Catamaran 10-Q 2012 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2012

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number: 000-52073

CATAMARAN CORPORATION

(Exact name of registrant as specified in its charter)

Yukon Territory	75-2578509
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)

2441 Warrenville Road, Suite 610, Lisle, IL 60532-3642

(Address of principal executive offices, zip code)

(800) 282-3232

(Registrant’s phone number, including area code)

(Former name if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer x	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of October 31, 2012, there were 205,137,882 of the Registrant’s common shares, no par value per share, outstanding.

TABLE OF CONTENTS

	Page
PART I — FINANCIAL INFORMATION	3
Item 1. Financial Statements (unaudited)	3
Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011	3
Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2012 and 2011	4
Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2012 and 2011	4
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2012 and 2011	6
Consolidated Statements of Shareholders’ Equity for the Nine Months Ended September 30, 2012 and 2011	7
Notes to Unaudited Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3. Quantitative and Qualitative Disclosures About Market Risk	31
Item 4. Controls and Procedures	31
PART II — OTHER INFORMATION	33
Item 1. Legal Proceedings	33
Item 1A. Risk Factors	33
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3. Defaults Upon Senior Securities	33
Item 4. Mine Safety Disclosures	33
Item 5. Other Information	33
Item 6. Exhibits	33
SIGNATURE	36
Exhibit 10.15
Exhibit 10.16
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2
Exhibit 101

2

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

CATAMARAN CORPORATION

Consolidated Balance Sheets

(in thousands, except share data)

	September 30, 2012			December 31, 2011
	(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	393,032		$	341,382
Restricted cash	52,389			12,017
Accounts receivable, net of allowance for doubtful accounts of $5,956 (2011 — $2,725)	676,111			240,425
Rebates receivable	248,215			33,834
Other current assets	140,376			35,605
Total current assets	1,510,123			663,263
Property and equipment, net of accumulated depreciation of $56,759 (2011 — $43,304)	80,090			21,658
Goodwill	4,471,582			291,045
Other intangible assets, net of accumulated amortization of $118,782 (2011 — $48,072)	1,258,397			69,777
Other long-term assets	53,016			4,564
Total assets	$	7,373,208		$	1,050,307
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	633,675		$	219,380
Accrued expenses and other current liabilities	268,401			66,729
Pharmacy benefit management rebates payable	248,536			59,235
Current portion - long-term debt	27,500			—
Total current liabilities	1,178,112			345,344
Deferred income taxes	343,332			18,361
Long-term debt	1,244,425			—
Other long-term liabilities	54,462			15,564
Total liabilities	2,820,331			379,269
Commitments and contingencies (Note 12)
Shareholders’ equity
Common shares: no par value, unlimited shares authorized; 205,137,882 shares issued and outstanding, September 30, 2012 (December 31, 2011 — 124,767,322 shares)	4,177,804			394,769
Additional paid-in capital	67,795			37,936
Retained earnings	312,462			238,333
Accumulated other comprehensive income	(2,504		)	—
Total shareholders' equity	4,555,557			671,038
Non-controlling interest	(2,680		)	—
Total equity	4,552,877			671,038
Total liabilities and equity	$	7,373,208		$	1,050,307

See accompanying notes to the unaudited consolidated financial statements.

3

CATAMARAN CORPORATION

Consolidated Statements of Operations

(in thousands, except share and per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
	(unaudited)						(unaudited)
Revenue	$	3,190,780		$	1,287,290		$	6,610,580		$	3,596,981
Cost of revenue	2,955,889			1,204,948			6,142,796			3,376,859
Gross profit	234,891			82,342			467,784			220,122
Expenses:
Selling, general and administrative	133,716			37,371			255,088			104,064
Depreciation of property and equipment	5,717			1,588			10,552			4,764
Amortization of intangible assets	51,380			3,899			70,710			11,125
	190,813			42,858			336,350			119,953
Operating income	44,078			39,484			131,434			100,169
Interest expense	11,668			435			14,544			1,382
Other expense, net	175			671			520			594
Income before income taxes	32,235			38,378			116,370			98,193
Income tax expense (benefit):
Current	30,816			14,289			62,004			34,587
Deferred	(17,988		)	(1,177		)	(18,693		)	(1,496		)
	12,828			13,112			43,311			33,091
Net income	$	19,407		$	25,266		$	73,059		$	65,102
Less: Net loss attributable to non-controlling interest	(1,070		)	—			(1,070		)	—
Net income attributable to the Company	$	20,477		$	25,266		$	74,129		$	65,102
Earnings per share attributable to the Company:
Basic	$	0.10		$	0.20		$	0.48		$	0.52
Diluted	$	0.10		$	0.20		$	0.48		$	0.52
Weighted average number of shares used in computing earnings per share:
Basic	203,505,355			124,542,534			153,850,043			124,101,146
Diluted	204,439,048			126,141,038			154,977,182			125,814,128

See accompanying notes to the unaudited consolidated financial statements.

4

CATAMARAN CORPORATION

Consolidated Statements of Comprehensive Income

(in thousands)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2012			2011		2012			2011
	(unaudited)					(unaudited)
Net income	$	19,407		$	25,266	$	73,059		$	65,102
Other comprehensive income, net of tax
Unrealized loss on cash flow hedge	(2,504		)	—		(2,504		)	—
Comprehensive income	$	16,903		$	25,266	$	70,555		$	65,102
Less: Comprehensive loss attributable to non-controlling interest	(1,070		)	$	—	(1,070		)	$	—
Comprehensive income attributable to the Company	$	17,973		$	25,266	$	71,625		$	65,102

See accompanying notes to the unaudited interim consolidated financial statements.

5

CATAMARAN CORPORATION

Consolidated Statements of Cash Flows

(in thousands)

	Nine Months Ended September 30,
	2012			2011
	(unaudited)
Cash flows from operating activities:
Net income	$	73,059		$	65,102
Items not involving cash:
Stock-based compensation	13,161			6,507
Depreciation of property and equipment	12,945			6,815
Amortization of intangible assets	70,710			11,125
Deferred lease inducements and rent	1,409			(397		)
Deferred income taxes	(18,693		)	(1,496		)
Tax benefit on stock-based compensation plans	(17,214		)	(9,322		)
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable	(86,160		)	(93,838		)
Rebates receivable	6,681			4,616
Restricted cash	9,338			(1,181		)
Other current assets	29,494			16,358
Accounts payable	59,477			88,504
Accrued expenses and other current liabilities	(24,459		)	(1,308		)
Pharmacy benefit management rebates payable	10,336			(5,304		)
Other	7,430			(1,469		)
Net cash provided by operating activities	147,514			84,712
Cash flows from investing activities:
Acquisition, net of cash acquired	(1,564,385		)	(12,421		)
Purchases of property and equipment	(12,901		)	(3,073		)
Net cash used by investing activities	(1,577,286		)	(15,494		)
Cash flows from financing activities:
Proceeds from public offering, net of issuance costs	518,813			—
Proceeds from issuance of debt	1,470,448			—
Repayment of debt	(511,993		)	—
Tax benefit on stock-based compensation plans	17,214			9,322
Proceeds from exercise of options	5,738			5,291
Debt issuance costs	(18,806		)	—
Net cash provided by financing activities	1,481,414			14,613
Effect of foreign exchange on cash balances	8			(4		)
Increase in cash and cash equivalents	51,650			83,827
Cash and cash equivalents, beginning of period	341,382			321,284
Cash and cash equivalents, end of period	$	393,032		$	405,111

See accompanying notes to the unaudited consolidated financial statements.

6

CATAMARAN CORPORATION

Consolidated Statements of Equity

(in thousands, except share data)

	Common Shares			Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Loss			Non-controlling Interest
	Shares	Amount													Total
Balance at December 31, 2011	124,767,322	$	394,769	$	37,936		$	238,333	$	—		$	—		$	671,038
Activity during the period (unaudited):
Net income	—	—		—			74,129		—			—			74,129
Net loss attributable to non-controlling interest	—	—		—			—		—			(1,070		)	(1,070		)
Issuance of common shares from public offering	11,960,000	518,813		—			—		—			—			518,813
Issuance of common shares for acquisition	66,779,940	3,238,144		—			—		—			—			3,238,144
Issuance of warrants and stock options for acquisition	—	—		19,824			—		—			—			19,824
Non-controlling interest assumed from acquisition	—	—		—			—		—			(1,610		)	(1,610		)
Exercise of stock options	1,163,624	8,155		(2,417		)	—		—			—			5,738
Vesting of restricted stock units	466,996	17,923		(17,923		)	—		—			—			—
Tax benefit on options exercised	—	—		17,214			—		—			—			17,214
Stock-based compensation	—	—		13,161			—		—			—			13,161
Other comprehensive income, net of tax	—	—		—			—		(2,504		)	—			(2,504		)
Balance at September 30, 2012 (unaudited)	205,137,882	$	4,177,804	$	67,795		$	312,462	$	(2,504	)	$	(2,680	)	$	4,552,877
Balance at December 31, 2010	123,205,994	$	381,736	$	24,973		$	146,547	$	—		$	—		$	553,256
Activity during the period (unaudited):
Net income	—	—		—			65,102		—			—			65,102
Exercise of stock options	1,211,134	7,530		(2,239		)	—		—			—			5,291
Vesting of restricted stock units	158,304	4,350		(4,350		)	—		—			—			—
Tax benefit on options exercised	—	—		9,322			—		—			—			9,322
Stock-based compensation	—	—		6,507			—		—			—			6,507
Balance at September 30, 2011 (unaudited)	124,575,432	$	393,616	$	34,213		$	211,649	$	—		$	—		$	639,478

See accompanying notes to the unaudited consolidated financial statements.

7

CATAMARAN CORPORATION

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Description of Business

Catamaran Corporation (“Catamaran” or the “Company”) is a leading provider of pharmacy benefits management (“PBM”) services and healthcare information technology (“HCIT”) solutions to the healthcare benefits management industry. The Company’s product offerings and solutions combine a wide range of PBM services, software applications, application service provider (“ASP”) processing services and professional services designed for many of the largest organizations in the pharmaceutical supply chain, such as federal, provincial, state and local governments, unions, corporations, pharmacy benefit managers, managed care organizations, retail pharmacy chains and other healthcare intermediaries. The Company is headquartered in Lisle, Illinois with several locations in the U.S. and Canada.

In July 2012, following the recent completion of its merger (the “Merger”) with Catalyst Health Solutions, Inc. (“Catalyst”), SXC Health Solutions Corp. unveiled a new name and brand for the combined company. The new name, Catamaran Corporation, reflects the union of two of the industry's fastest-growing PBM companies to create a PBM with a nimble and flexible approach to helping clients navigate today's turbulent healthcare environment in order to contain costs and enhance the well-being of its members. The Company trades on the Toronto Stock Exchange under ticker symbol “CCT” and on the Nasdaq Global Select Market under ticker symbol “CTRX.” For more information, please visit www.catamaranrx.com.

