | | 43,537 | | | | 43,697 | | | | 43,461 | |
CATALYST HEALTH SOLUTIONS, INC.
and Subsidiaries
CONSOLIDATED SELECTED INFORMATION
(In thousands)
(Unaudited)
| | | | | | | | | | | | |
| | | For the three months
ended June 30, | | | For the six months
ended June 30, | |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
Retail prescriptions | | 13,368 | | | 12,027 | | | 26,632 | | | 24,465 | |
Total mail prescriptions | | 512 | | | 413 | | | 1,019 | | | 816 | |
| | | | | | | | | | | | |
Total prescriptions | | 13,880 | | | 12,440 | | | 27,651 | | | 25,281 | |
Total adjusted prescriptions(1) | | 14,904 | | | 13,266 | | | 29,689 | | | 26,913 | |
| | | | |
Adjusted mail order penetration %(2) | | 10 | % | | 9 | % | | 10 | % | | 9 | % |
Generic utilization % | | 67 | % | | 64 | % | | 67 | % | | 64 | % |
| | | | |
Gross profit | | 45,135 | | | 34,126 | | | 86,265 | | | 65,319 | |
Operating income | | 25,873 | | | 18,266 | | | 47,684 | | | 35,030 | |
Depreciation & amortization | | 2,834 | | | 2,362 | | | 5,579 | | | 4,420 | |
(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.
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