2. Basis of Presentation

Basis of presentation:

The unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), pursuant to the Securities and Exchange Commission’s (“SEC”) rules and regulations for reporting on Form 10-Q, and following accounting policies consistent with the Company’s audited annual consolidated financial statements for the year ended December 31, 2011. The unaudited consolidated financial statements of the Company include its wholly-owned subsidiaries and all significant intercompany transactions and balances have been eliminated in consolidation. Amounts in the unaudited consolidated financial statements and notes thereto are expressed in U.S. dollars, except where indicated. The financial information included herein reflects all adjustments (consisting only of normal recurring adjustments), which, in the opinion of management, are necessary for a fair presentation of the results for the periods presented. Certain reclassifications have been made to conform the prior year's consolidated financial statements to the current year's presentation, which includes reclassifying pharmacy claims payable to accounts payable. The results of operations for the three and nine month periods ended September 30, 2012 are not necessarily indicative of the results to be expected for the full year ending December 31, 2012. As of the issuance date of the Company’s financial statements, the Company has assessed whether subsequent events have occurred that require adjustment to or disclosure in these unaudited consolidated financial statements in accordance with Financial Accounting Standards Board’s (“FASB”) guidance.

Pursuant to the SEC rules and regulations for reporting on Form 10-Q, certain information and note disclosures normally included in the annual consolidated financial statements prepared in accordance with GAAP have been condensed or excluded. As a result, these unaudited consolidated financial statements do not contain all the disclosures required to be included in the annual consolidated financial statements and should be read in conjunction with the most recent audited annual consolidated financial statements and notes thereto described in our Annual Report on Form 10-K for the year ended December 31, 2011.

Use of estimates:

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Significant items subject to such estimates and assumptions include revenue recognition, rebates, purchase price allocation in connection with acquisitions, valuation of property and equipment, valuation of intangible assets acquired and related amortization periods, impairment of goodwill, income tax uncertainties, contingencies and valuation allowances for receivables and income taxes. Actual results could differ from those estimates.

3. Recent Accounting Pronouncements

a) Recent accounting standards implemented

No new standards have been implemented by the Company during the three and nine month periods ended September 30, 2012.

b) Recent accounting standards issued

In July 2012, FASB issued an update to the indefinite-lived intangible assets impairment testing standard. The revised standard is intended to reduce the cost and complexity of the annual impairment test by providing entities an option to perform a "qualitative" assessment to determine whether further impairment testing is necessary. The revised standard is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012; however, an entity can choose to early adopt provided that the entity has not yet performed its 2012 annual impairment test or issued its financial statements. The Company does not expect the implementation of the amendments to have a significant impact on its financial results or in the presentation and disclosure of its financial statements.

8

CATAMARAN CORPORATION

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. Stock Split

On September 6, 2012, the Company announced that its board of directors had declared a nominal dividend on the issued and outstanding common shares of the Company to effect a two-for-one stock split. Shareholders of record at the close of business on September 20, 2012 were issued one additional common share for each share owned as of that date. The additional common shares were distributed on October 1, 2012. All share and per share data presented in this report have been retroactively adjusted to reflect this stock split.

5. Business Combinations

Catalyst Health Solutions, Inc. Merger

On July 2, 2012, the Company completed its previously announced Merger with Catalyst, a full-service PBM. Each share of Catalyst common stock outstanding immediately prior to the effective time of the Merger (other than shares owned by the Company or Catalyst or any of their respective wholly-owned subsidiaries or shares with respect to which appraisal rights have been properly exercised) was converted in the Merger into the right to receive 1.3212 of a Company common share and $14.00 in cash. This resulted in the Company issuing approximately 66.8 million common shares, issuing 0.5 million warrants, and paying $1.4 billion in cash to Catalyst stockholders to complete the Merger. The results of Catalyst have been included in the Company's results since July 2, 2012. The consolidated statement of operations for the three and nine month periods ended September 30, 2012 includes Catalyst's total revenues of $1.5 billion following consummation of the Merger.

The Merger was accounted for under the acquisition method of accounting with the Company treated as the acquiring entity. Accordingly, the consideration paid by the Company to complete the acquisition has been allocated to the assets acquired and liabilities assumed based upon their estimated fair values as of the date of acquisition. The carrying values for current assets and liabilities were deemed to approximate their fair values due to the short-term nature of their maturities. The fair values for acquired customer relationships intangible asset was valued using an excess earnings model based on expected future revenues derived from the customers acquired. The excess of the purchase price over the estimated fair values of the net assets acquired was recorded as goodwill.

All of the assets and liabilities recorded for the Merger are included within the Company's PBM segment. Goodwill is non-amortizing for financial statement purposes. Goodwill of $525 million related to the Catalyst Merger is tax deductible. The goodwill recognized by the Company represents many of the synergies and business growth opportunities that may be realized from this Merger. The synergies include improved pricing from the Company's suppliers due to the increased volume of prescription drug purchases, pull through opportunities of the combined companies' mail and specialty service offerings, and a more efficient leveraging of resources to achieve operating profits.

The purchase price of the acquired Catalyst operations was comprised of the following (in thousands):

Cash paid to Catalyst shareholders	$	1,415,276
Fair value of common shares issued (a)	3,238,141
Fair value of warrants and stock options issued (b)	19,824
Total purchase price	$	4,673,241

(a) Valued based on the number of outstanding shares immediately prior to the Merger multiplied by the exchange ratio of 1.3212, multiplied by the closing market price of Catamaran shares on July 2, 2012.

(b) The Black-Scholes pricing model was used to calculate the fair value of the replacement warrants and stock options issued.

9

CATAMARAN CORPORATION

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following summarizes the preliminary fair values assigned to the assets acquired and liabilities assumed at the acquisition date and are subject to change as the valuation processes are not complete. Final determination of the fair values may result in further adjustments to the amounts presented below (in thousands):

	Initial Amounts Recognized at Acquisition Date
Cash and cash equivalents	$	93,775
Other current assets	695,888
Total current assets	789,663
Property and equipment	55,659
Goodwill	4,010,235
Customer relationships intangible	1,184,800
Other long-term assets	31,515
Total assets acquired	6,071,872
Accounts Payable	338,819
Pharmacy benefit management rebates payable	176,202
Accrued expenses and other current liabilities	187,851
Long-term debt	311,994
Other long-term liabilities	385,375
Total liabilities assumed	1,400,241
Non-controlling interest	(1,610		)
Net assets acquired	$	4,673,241

During the three and nine month periods ended September 30, 2012, the Company recognized $43.0 million of amortization expense from intangible assets acquired in the Catalyst Merger. Amortization associated with the Catalyst Merger for the remainder of 2012 is expected to be $43.0 million. The estimated fair value of the customer relationship intangible asset is $1.2 billion with a useful life of 9 years. The intangible asset acquired will not have any residual value at the end of the amortization period. There were no in-process research and development assets acquired.

Separate Transactions and Preexisting Relationships

During the three and nine months ended September 30, 2012, the Company incurred transaction and integration expenses related to the Merger, exclusive of debt financing costs, totaling $19.8 million and $26.4 million, respectively. Included in this amount are $17.2 million and $22.5 million in transaction expenses, for the three and nine month periods ended September 30, 2012, respectively. These costs are included in selling, general and administrative ("SG&A") expenses in each period. Additionally, during the three and nine months ended September 30, 2012, the Company recorded $16.3 million in charges to selling, general and administrative expenses due to transactions recognized separately from the acquisition of assets and assumptions of liabilities from the Merger. The charges recorded related to $3.5 million in contract settlements and terminations made by Catalyst prior to the acquisition that had future benefit to the Company, $3.1 million for payments made to Catalyst employees based on contractual arrangements which had future benefit to the Company, and $9.7 million in severance charges incurred subsequent to the close of the Merger.

Due to the previous contractual relationship between the Company and Catalyst, there were pre-existing transactions between the entities which resulted in approximately $4.1 million in accounts receivable due to the Company from Catalyst, mainly for HCIT transaction processing services provided. No gain or loss was generated from the subsequent settlement of these pre-existing balances.

HealthTran LLC Acquisition

In January 2012, the Company completed the acquisition of all of the outstanding equity interests of HealthTran LLC (“HealthTran”), a full-service PBM, in exchange for $250 million in cash, subject to certain customary post-closing adjustments, in each case upon the terms and subject to the conditions contained in the HealthTran purchase agreement. HealthTran was an existing HCIT client and utilizes a Company platform for its claims adjudication services. The acquisition provides the opportunity to create new revenues from HealthTran's customer base and generate cost savings through purchasing and SG&A synergies. Costs related to the HealthTran acquisition of $0.9 million were included in selling, general and administrative expenses for the year ended December 31, 2011. The results of HealthTran have been included in the Company's results since January 1, 2012.

The HealthTran acquisition was accounted for under the acquisition method of accounting with the Company treated as the acquiring entity. Accordingly, the consideration paid by the Company to complete the acquisition has been allocated to the assets acquired and liabilities assumed based upon their estimated fair values as of the date of acquisition. The carrying values for current assets and liabilities were deemed to approximate their fair values due to the short-term nature of their maturities. Fair values for acquired amortized intangible assets were determined as follows: customer relationships were valued using an excess earnings model based on expected future revenues derived from the customers acquired,

10

CATAMARAN CORPORATION

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

non-compete agreements were valued using discounted cash flow models based on expected future results of HealthTran, trademarks/tradenames were valued using a royalty savings model based on future projected revenues of HealthTran and applicable market royalty rates and licenses utilized a replacement cost approach. The excess of the purchase price over the estimated fair values of the net assets acquired was recorded as goodwill. All of the assets and liabilities recorded for the HealthTran acquisition are included within the Company's PBM segment. Goodwill is non-amortizing for financial statement purposes and the entire goodwill balance generated from the HealthTran acquisition is tax deductible. The goodwill recognized by the Company represents many of the synergies and business growth opportunities that may be realized from this acquisition. The synergies include the expansion of the Company's product offerings and improved pricing from the Company's suppliers due to the increased volume of prescription drug purchases.

The following summarizes the preliminary fair values assigned to the assets acquired and liabilities assumed at the acquisition date and are subject to change as the valuation processes are not complete. Final determination of the fair values may result in further adjustments to the amounts presented below (in thousands):

	Initial Amounts Recognized at Acquisition Date (a)		Measurement Period Adjustments (b)			Current Amounts Recognized at Acquisition Date
Current assets	$	30,654	$	233		$	30,887
Property and equipment	2,787		—			2,787
Goodwill	173,642		2,300			175,942
Intangible assets	77,130		(2,600		)	74,530
Total assets acquired	284,213		(67		)	284,146
Current liabilities	36,784		(776		)	36,008
Total liabilities assumed	36,784		(776		)	36,008
Net assets acquired	$	247,429	$	709		$	248,138

(a) As previously reported in the Company's Form 10-Q for the period ended March 31, 2012.

(b) These measurement period adjustments were recorded to reflect an additional $1.0 million due to the former HealthTran owners for the working capital reconciliation and changes in the estimated fair values of the associated assets acquired and liabilities assumed based on factors existing as of the acquisition date.

During the three and nine month periods ended September 30, 2012, the Company recognized $4.2 million and $14.6 million, respectively, of amortization expense from intangible assets acquired in the HealthTran acquisition. Amortization associated with the HealthTran acquisition for the remainder of 2012 is expected to be $4.3 million.

The estimated fair values and useful lives of intangible assets acquired are as follows (dollars in thousands):

	Fair Value		Useful Life
Trademarks/Trade names	$	1,750	6 months
Customer relationships	69,800		4-9 years
Non-compete agreements	2,600		5 years
License	380		3 years
Total	$	74,530

None of the acquired intangible assets will have any residual value at the end of the amortization periods. There were no in-process research and development assets acquired.

PTRX and SaveDirectRx Acquisitions

On October 3, 2011, the Company completed the acquisitions of PTRX, Inc. (“PTRX”), a full-service PBM, and its exclusive mail-order pharmacy provider and SaveDirectRx, Inc. (“SaveDirectRx”), both based in San Antonio, Texas. The combined purchase price was $77.2 million in cash, subject to certain customary post-closing adjustments, with an opportunity for the former owners of SaveDirectRx to earn an additional $4.5 million, subject to the achievement of certain performance targets through 2012. The results of operations of these businesses have been included in the Company's consolidated statements of operations from the date of their acquisition.

The purchase price of the acquired PTRX and SaveDirectRx operations was comprised of the following (in thousands):

Cash payment to PTRX shareholders	$	77,181
Fair value of contingent purchase price	4,225
Total purchase price	$	81,406

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CATAMARAN CORPORATION

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The SaveDirectRx purchase agreement includes contingent purchase price consideration in the form of an earn-out payment of up to $4.5 million contingent upon the SaveDirectRx book of business meeting or exceeding certain gross profit and revenue targets for the 2012 fiscal year. The $4.2 million fair-value of the contingent purchase price was accrued at the date of acquisition as part of the total consideration transferred. The Company utilized a probability weighted discounted cash flow method based on the expected future performance of SaveDirectRx and its ability to meet the target performance objectives to arrive at the fair value of the contingent consideration. The Company will continue to reassess the fair value of the contingent purchase price until the applicable earn-out period has lapsed. Any future changes to the fair value of the contingent purchase price will be recognized in earnings of the Company. As the fair value measurement for the contingent consideration is based on inputs not observed in the market, the measurement is classified as a level 3 measurement as defined by the fair value hierarchy. Refer to Note 14— Fair Value for further detail.

Costs related to the PTRX and SaveDirectRx acquisitions were insignificant. Due to the previous contractual relationship between the Company and PTRX and SaveDirectRx, there were pre-existing transactions between the entities which resulted in approximately $2.4 million in accounts receivable due to the Company from PTRX and SaveDirectRx, mainly for PBM services provided, and approximately $2.6 million due to PTRX and SaveDirectRx primarily for pharmacy benefit management rebates. No gain or loss was generated from the subsequent settlement of these pre-existing balances.

The PTRX and SaveDirectRx acquisitions were accounted for under the acquisition method of accounting with the Company treated as the acquiring entity. Accordingly, the consideration paid by the Company to complete the acquisitions has been allocated to the assets acquired and liabilities assumed based upon their estimated fair values as of the date of acquisition. The assets and liabilities recorded for PTRX and SaveDirectRx were recorded in the PBM segment. Goodwill is non-amortizing for financial statement purposes and $25 million of the goodwill balance generated from the PTRX and SaveDirectRx acquisitions is tax deductible.

The following summarizes the fair values assigned to the assets acquired and liabilities assumed at the acquisition date. The Company does not anticipate further material adjustments to the fair value of the assets acquired and liabilities assumed.

(in thousands)	Initial Amounts Recognized at Acquisition Date (a)		Measurement Period Adjustments (b)			Current Amounts Recognized at Acquisition Date
Current assets	$	19,063	$	(771	)	$	18,292
Property and equipment	573		—			573
Goodwill	61,450		(1,054		)	60,396
Intangible assets	25,380		—			25,380
Total assets acquired	106,466		(1,825		)	104,641
Current liabilities	19,476		(1,825		)	17,651
Deferred income taxes	5,584		—			5,584
Total liabilities assumed	25,060		(1,825		)	23,235
Net assets acquired	$	81,406	$	—		$	81,406

(a) As previously reported in the Company's annual report on Form 10-K for the year ended December 31, 2011.

(b) These measurement period adjustments were recorded to reflect changes in the estimated fair values of the associated assets acquired and liabilities assumed based on factors existing as of the acquisition date. These adjustments were not recast in the 2011 consolidated financial statements as they were not deemed material.

During the three and nine month periods ended September 30, 2012, the Company recognized $1.2 million and $3.7 million, respectively, of amortization expense from intangible assets acquired in the PTRX and SaveDirectRx acquisitions. Amortization related to these acquisitions for the remainder of 2012 is expected to be $1.1 million.

The estimated fair values and useful lives of intangible assets acquired are as follows (dollars in thousands):

	Fair Value		Useful Life
Trademarks/Trade names	$	400	6 months
Customer relationships	20,800		8 years
Non-compete agreements	3,800		3-4 years
Licenses	380		3 years
Total	$	25,380

None of the acquired intangible assets will have any residual value at the end of the amortization periods. There were no in-process research and development assets acquired.

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CATAMARAN CORPORATION

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information presents the combined historical results of operations of the Company, PTRX, SaveDirectRx, HealthTran and Catalyst as if the acquisitions had occurred on January 1, 2011. The unaudited pro forma financial information includes certain adjustments related to the acquisitions, such as increased amortization from the fair value of intangible assets acquired, and consequential income tax effects from the acquisition. Unaudited pro forma results of operations are as follows (in thousands, except share and per share amounts):

	Three Months Ended September 30				Nine Months Ended September 30
	2012		2011		2012		2011
Revenue	$	3,199,249	$	2,791,875	$	9,609,204	$	7,598,335
Gross profit	$	227,025	$	186,212	$	638,586	$	491,831
Net income	$	36,775	$	27,269	$	92,608	$	55,108
Earnings per share:
Basic	$	0.18	$	0.13	$	0.45	$	0.27
Diluted	$	0.18	$	0.13	$	0.45	$	0.27
Weighted average shares outstanding:
Basic	203,505,355		203,282,474		204,350,013		202,841,086
Diluted	204,439,048		204,880,978		205,477,142		204,554,068

This unaudited pro forma financial information is not intended to represent or be indicative of what would have occurred if these transactions had taken place on the date presented and is not indicative of what the Company's actual results of operations would have been had the acquisitions been completed at the beginning of the period indicated above. Further, the pro forma combined results do not reflect one-time costs to fully integrate and operate the combined organization more efficiently or anticipated synergies expected to result from the combinations and should not be relied upon as being indicative of the future results that the Company will experience.

6. Variable Interest Entity

Catalyst entered into a purchase agreement on December 16, 2011, and made an initial capital contribution of $5.0 million to Script Relief LLC,("Script Relief"), a Delaware limited liability company, in exchange for a 19.9% ownership interest. On March 1, 2012 Catalyst made an additional $5.0 million capital contribution to Script Relief due to its achievement of certain milestones, thereby increasing Catalyst's ownership interest to 47%. Script Relief operates a direct to consumer pharmacy benefit business including discount card offerings and associated activities. The Company evaluated this transaction and determined that Script Relief is a variable interest entity with Catamaran being the primary beneficiary, as the Company's underlying PBM and pharmacy contracts represent Script Relief's key business operations and the Company has the power to direct these activities. As a result, Script Relief is consolidated in the Company's consolidated financial statements and with the amounts attributable to the non-controlling interests disclosed. The assets and liabilities of Script Relief were recorded at fair value as of the date of the Merger with Catalyst. The carrying amount of the assets and liabilities, and the impact of the operating results of this consolidated variable interest entity are not material to our consolidated financial statements.

Beginning in December 2012, and through April 2016, the Company has the right to purchase all of the outstanding interests owned by the other equity member of Script Relief. The purchase of the outstanding interests is at our sole discretion and is subject to a contractually-defined purchase price. If the Company elects to exercise this call option, it contains a minimum purchase price of $50.0 million, which could be increased based on operating performance. Conversely, if the right to purchase is not exercised in three years, Script Relief has the right to purchase the Company's ownership interest in Script Relief at original cost plus the rate of a defined dividend. There are no terms that would require the Company to provide additional financial support to the variable interest entity.

7. Goodwill and Other Intangible Assets

Goodwill and indefinite-lived intangible assets are reviewed for impairment annually or more frequently if impairment indicators arise. The Company allocates goodwill to both the PBM and HCIT segments. There were no impairments of goodwill or indefinite-lived intangible assets during the three or nine months ended September 30, 2012 and 2011.

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CATAMARAN CORPORATION

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The changes in the carrying amounts of goodwill by reportable segment for the nine months ended September 30, 2012 are as follows (in thousands):

	PBM		HCIT	Total
Balance at December 31, 2011	271,380		19,665	291,045
HealthTran acquisition (a)	173,642		—	173,642
Catalyst merger (b)	4,010,235		—	4,010,235
Separate transactions (c)	(4,607	)	—	(4,607	)
Measurement period adjustments (d)	1,267		—	1,267
Balance at September 30, 2012	4,451,917		19,665	4,471,582

a) Initial goodwill recorded for the the acquisition of HealthTran in January 2012.

b) Initial goodwill recorded in connection with the Merger with Catalyst in July 2012.

c) Adjustments to goodwill for transactions entered into and executed by Catalyst prior to the Merger deemed to have future benefit to the Company and not recorded as part of purchase accounting.

d) Adjustments to purchase price, including settlement of working capital adjustment for recent acquisitions during the measurement period. The measurement period adjustments were not recast in the 2011 consolidated financial statements as they were not deemed material.

Definite-lived intangible assets are amortized over the useful lives of the related assets. The components of intangible assets were as follows (in thousands):

	September 30, 2012						December 31, 2011
	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Customer relationships	$	1,329,874	$	104,849	$	1,225,025	$	92,274	$	39,158	$	53,116
Acquired software	3,765		3,710		55		3,765		3,522		243
Trademarks/Tradenames	14,070		5,808		8,262		12,320		2,831		9,489
Non-compete agreements	6,990		3,796		3,194		7,810		2,226		5,584
Licenses	22,480		619		21,861		1,680		335		1,345
Total	$	1,377,179	$	118,782	$	1,258,397	$	117,849	$	48,072	$	69,777

Total amortization associated with intangible assets at September 30, 2012 is estimated to be $51.4 million for the remainder of 2012, $195.2 million in 2013, $179.9 million in 2014, $164.8 million in 2015, $143.5 million in 2016, and $523.6 million in total for years after 2016 through 2023.

8. Debt

The following table sets forth the components of our long-term debt (in thousands) as of September 30, 2012. At December 31, 2011, the Company did not have any outstanding long-term debt.

Senior secured term loan facility with an interest rate of 2.25% at September 30, 2012	$	1,071,925
Senior secured revolving credit facility due July 2, 2017 with an interest rate of 2.25% at September 30, 2012	200,000
Less current maturities	(27,500		)
Long-term debt	$	1,244,425

(a) 2012 Credit Agreement

Concurrent with the consummation of the Merger on July 2, 2012, the Company executed a $1.8 billion credit agreement consisting of (i) a five-year senior secured term loan facility in the amount of $1.1 billion (the “Term A Facility”) and (ii) a five-year senior secured revolving credit facility in the amount of $700 million (the “Revolving Facility,” and, together with the Term A Facility, the “ 2012 Credit Agreement”). In July 2012, the Company borrowed $1.4 billion under the 2012 Credit Agreement consisting of $1.1 billion under the Term A Facility and $300 million under the Revolving Facility to fund in part the aggregate cash consideration payable to Catalyst stockholders in the Merger, repay and discharge existing indebtedness of the Company and Catalyst and pay related transaction fees and expenses. Net proceeds received under the Term A Facility were $1.1 billion less $29.6 million in debt discount. The debt discount related to the Term A Facility is presented on the consolidated balance sheet as a reduction to long-term debt and is being amortized to interest expense over the life of the Term A Facility using the straight-line method as this method does not result in a materially different interest expense than the effective interest rate method. Additionally, the Company paid $18.8 million in debt issuance costs related to the Revolving Facility. The financing costs related to the Revolving Facility are presented on the consolidated balance sheet as other assets and are being amortized to interest expense over the life of the Revolving Facility

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CATAMARAN CORPORATION

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

using the straight-line method. The amortization related to financing costs and debt discounts totaled $2.5 million and $2.7 million for the three and nine month periods ended September 30, 2012, respectively.

In August 2012, the Company repaid $100 million of the amount borrowed under the Revolving Facility. As of September 30, 2012, the Company had $500 million of remaining available borrowing capacity under the Revolving Credit Facility.

Principal amounts outstanding under the Revolving Facility of the 2012 Credit Agreement are due and payable in full on July 2, 2017. Principal repayments on the Term A Facility will be due as follows (in thousands):

Year	Amount due
2013	$	41,250
2014	75,625
2015	123,750
2016	199,375
2017	660,000
Total	$	1,100,000

The interest rates applicable to the Term A Facility and the Revolving Facility are based on a fluctuating rate of interest measured by reference to either, at the Company’s option, (i) a base rate, plus an applicable margin, or (ii) an adjusted LIBOR, plus an applicable margin. The initial applicable margin for all borrowings is 1.00% per annum with respect to base rate borrowings and 2.00% per annum with respect to LIBOR borrowings. The applicable margin, in each case, will be adjusted from time to time based on the Company’s consolidated leverage ratio for the previous fiscal quarter. During an event of default, default interest is payable at a rate that is 2.00% higher than the rate otherwise applicable.

The interest rate on the amounts drawn under the 2012 Credit Agreement at September 30, 2012 was 2.25%.

All existing and future, direct and indirect, material subsidiaries are required to become guarantors of all of the Company’s obligations under the 2012 Credit Agreement. Pursuant to a Subsidiary Guaranty dated July 2, 2012, made by the subsidiary guarantors party thereto in favor of JPMorgan Chase Bank, N.A. (“JPMCB”), as administrative agent, the Subsidiary Guarantors guarantee all obligations of the Company under the 2012 Credit Agreement. Pursuant to a Security Agreement dated July 2, 2012 (the “Security Agreement”), among the Company, the Subsidiary Guarantors and JPMCB, as collateral agent and a Pledge Agreement dated July 2, 2012, among the Company, the Subsidiary Guarantors and JPMCB, as collateral agent, the Company and each Subsidiary Guarantor pledged substantially all of their assets, subject to certain exceptions, to secure the Company’s obligations under the 2012 Credit Agreement.

The 2012 Credit Agreement also requires the Company to maintain a consolidated leverage ratio at all times less than or equal to 3.75 to 1 initially, with step-downs to (i) 3.50 to 1 beginning with the fiscal quarter ending December 31, 2012, (ii) 3.25 to 1 beginning with the fiscal quarter ending December 31, 2013 and (iii) 3.00 to 1 beginning with the fiscal quarter ending December 31, 2014. The Company’s consolidated leverage ratio is defined as the ratio of (1) consolidated total debt to (2) consolidated EBITDA (with add-backs permitted to consolidated EBITDA for (a) fees and expenses related to the Merger, the closing of the 2012 Credit Agreement, a specified historic acquisition and future permitted acquisitions, (b) synergies projected by the Company in good faith to be realized as a result of the Merger in an aggregate amount not to exceed a specified threshold and (c) fees and expenses and integration costs related to historical acquisitions of Catalyst and its subsidiaries in an aggregate amount not to exceed a specified threshold). The Company is also required to maintain an interest coverage ratio greater than or equal to 4.00 to 1, where the interest coverage ratio is defined as the ratio of (1) consolidated EBIT (with add-backs permitted to consolidated EBIT for (x) fees and expenses related to the Merger, the closing of the 2012 Credit Agreement, a specified historic acquisition and future permitted acquisitions, (y) synergies projected by the Company in good faith to be realized as a result of the Merger in an aggregate amount not to exceed a specified threshold and (z) fees and expenses and integration costs related to historical acquisitions of Catalyst and its subsidiaries in an aggregate amount not to exceed a specified threshold) to (2) consolidated interest expense, tested at the end of each fiscal quarter for the rolling four fiscal quarter period then most recently ended. As of September 30, 2012, the Company was in compliance with the covenants of the 2012 Credit Agreement.

The carrying value of the Company's debt at September 30, 2012 approximates its fair value.

(b) 2011 Credit Agreement

On December 16, 2011, the Company entered into a Credit Agreement (the “2011 Credit Agreement”) with JPMCB, as a lender and as administrative agent, and other financial institutions within the syndication, with respect to a five-year senior unsecured revolving credit facility. The 2011 Credit Agreement provided that, upon the terms and subject to the conditions set forth therein, the lenders will make loans to the Company from time to time, with an initial aggregate revolving commitment of $350 million, subject to increase from time to time up to a maximum aggregate revolving commitment of $450 million. On January 3, 2012, the Company borrowed $100 million under the 2011 Credit Agreement to pay a portion of the consideration in connection with the acquisition of HealthTran and certain transaction fees and expenses related to the acquisition. In connection with the 2011 Credit Agreement, the Company incurred approximately $1.6 million in financing costs. The financing costs were presented on the consolidated balance sheet as other assets and were amortized to interest expense over the life of the 2011 Credit Agreement using the straight-line method. In connection with the Merger, the Company terminated its 2011 Credit Agreement after

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CATAMARAN CORPORATION

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

repaying the outstanding balance in July 2012 and executed a new credit agreement as discussed above.

9. Common Shares and Stock-Based Compensation

(a) Issuance of common shares

On May 16, 2012, the Company completed a public offering of 12.0 million of its common shares at a price to the public of $45.30 per share. The net proceeds to the Company from the offering were approximately $518.8 million, after deducting the underwriting discounts and commissions and offering expenses. The Company used part of the net proceeds from the offering to pay a portion of the cash component of the Merger consideration and other related fees and expenses in connection with the Merger and the balance for general corporate purposes.

On July 2, 2012, the Company issued 66.8 million common shares and 0.5 million warrants in connection with the Catalyst Merger. See Note 5— Business Combinations for further information related to the Merger.

(b) Equity incentive plans

In July 2012, the maximum common shares of the Company allowed to be issued under the Catamaran Corporation Long-Term Incentive Plan (“LTIP”) was increased by 5 million, after the Company's shareholders approved an amendment to the LTIP at a Special Meeting of Shareholders of the Company on July 2, 2012.

In connection with the closing of the Merger with Catalyst on July 2, 2012, the Company assumed the 2003 HealthExtras, Inc. Equity Incentive Plan (the “2003 Plan”) and the Catalyst Health Solutions, Inc. 2006 Stock Incentive Plan (the “2006 Plan” and, together with the 2003 Plan, the "Catalyst Plans”), each as amended and adjusted for the purpose of granting awards to certain employees of Catalyst who continue their employment with the Company subsequent to the close of the Merger or to newly hired employees of the Company who were not employed with the Company as of the close of the Merger. The maximum common shares of the Company allowed to be issued under the assumed Catalyst Plans is 1,492,014.

(c) Stock-based compensation

During the three-month periods ended September 30, 2012 and 2011, the Company recorded stock-based compensation expense of $6.3 million and $2.4 million, respectively. During the nine-month periods ended September 30, 2012 and 2011, the Company recorded stock-based compensation expense of $13.2 million and $6.5 million, respectively. There were 7,783,940 and 1,113,129 stock-based awards available for grant under the LTIP and Catalyst Plans, respectively as of September 30, 2012.

(i) Stock options

The Black-Scholes option-pricing model was used to estimate the fair value of the stock options issued in each period at the grant date. Below is a summary of options granted and the assumptions utilized to derive fair value of the stock options under the Black-Scholes option-pricing model:

	Nine Months Ended September 30,
	2012		2011
Total stock options granted	404,652		439,108
Volatility	47.2%-49.2%		48.6%-49.5%
Risk-free interest rate	0.65% - 0.83%		0.9%-2.2%
Expected life (in years)	4.5		4.5
Dividend yield	—		—
Weighted-average grant date fair value	$	29.40	$	10.81

As of September 30, 2012, stock options outstanding consisted of 48,292 Canadian dollar stock options at a weighted-average exercise price of Canadian $3.51 and 1,676,982 U.S. dollar stock options at a weighted-average exercise price of $19.13. In total there was $8.6 million of unrecognized compensation cost related to stock options, which is expected to be recognized over a weighted-average period of 2.9 years.

(ii) Restricted stock units

During the nine months ended September 30, 2012, the Company granted 653,100 time-based restricted stock units (“RSUs”) and 268,912 performance-based RSUs to its employees and non-employee directors with a weighted-average grant date fair value of $38.46 per share. The grant date fair value is established for RSUs based on the market price at the grant date. Time-based RSUs vest on a straight-line basis over a range of two to four years and performance-based RSUs cliff vest based upon the achievement of certain agreed upon three-year cumulative performance conditions.

At September 30, 2012, there were 957,638 time-based RSUs and 683,596 performance-based RSUs outstanding, with a total of $35.9 million

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CATAMARAN CORPORATION

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

of unrecognized compensation cost expected to be recognized over a weighted-average period of 2.9 years.

The number of outstanding performance-based RSUs as of September 30, 2012 assumes the associated performance targets will be met at the maximum level.

10. Segment Information

The Company reports in two operating segments: PBM and HCIT. The Company evaluates segment performance based upon revenue and gross profit. Financial information by segment is presented below (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
PBM:
Revenue	$	3,150,755	$	1,256,369	$	6,493,029	$	3,511,148
Cost of revenue	2,940,060		1,188,197		6,094,664		3,330,886
Gross profit	$	210,695	$	68,172	$	398,365	$	180,262
Total assets at September 30	$	7,146,899	$	690,445
HCIT:
Revenue	$	40,025	$	30,921	$	117,551	$	85,833
Cost of revenue	15,829		16,751		48,132		45,973
Gross profit	$	24,196	$	14,170	$	69,419	$	39,860
Total assets at September 30	$	226,309	$	306,653
Consolidated:
Revenue	$	3,190,780	$	1,287,290	$	6,610,580	$	3,596,981
Cost of revenue	2,955,889		1,204,948		6,142,796		3,376,859
Gross profit	$	234,891	$	82,342	$	467,784	$	220,122
Total assets at September 30	$	7,373,208	$	997,098

11. Income Taxes

The Company’s effective tax rate for the three months ended September 30, 2012 and 2011 was 39.8% and 34.2%, respectively. The Company's effective tax rate for the nine months ended September 30, 2012 and 2011 was 37.2% and 33.7%, respectively. The Company and its subsidiaries file income tax returns in Canadian and U.S. federal jurisdictions, and various provincial, state and local jurisdictions. With a few exceptions, the Company is no longer subject to tax examinations by tax authorities for years prior to 2007. The Company's effective tax rate increased during the three and six months ended September 30, 2012, primarily due to expenses incurred during 2012 related to the Merger that are not tax deductible.

12. Commitments and Contingencies

A number of lawsuits were filed by alleged Catalyst stockholders challenging our proposed merger transaction with Catalyst following our announcement on April 18, 2012 that we had entered into a definitive merger agreement with respect to the Merger.  The complaints in the actions name as defendants Catalyst, Catalyst's directors, the Company and certain wholly-owned subsidiaries of the Company (collectively, “the defendants”).  Five complaints were filed in two different venues:  four complaints in the Court of Chancery of the State of Delaware and one in the Circuit Court for Montgomery County of the State of Maryland.  The plaintiffs in the purported class action complaints generally alleged, among other things, that (i) the Catalyst directors violated their fiduciary duties in connection with their negotiation of and agreement to the merger agreement and the Merger by, among other things, agreeing to allegedly inadequate consideration and preclusive terms, (ii) the Company and certain of its wholly-owned subsidiaries allegedly aided and abetted the Catalyst directors' alleged breaches of fiduciary duties and (iii) the joint proxy statement/prospectus of the Company and Catalyst relating to the Merger allegedly included certain materially misleading disclosures and omissions. The plaintiffs sought, among other things, to enjoin the defendants from consummating the Merger and unspecified compensatory damages, together with the costs and disbursements of the action.  On May 25, 2012, the Delaware Court of Chancery issued a decision and order consolidating the Delaware cases. On June 25, 2012, the defendants entered into a memorandum of understanding with respect to a settlement with the remaining parties to the action in the Court of Chancery in the State of Delaware.  Without agreeing that any of the plaintiffs' claims have merit, the defendants agreed, pursuant to the terms of the memorandum of understanding, to make additional disclosures described in the Company's Current Report on Form 8-K filed June 25, 2012, which supplemented and formed part of the joint proxy statement/prospectus of the Company and Catalyst dated June 1, 2012. In July 2012, the Maryland case was voluntarily dismissed by the plaintiff in that action. On October 24, 2012, the parties to the remaining Delaware cases filed a stipulation of settlement, which is subject to approval by the Delaware Court of Chancery following notice to the Catalyst stockholders. The hearing with respect to such approval by the Delaware Court of Chancery is currently scheduled for February 5, 2013. There can be no assurance that the Delaware Court of Chancery will approve the settlement. The

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CATAMARAN CORPORATION

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

settlement terms provide that the Delaware cases will be dismissed with prejudice against all defendants. The settlement did not affect the amount of the merger consideration paid to the stockholders of Catalyst in the Merger. As of September 30, 2012, the Company had recorded an immaterial liability in the consolidated financial statements relating to the settlement of this matter.

In addition, from time to time in connection with its operations, the Company is named as a defendant in actions for damages and costs allegedly sustained by third party plaintiffs. The Company has considered these proceedings and disputes in determining the necessity of any accruals for losses that are probable and reasonably estimable. In addition, various aspects of the Company’s business may subject it to litigation and liability for damages arising from errors in processing the pricing of prescription drug claims, failure to meet performance measures within certain contracts relating to its services performed, its ability to obtain certain levels of discounts or rebates on prescription purchases from retail pharmacies and drug manufacturers or other actions or omissions. The Company’s recorded accruals are based on estimates developed with consideration given to the potential merits of claims or quantification of any performance obligations. The Company takes into account its history of claims, the limitations of any insurance coverage, advice from outside counsel, and management’s strategy with regard to the settlement or defense of such claims and obligations. While the ultimate outcome of those claims, lawsuits or performance obligations cannot be predicted with certainty, the Company believes, based on its understanding of the facts of these claims and performance obligations, that adequate provisions have been recorded in the accounts where required.

13. Financial Instruments

The Company used variable rate debt to assist in financing its Merger with Catalyst. The Company is subject to interest rate risk related to the variable rate debt. When interest rates increase, interest expense could increase. Conversely, when interest rates decrease, interest expense could also decrease.

In order to manage fluctuations in cash flows resulting from interest rate risk attributable to changes in the benchmark interest rates the Company entered into 3-year interest rate swap agreements with a total notional amount of $500 million to fix the variable LIBOR rate on the Company's term loan to 0.52%, resulting in an effective rate of 2.52% after adding the 2.00% margin per the 2012 Credit Agreement. Under the interest rate swap, the Company receives LIBOR-based variable interest rate payments and makes fixed interest rate payments, thereby creating the equivalent to fixed-rate debt. These interest rate contract derivative instruments were designated as cash flow hedges upon inception in September 2012.

The Company assesses interest rate cash flow risk by continually identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating hedging opportunities. The Company does not enter into derivative instruments for any purpose other than hedging identified exposures. That is, the Company does not speculate using derivative instruments and has not designated any instruments as fair value hedges or hedges of the foreign currency exposure of a net investment in foreign operations.

The fair value of the interest rate swap liability as of September 30, 2012 was $2.6 million. Interest expense for the three and nine months ended September 30, 2012 includes $0.1 million of interest expense reclassified from other comprehensive income into current earnings. As of September 30, 2012, approximately $1.4 million of deferred expenses related to the derivative instruments accumulated in other comprehensive income is expected to be reclassified as interest expense during the next twelve months. This expectation is based on the expected timing of the occurrence of the hedged forecasted transactions.

14. Fair Value

Fair value measurement guidance defines a three-level hierarchy to prioritize the inputs to valuation techniques used to measure fair value into three broad levels, with Level 1 considered the most reliable. During the nine-month period ended September 30, 2012, there were no movements of fair value measurements between Levels 1, 2 and 3. For assets and liabilities measured at fair value on a recurring basis in the consolidated balance sheets, the table below categorizes fair value measurements across the three levels as of September 30, 2012 and December 31, 2011 (in thousands):

	September 30, 2012
	Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Restricted investments	$	—	$	4,710	$	—	$	4,710
Liabilities:
Contingent purchase price consideration	$	—	$	—	$	48,103	$	48,103
Derivative	$	—	$	2,616	$	—	$	—

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CATAMARAN CORPORATION

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	December 31, 2011
	Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Liabilities:
Contingent purchase price consideration	$	—	$	—	$	9,406	$	9,406

When available and appropriate, the Company uses quoted market prices in active markets to determine fair value, and classifies such items within Level 1. Level 1 values only include instruments traded on a public exchange. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability or can be derived principally from or corroborated by observable market data. If the Company were to use one or more significant unobservable inputs for a model-derived valuation, the resulting valuation would be classified in Level 3.

Restricted investments

Pursuant to regulations governing one of the Company's subsidiaries, Catamaran maintains statutory deposits as required by state Medicaid authorities and other agencies of $4.7 million at September 30, 2012. These restricted investments consist primarily of U.S. Treasury notes and are designated as held-to-maturity and are carried at amortized cost, which approximates fair value. The use of these funds is limited to specific purposes as required by each state, or as protection against the insolvency of capitated providers. The Company has the ability to hold these restricted investments until maturity and, as a result, the Company does not expect the value of these investments to decline significantly due to sudden change in market interest rates. As the fair value measurement for the restricted investments are based on quoted prices for similar assets in an active market, these measurements are classified as Level 2 measurements as defined by fair value measurements guidance.

Contingent purchase price consideration

The contingent purchase price consideration liability reflects the fair values of potential future payments related to the acquisitions of SaveDirectRx, MedfusionRx and Walgreens Health Initiatives (acquired by Catalyst in 2011). The potential future payments are contingent upon the acquired entities meeting or exceeding certain revenue, gross profit or client retention targets. The measurement periods of the targets range from 2012 to 2014. As of September 30, 2012, the fair value of the contingent purchase price consideration was $48.1 million, of which, $28.9 million is classified as accrued expenses and other current liabilities in the consolidated balance sheet and $19.2 million is recorded in other long-term liabilities in our balance sheet. The contingent purchase price for Walgreens Health Initiatives has a maximum payout of $40 million. The maximum payout for the SaveDirectRx and MedfusionRx contingent consideration is $4.5 million and $5.5 million, respectively.

The change in the present value of the amount expected to be paid in the future for the contingent purchase price consideration was $0.3 million and $0.6 million for the three and nine months ended September 30, 2012 and was recorded as interest expense in the consolidated income statement. The Company utilized a probability weighted discounted cash flow method to arrive at the fair value of the contingent consideration based on the expected results or the achievement of client retention milestones.

As the fair value measurement for the contingent consideration is based on inputs not observed in the market, these measurements are classified as Level 3 measurements as defined by fair value measurements guidance.

Derivatives

Derivative liabilities relate to the interest rate swap (refer to Note 13 — Financial instruments for further information), which had a fair value of $2.6 million as of September 30, 2012. The fair value adjustment for the three and nine months ended September 30, 2012 is $0.1 million and was recognized as interest expense in the consolidated statements of operations. As the fair value measurement for the derivative instruments are based on quoted prices from a financial institution, these measurements are classified as Level 2 measurements as defined by fair value measurements guidance.

15. Earnings Per Share

The Company calculates basic EPS using the weighted average number of common shares outstanding during the period. Diluted EPS is calculated using the same method as basic EPS, but the Company adds the number of additional common shares that would have been outstanding for the period if the potential dilutive common shares had been issued. The following is the reconciliation between the number of weighted average shares used in the basic and diluted EPS calculations for the three and nine month periods ended September 30, 2012 and 2011:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2012	2011	2012	2011
Weighted average number of shares used in computing basic EPS	203,505,355	124,542,534	153,850,043	124,101,146
Add dilutive common stock equivalents:
Outstanding stock options and restricted stock units (a)	933,693	1,598,504	1,127,139	1,712,982
Weighted average number of shares used in computing diluted EPS	204,439,048	126,141,038	154,977,182	125,814,128

(a) Excludes 1,212,910 and 395,508 common stock equivalents for the three-month periods ended September 30, 2012 and 2011, and 1,021,501 and 612,106 common stock equivalents for the nine-month periods ended September 30, 2012 and 2011 because their effect was anti-dilutive.

16. Concentration Risk

For the three-month periods ended September 30, 2012 and 2011, one customer accounted for 24% and 39% of total revenues, respectively. For the nine-month periods ended September 30, 2012 and 2011, one customer accounted for 35% and 40% of total revenue, respectively.

At September 30, 2012, one customer accounted for 10% of the outstanding accounts receivable balance. At December 31, 2011, one customer accounted for 16% of the outstanding accounts receivable balance.

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the Management’s Discussion and Analysis (“MD&A”) section of the Company’s 2011 Annual Report on Form 10-K. Results of the periods presented are not necessarily indicative of the results to be expected for the full year ending December 31, 2012.

Caution Concerning Forward-Looking Statements

Certain information in this MD&A, in various filings with regulators, in reports to shareholders and in other communications is forward-looking within the meaning of certain securities laws and is subject to important risks, uncertainties and assumptions. This forward-looking information includes, among other things, information with respect to the Company’s anticipated operating results and the Company's objectives and the strategies to achieve those objectives, as well as information with respect to the Company’s beliefs, plans, expectations, anticipations, estimates and intentions. Numerous factors could cause actual results to differ materially from those in the forward-looking statements, including without limitation, our ability to achieve increased market acceptance for our product offerings and penetrate new markets; our dependence on and ability to retain key customers; consolidation in the healthcare industry; our ability to identify and complete acquisitions, manage our growth, integrate acquisitions and achieve expected synergies from acquisitions; our ability to maintain relationships with one or more key pharmaceutical manufacturers and providers; compliance with existing laws, regulations and industry initiatives and future changes in laws or regulations in the healthcare industry; breach of our security by third parties; the existence of undetected errors or similar problems in our software products; our ability to compete successfully; potential liability for the use of incorrect or incomplete data; the length of the sales cycle for our healthcare software solutions; interruption of our operations due to outside sources; maintaining our intellectual property rights and litigation involving intellectual property rights; our ability to obtain, use or successfully integrate third-party licensed technology; our dependence on the expertise of our key personnel; our access to sufficient capital to fund our future requirements; potential write-offs of goodwill or other intangible assets; and the outcome of any legal proceeding that has been or may be instituted against us. This list is not exhaustive of the factors that may affect any of our forward-looking statements and is subject to change.

In addition, numerous factors could cause actual results with respect to the merger with Catalyst Health Solutions, Inc. ("Catalyst" or the "Merger") to differ materially from those in the forward-looking statements, including without limitation, the possibility that the expected efficiencies and cost savings from the Merger will not be realized, or will not be realized within the expected time period; the risk that the Company's and Catalyst's businesses will not be integrated successfully; potential disruption from the Merger making it more difficult to maintain business and operational relationships; the risk of customer attrition; and the impact on the availability of funds for other business purposes due to our debt service obligations and funds required to integrate Catalyst.

When relying on forward-looking information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. In making the forward-looking statements contained in this MD&A, the Company does not assume any significant future acquisitions, dispositions or one-time items. It does assume, however, the renewal of certain customer contracts. Every year, the Company has major customer contracts that come up for renewal. In addition, the Company also assumes new customer contracts. In this regard, the Company is pursuing large opportunities that present a very long and complex sales cycle which substantially affects its forecasting abilities. The Company has assumed certain timing for the realization of these opportunities which it thinks is reasonable but which may not be achieved. Furthermore, the pursuit of these larger opportunities does not ensure a linear progression of revenue and earnings since they may involve significant up-front costs followed by renewals and cancellations of existing contracts. The Company has assumed certain revenues which may not be realized. The Company has also assumed that the material factors referred to in the previous paragraphs will not cause such forward-looking information to differ materially from actual results or events. The foregoing list of factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors. For additional information with respect to certain of these and other factors, refer to the Risk Factors section contained in Item 1A of the Company’s 2011 Annual Report onForm 10-K, and subsequent filings on Form 10-Q.

THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS MD&A REPRESENTS THE COMPANY’S CURRENT EXPECTATIONS AND, ACCORDINGLY, IS SUBJECT TO CHANGE. HOWEVER, THE COMPANY EXPRESSLY DISCLAIMS ANY INTENTION OR OBLIGATION TO UPDATE OR REVISE ANY FORWARD-LOOKING INFORMATION, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE, EXCEPT AS REQUIRED BY APPLICABLE LAW.

Overview

Catalyst Merger

On April 17, 2012, the Company entered into a definitive merger agreement (the "Merger Agreement") to combine the Company and Catalyst Health Solutions, Inc. ("Catalyst") in a cash and stock merger transaction. The Merger was completed on July 2, 2012, following the approval by shareholders of the Company and Catalyst. For financial reporting and accounting purposes, the Company was the acquirer of Catalyst. The unaudited consolidated financial statements reflect the results of operations of Catalyst since the acquisition date.

Additionally, following the completion of the Merger, the Company unveiled a new name and brand for the combined company, Catamaran Corporation ("Catamaran"). In conjunction with the name change, the Company's common shares began trading under the ticker "CTRX" on the NASDAQ and as "CCT" on the Toronto Stock Exchange.

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PBM Business

The Company provides comprehensive PBM services to customers, which include managed care organizations, local governments, unions, corporations, HMOs, employers, workers’ compensation plans, third party health care plan administrators and federal and state government programs through its network of licensed pharmacies throughout the United States. The PBM services include electronic point-of-sale pharmacy claims management, retail pharmacy network management, mail service pharmacy, specialty service pharmacy, Medicare Part D services, benefit design consultation, preferred drug management programs, drug review and analysis, consulting services, data access and reporting and information analysis. Included in the Company's PBM offerings are the fulfillment of prescriptions through the Company's own mail and specialty pharmacies. In addition, the Company is a national provider of drug benefits to its customers under the federal government’s Medicare Part D program.

Revenue primarily consists of sales of prescription drugs, together with any associated administrative fees, to customers and participants, either through the Company’s nationwide network of retail pharmacies or its own mail and specialty pharmacies. Revenue related to the sale of prescription drugs is recognized when the claims are adjudicated and the prescription drugs are shipped. Claims are adjudicated at the point-of-sale using an on-line processing system. Profitability of the PBM segment is largely dependent on the volume and type of prescription drug claims adjudicated and sold. Growth in revenue and profitability of the PBM segment is dependent upon attracting new customers, retaining the Company’s current customers and providing additional services to the Company’s current customer base by offering a flexible and cost-effective alternative to traditional PBM offerings. The Company’s PBM offerings allow its customers to gain increased control of their pharmacy benefit cost and maximize savings and quality of care through a full range of pharmacy spend management services, including: formulary administration, benefit plan design and management, pharmacy network management, drug utilization review, clinical services and consulting, reporting and information analysis solutions, mail and specialty pharmacy services and consumer web services.

Under the Company’s customer contracts, retail pharmacies are solely obligated to collect the co-payments from the participants. As such, the Company does not include participant co-payments to retail pharmacies in revenue or cost of revenue. If these amounts were included in revenue and cost of revenue, operating income and net income would not have been affected.

The Company evaluates customer contracts to determine whether it acts as a principal or as an agent in the fulfillment of prescriptions through its retail pharmacy network. The Company acts as a principal in most of its transactions with customers, and revenue is recognized at the prescription price (ingredient cost plus dispensing fee) negotiated with customers, plus an administrative fee, if applicable (“gross reporting”). Gross reporting is appropriate when the Company (i) has separate contractual relationships with customers and with pharmacies, (ii) has responsibility for validating and managing a claim through the claims adjudication process, (iii) commits to set prescription prices for the pharmacy, including instructing the pharmacy as to how that price is to be settled (co-payment requirements), (iv) manages the overall prescription drug relationship with the patients, who are participants of customers’ plans, and (v) has credit risk for the price due from the customer. In instances where the Company merely administers a customer’s network pharmacy contract to which the Company is not a party and under which the Company does not assume pricing risk and credit risk, among other factors, the Company only records an administrative fee as revenue. For these customers, the Company earns an administrative fee for collecting payments from the customer and remitting the corresponding amount to the pharmacies in the customer’s network. In these transactions, the Company acts as an agent for the customer. As the Company is not the principal in these transactions, the drug ingredient cost is not included in revenue or in cost of revenue (“net reporting”). As such, there is no impact to gross profit based upon whether gross or net reporting is used.

HCIT Business

The Company is also a leading provider of HCIT solutions and services to providers, payors, and other participants in the pharmaceutical supply chain in North America. The Company’s product offerings include a wide range of software products for managing prescription drug programs and for drug prescribing and dispensing. The Company’s solutions are available on a license basis with on-going maintenance and support or on a transaction fee basis using an ASP model. The Company’s payor customers include managed care organizations, health plans, government agencies, employers and intermediaries such as pharmacy benefit managers. The solutions offered by the Company’s services assist both payors and providers in managing the complexity and reducing the cost of their prescription drug programs and dispensing activities.

Profitability of the HCIT business depends primarily on revenue derived from transaction processing services, software license sales, hardware sales, maintenance and professional services. Recurring revenue remains a cornerstone of the Company’s business model and consists of transaction processing services and maintenance. Growth in revenue from recurring sources has been driven primarily by growth in the Company’s transaction processing business in the form of claims processing for its payor customers and switching services for its provider customers. Through the Company’s transaction processing business, where the Company is generally paid based on the volume of transactions processed, the Company continues to benefit from the growth in pharmaceutical drug use in the United States. The Company believes that aging demographics and increased use of prescription drugs will continue to generate demand in the transaction processing business. In addition to benefiting from this industry growth, the Company continues to focus on increasing recurring revenue in the transaction processing area by adding new transaction processing customers to its existing customer base. The recognition of revenue in the HCIT business depends on various factors, including the type of service provided, contract parameters and any undelivered elements.

Industry Overview

The PBM industry is intensely competitive, generally resulting in continuous pressure on gross profit as a percentage of total revenue. In recent years, industry consolidation and dramatic growth in managed healthcare have led to increasingly aggressive pricing of PBM services. Given the pressure on all parties to reduce healthcare costs, the Company expects this competitive environment to continue for the foreseeable future.

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In order to remain competitive, the Company looks to continue to drive purchasing efficiencies of pharmaceuticals to improve operating margins and target the acquisition of other businesses to achieve its strategy of expanding its product offerings and customer base. The Company also looks to retain and expand its customer base by improving the quality of service provided by enhancing its solutions and lowering the total drug spend for customers.

The HCIT industry is increasingly competitive as technologies continue to advance and new products continue to emerge. This rapidly developing industry requires the Company to perpetually improve its offerings to meet customer’s rising product standards. Recent governmental stimulus initiatives to improve the country’s electronic health records should assist the growth of the industry in addition to increased regulatory reporting forecasted by the recent healthcare reform legislation. However, it may also increase competition as more players enter the expanding market.

The complicated environment in which the Company operates presents it with opportunities, challenges, and risks. The Company’s customers are paramount to its success; the retention of existing customers and winning of new customers and members pose the greatest opportunities, and the loss thereof represents an ongoing risk. The preservation of the Company’s relationships with pharmaceutical manufacturers and the Company's network of participating retail pharmacies is very important to the execution of its business strategies. The Company’s future success will be influenced by its ability to drive volume at its specialty and mail order pharmacies and increase generic dispensing rates in light of the significant brand-name drug patent expirations expected to occur over the next several years. The Company’s ability to continue to provide innovative and competitive clinical and other services to customers and patients, including the Company’s active participation in the Medicare Part D benefit and the rapidly growing specialty pharmacy industry, also plays an important part in the Company’s future success.

Competitive Strengths

The Company has demonstrated its ability to serve a broad range of customers from large managed care organizations and state governments to employer groups with fewer than a thousand members. The Company believes its principal competitive strengths are:

Flexible, customized and independent services: The Company believes a key differentiator between itself and its competitors is not only the Company’s ability to provide innovative PBM services, but also to deliver these services on an à la carte basis. This suite offers the flexibility of broad product choice along the entire PBM continuum, enabling enhanced customer control, solutions tailored to the customers’ specific requirements and flexible pricing.

The Company’s business model allows its large customers to license the Company’s products and operate the Company’s systems themselves (with or without taking advantage of the Company’s significant customization, consulting and systems implementation services) and allows its other customers to utilize the Company’s systems’ capabilities on a fee-per-transaction or subscription basis through ASP processing from the Company’s data center.

Leading technology platform: The Company’s technology is robust, scaleable and web-enabled. The Company’s payor offerings efficiently supported over 558 million transactions in 2011. The platform is able to instantly cross-check multiple processes, such as reviewing claim eligibility and adverse drug reaction and properly calculating member, pharmacy and payor payments. The Company’s technology is built on flexible, database-driven rule sets and broad functionality applicable for most types of business. The Company believes it has one of the most comprehensive claims processing platforms in the market.

The Company’s technology platform allows it to provide more comprehensive PBM services by offering customers a selection of services to choose from tailored to meet their unique needs instead of requiring them to accept a one-size-fits-all solution. The Company believes this à la carte offering is a key differentiator from its competitors.

Measurable cost savings for customers: The Company provides its customers with increased control over prescription drug costs and drug benefit programs. The Company’s pricing model and flexible product offerings are designed to deliver measurable cost savings to the Company’s customers. The Company believes its pricing model is a key differentiator from its competitors for the Company’s customers who want to gain control of their prescription drug costs. For example, the Company’s pharmacy network contracts and rebate agreements are made available by the Company to each customer. For customers who select the Company’s pharmacy network and manufacturer rebate services on a fixed fee per transaction basis, there is clarity to the rebates and other fees payable to the customer. The Company believes that its pricing model, together with the flexibility to select from a broad range of customizable services, helps customers realize measurable results and cost savings.

Selected Trends and Highlights for the Three and Nine Months Ended September 30, 2012 and 2011

Business trends

Our results for the three and nine months ended September 30, 2012 reflect the successful execution of our business model, which emphasizes the alignment of our financial interests with those of our clients through greater use of generics and low-cost brands, as well as our mail and specialty pharmacies. The positive trends we saw in 2011, including drug purchasing improvements from increased scale due to acquisitions and growth in our customer base and increased generic usage, have continued to offset the negative impact of various marketplace forces affecting pricing and plan structure, among other items, and thus continue to generate improvements in our results of operations. Additionally, as the regulatory environment evolves, we will continue to make significant investments designed to keep us ahead of the competition.

During the recent quarter, we began integrating Catalyst and we continued to successfully integrate our recent acquisition of HealthTran LLC (“HealthTran”) into our business. The continued integration of Catalyst and HealthTran, as well as new client implementations during 2012,

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have driven overall growth in our top line revenue as well as overall operating results. We also continue to benefit from better management of drug ingredient costs through increased competition among generic manufacturers. The average generic dispensing rate (GDR) or the number of generic prescriptions as a percentage of the total number of prescriptions dispensed for our PBM clients reached 81.7% for the nine months ended September 30, 2012, a 3.6% increase from the same period in 2011. This increase was achieved through a broad range of plan design solutions, helped considerably by a continuing wave of major generic releases. This trend is expected to continue throughout 2012.

Financial results

Total revenue for the three months ended September 30, 2012 was $3.2 billion as compared to $1.3 billion for the same period in 2011. Total revenue for the nine months ended September 30, 2012 was $6.6 billion compared to $3.6 billion for the same period in 2011. The increases are largely attributable to the recent Merger with Catalyst, which was completed on July 2, 2012 and contributed $1.5 billion in revenue since the closing of the Merger, as well as the successful implementation of new customer contracts in 2012. As a result of these items, the Company's adjusted prescription claim volume increased 174.7% to 64.0 million for the third quarter of 2012, as compared to 23.3 million for the third quarter of 2011. Adjusted prescription claim volume increased 94.5% to 131.3 million for the nine months ended September 30, 2012 as compared to 67.5 million for the nine months ended September 30, 2011. Adjusted prescription claim volume equals the Company's retail and specialty prescriptions, plus mail pharmacy prescriptions multiplied by three. The mail pharmacy prescriptions are multiplied by three to adjust for the fact that they typically include approximately three times the amount of product days supplied compared with retail and specialty prescriptions.

Operating income increased $4.6 million, or 11.6%, for the three months ended September 30, 2012, to $44.1 million as compared to $39.5 million for the same period in 2011. Operating income increased $31.3 million, or 31.2%, for the nine months ended September 30, 2012, to $131.4 million as compared to $100.2 million for the same period in 2011. These increases are largely attributable to the recent Merger with Catalyst, which was completed on July 2, 2012, as well as the successful implementation of new customer contracts in 2012. Partially offsetting the growth in operating income during 2012 were transaction and integration expenses related to the Merger. These costs totaled $19.8 million, which includes $17.2 million in acquisition costs, for the three months ended September 30, 2012, and $26.4 million, which includes $22.5 million in acquisition costs, for the nine months ended September 30, 2012.

The Company reported net income attributable to the Company of $20.5 million, or $0.10 per share (fully-diluted), for the three months ended September 30, 2012, as compared to $25.3 million, or $0.20 per share (fully-diluted), for the same period in 2011. Net income attributable to the Company decreased during the three-month period ended September 30, 2012 as compared to the same period in 2011 due to an increase in interest expense as a result of the Company's borrowings utilized to partially finance the Merger with Catalyst, costs incurred to complete the Merger and an increase in amortization expense as a result of intangible assets acquired in the Merger. These additional expenses were offset by increased revenues and operating income as a result of the addition of the Catalyst and HealthTran businesses and other new customer implementations during the year.

Earnings per share attributable to the Company fell in the three-month period ended September 30, 2012 as compared to the same period in 2011 primarily due to the decrease in net income attributable to the Company as previously noted, as well as an increase in common shares of the Company outstanding primarily due to the Company's issuance of approximately 12 million common shares in May 2012 in a public offering and the issuance of 66.8 million shares to complete the Merger with Catalyst. Net income attributable to the Company for the nine months ended September 30, 2012 was $74.1 million or $0.48 per share (fully-diluted), as compared to $65.1 million or $0.52 per share (fully-diluted) for the same period in 2011. The increase in net income is driven by an increase in revenues due to the recent Merger with Catalyst, acquisition of HealthTran, as well as new customer implementations, offset by an increase in SG&A expense, increased amortization of intangibles due to acquisitions and transaction expenses related to the Merger. Earnings per share fell in the nine-month period ended September 30, 2012 as compared to the same period in 2011 primarily due to the increase in common shares of the Company outstanding as noted previously.

Amortization expense included in net income was $51.4 million for the three months ended September 30, 2012 as compared to $3.9 million for the same period in 2011. For the nine months ended September 30, 2012, amortization expense included in net income was $70.7 million as compared to $11.1 million for the same period in 2011.

Business combinations

On July 2, 2012, the Company completed the previously disclosed Merger with Catalyst, a full-service PBM serving more than 18 million lives in the United States and Puerto Rico. The transaction creates the fourth largest PBM in the U.S. by prescription volume, with an annual prescription volume of more than 250 million adjusted PBM scripts and combined annual revenues of approximately $13 billion. Each share of Catalyst common stock outstanding immediately prior to the effective time of the Merger (other than shares held by the Company, Catalyst or any of their respective wholly-owned subsidiaries, or shares with respect to which appraisal rights have been properly exercised) was converted in the Merger into the right to receive 1.3212 of a Company common share and $14.00 in cash. This resulted in the Company issuing approximately 66.8 million shares of common stock, issuing approximately 0.5 million warrants and paying $1.4 billion in cash to Catalyst shareholders to complete the Merger.

In January 2012, the Company completed the acquisition of all of the outstanding equity interests of HealthTran, in exchange for $250 million in cash, subject to certain customary post-closing adjustments, in each case upon the terms and subject to the conditions contained in the HealthTran purchase agreement. HealthTran was an existing HCIT customer and utilizes one of the Company's platforms for its claims adjudication services. The acquisition provides an opportunity to create new revenue streams and generate cost savings through purchasing synergies.

On October 3, 2011, the Company completed its acquisitions of PTRX, a full-service PBM, and its exclusive mail-order pharmacy provider and

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SaveDirectRx, both based in San Antonio, Texas. The purchase price was $77.2 million in cash, with an opportunity for the former owners of SaveDirectRx to earn an additional $4.5 million, subject to the achievement of certain performance targets through 2012. The acquisitions of PTRX and SaveDirectRx are in line with the Company's strategy to acquire assets that currently utilize the Company's technology platform in order to ease the integration into the Company's business. Further, these acquisitions have allowed the Company to extend its presence in the southwestern part of the U.S. and expand its mail pharmacy business.

Recent developments

On September 6, 2012, the Company announced that its board of directors had declared a nominal dividend on the issued and outstanding common shares of the Company to effect a two-for-one stock split. Shareholders of record at the close of business on September 20, 2012 were issued one additional common share for each share owned as of that date. The additional common shares were distributed on October 1, 2012. All share and per share data presented in this report have been adjusted to reflect this stock split.

In July 2012, following the recent completion of the Merger with Catalyst, the Company changed its name from SXC Health Solutions Corp. to Catamaran Corporation to reflect the union of two of the industry's fastest-growing pharmacy benefits management companies. Along with the name change, the Company's shares began being traded under the ticker "CTRX" on the NASDAQ and as "CCT" on the Toronto Stock Exchange ("TSX"), replacing the ticker symbols "SXCI" and "SXC" on the NASDAQ and TSX, respectively.

Concurrent with the consummation of the Merger on July 2, 2012, the Company executed a $1.8 billion credit agreement consisting of (i) a five-year senior secured term loan facility in the amount of $1.1 billion (the “Term A Facility”) and (ii) a five-year senior secured revolving credit facility in the amount of $700 million (the “Revolving Facility,” and, together with the Term A Facility, the “2012 Credit Agreement”). In July, 2012, the Company borrowed $1.4 billion under the 2012 Credit Agreement and utilized the proceeds to partially finance the aggregate cash consideration payable to Catalyst stockholders in the Merger, repay and discharge existing indebtedness of the Company and Catalyst and pay related transaction fees and expenses.  All obligations of the Company with respect to the 2012 Credit Agreement will be guaranteed by certain of its material direct and indirect subsidiaries. Refer to Note 8 — Debt in the notes to the unaudited consolidated financial statements for more information regarding the 2012 Credit Agreement.

On May 16, 2012, the Company announced that it successfully completed its public offering of 11,960,000 of its common shares at a price to the public of $45.30 per share. The net proceeds to the Company from the offering were approximately $518.8 million, after deducting the underwriting discounts and commissions and offering expenses. The Company used the net proceeds from the offering to pay a portion of the cash component of the Merger consideration and to pay certain related fees and expenses and the balance for general corporate purposes.

Results of Operations

Three and nine months ended September 30, 2012 as compared to the three and nine months ended September 30, 2011

	Three Months Ended September 30,					Nine Months Ended September 30,
In thousands, except per share data	2012			2011		2012			2011
Revenue	$	3,190,780		$	1,287,290	$	6,610,580		$	3,596,981
Cost of revenue	2,955,889			1,204,948		6,142,796			3,376,859
Gross profit	234,891			82,342		467,784			220,122
SG&A	133,716			37,371		255,088			104,064
Depreciation of property and equipment	5,717			1,588		10,552			4,764
Amortization of intangible assets	51,380			3,899		70,710			11,125
Operating income	44,078			39,484		131,434			100,169
Interest expense	11,668			435		14,544			1,382
Other expense, net	175			671		520			594
Income before income taxes	32,235			38,378		116,370			98,193
Income tax expense	12,828			13,112		43,311			33,091
Net income	19,407			25,266		73,059			65,102
Less: Net loss attributable to non-controlling interest	(1,070		)	—		(1,070		)	—
Net income attributable to the Company	$	20,477		$	25,266	$	74,129		$	65,102
Diluted earnings per share	$	0.10		$	0.20	$	0.48		$	0.52

Revenue

Revenue increased $1.9 billion, or 147.9%, to $3.2 billion for the three months ended September 30, 2012 as compared to $1.3 billion for the three months ended September 30, 2011. Revenue increased $3.0 billion, or 83.8%, to $6.6 billion for the nine months ended September 30, 2012 as compared to $3.6 billion for the nine months ended September 30, 2011. The increase in revenue for both periods is primarily due to

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the recent Merger with Catalyst, which was completed on July 2, 2012 and contributed $1.5 billion in additional revenue for the three and nine month periods ended September 30, 2012, as well as additional revenues from the acquisition of HealthTran in January 2012 and implementations of new customer contracts in 2012. As a result of the new customer contract implementations and the integration of Catalyst and HealthTran customers, adjusted prescription claim volume increased 174.7% to 64.0 million for the three months ended September 30, 2012 as compared to 23.3 million for the three months ended September 30, 2011. Adjusted prescription claim volume for the PBM segment increased 94.5% to 131.3 million for the nine months ended September 30, 2012 as compared to 67.5 million for the nine months ended September 30, 2011.

Cost of Revenue

Cost of revenue increased $1.8 billion, or 145.3%, to $3.0 billion for the three months ended September 30, 2012, while the cost for the nine months ended September 30, 2012 increased $2.8 billion, or 81.9%, to $6.1 billion. The increase is primarily due to the recent Merger with Catalyst along with increased PBM transaction volumes in 2012 as noted above in the revenue discussion. During the three and nine months ended September 30, 2012, the cost of prescriptions dispensed from the Company's PBM segment accounted for 99% of the cost of revenue. The cost of prescriptions dispensed is substantially comprised of the actual cost of the prescription drugs sold, plus any applicable shipping or dispensing costs.

Gross Profit

Gross profit increased $152.5 million, or 185.3%, to $234.9 million for the three months ended September 30, 2012 as compared to the same period in 2011. Gross profit increased $247.7 million, or 112.5%, to $467.8 million for the nine months ended September 30, 2012 as compared to $220.1 million for the same period in 2011. The increase is mostly due to incremental PBM revenues generated from the recent Merger with Catalyst, new customer implementations in 2012 and the integration of HealthTran customers. Gross profit has increased from 6.4% of revenue to 7.4% of revenueduring the three months ended September 30, 2012 as compared to the same period in 2011. Gross profit has increased from 6.1% of revenue to 7.1% of revenueduring the nine months ended September 30, 2012 as compared to the same period in 2011. The gross profit percentage increased in both periods primarily as a result of synergies realized from the integrations of Catalyst and HealthTran customers during 2012.

SG&A Costs

SG&A costs for the three months ended September 30, 2012 were $133.7 million as compared to $37.4 million for the three months ended September 30, 2011, an increase of $96.3 million, or 257.8%. SG&A cost increased by $151.0 million, or 145.1% to $255.1 million for the nine months ended September 30, 2012 compared to $104.1 million for the same period in 2011. SG&A costs consist primarily of employee costs in addition to professional services costs, facilities and costs not related to revenue. SG&A costs have increased due to the addition of operating costs related to the Company's recent Merger with Catalyst, prior acquisitions of HealthTran, PTRX and SaveDirectRx that were not present during the three and nine months ended September 30, 2011, as well as additional resources added to support the growth of the PBM segment. SG&A expenses also increased due to transaction and integration expenses related to the Merger totaling $19.8 million for the three months ended September 30, 2012, and $26.4 million for the nine months ended September 30, 2012. Additionally, the Company recorded $16.3 million of expenses related to the Merger which were comprised of $6.6 million for transactions entered into by Catalyst prior to the Merger that were deemed to have future benefit to the Company and $9.7 million in severance charges incurred subsequent to the close of the Merger. In addition, SG&A costs include stock-based compensation cost of $6.1 million and $12.6 million for the three and nine months ended September 30, 2012, respectively.

Depreciation

Depreciation expense relates to property and equipment used in all areas of the Company, except for those depreciable assets directly related to the generation of revenue, which is included in cost of revenue in the consolidated statements of operations. Depreciation expense was $5.7 million and $1.6 million for the three months ended September 30, 2012 and 2011, respectively. Depreciation expense was $10.6 million and $4.8 million for the nine months ended September 30, 2012 and 2011, respectively. Depreciation expense will fluctuate based on the level of new asset purchases, as well as the timing of assets becoming fully depreciated. Depreciation expense increased mainly as a result of fixed assets acquired from the Catalyst Merger, HealthTran acquisition, as well as new asset purchases made by the Company in 2012 and 2011.

Amortization

Total amortization expense for the three months ended September 30, 2012 and 2011 was $51.4 million and $3.9 million, respectively, an increase of $47.5 million. Amortization expense for the nine months ended September 30, 2012 and 2011 was $70.7 million and $11.1 million, an increase of $59.6 million. The increase in amortization expense was driven mainly by the amortization of intangible assets acquired in the recent Merger with Catalyst as well as prior acquisitions of HealthTran, PTRX and SaveDirectRx. Amortization expense on all the Company’s intangible assets held as of September 30, 2012 is expected to be approximately $51.4 million for the remainder of 2012. Refer to Note 7 — Goodwill and Other Intangible Assets in the notes to the unaudited consolidated financial statements for more information on amortization expected in future years.

Interest Expense

Interest expense increased to $11.7 million for the three months ended September 30, 2012 from $0.4 million for the same period in 2011. Interest expense increased $13.2 million for the nine months ended September 30, 2012 from $1.4 million for the same period in 2011.The increase for both periods is primarily due to additional interest expense related to the $1.8 billion credit facility entered into in connection to the Merger

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with Catalyst. The Company utilized $1.4 billion of its credit facility to partially finance the Merger with Catalyst. Refer to Note 8 — Debt in the notes to the unaudited consolidated financial statements for more information related to the Company's credit facility.

Income Taxes

The Company recognized income tax expense of $12.8 million for the three months ended September 30, 2012, representing an effective tax rate of 39.8%, as compared to $13.1 million, representing an effective tax rate of 34.2%, for the same period in 2011. The Company recognized income tax expense of $43.3 million for the nine months ended September 30, 2012, representing an effective tax rate of 37.2%, as compared to $33.1 million, representing an effective tax rate of 33.7%, for the same period in 2011. The Company's effective tax rate increased during the three and nine months ended September 30, 2012 primarily due to expenses incurred during 2012 related to the Merger that are not tax deductible, as well as other taxes recognized as a result of the completion of the Merger.

Segment Analysis

The Company reports in two operating segments: PBM and HCIT. The Company evaluates segment performance based on revenue and gross profit. Below is a reconciliation of the Company’s business segments to the unaudited consolidated financial statements.

Three months ended September 30, 2012 as compared to the three months ended September 30, 2011 (in thousands)

	PBM						HCIT						Consolidated
	2012			2011			2012			2011			2012			2011
Revenue	$	3,150,755		$	1,256,369		$	40,025		$	30,921		$	3,190,780		$	1,287,290
Cost of revenue	2,940,060			1,188,197			15,829			16,751			2,955,889			1,204,948
Gross profit	$	210,695		$	68,172		$	24,196		$	14,170		$	234,891		$	82,342
Gross profit %	6.7		%	5.4		%	60.5		%	45.8		%	7.4		%	6.4		%

Nine months ended September 30, 2012 as compared to the nine months ended September 30, 2011 (in thousands)

	PBM						HCIT						Consolidated
	2012			2011			2012			2011			2012			2011
Revenue	$	6,493,029		$	3,511,148		$	117,551		$	85,833		$	6,610,580		$	3,596,981
Cost of revenue	6,094,664			3,330,886			48,132			45,973			6,142,796			3,376,859
Gross profit	$	398,365		$	180,262		$	69,419		$	39,860		$	467,784		$	220,122
Gross profit %	6.1		%	5.1		%	59.1		%	46.4		%	7.1		%	6.1		%

PBM

Revenue was $3.2 billion for the three months ended September 30, 2012, an increase of $1.9 billion, or 150.8%, as compared to the same period in 2011. Revenue was $6.5 billion for the nine months ended September 30, 2012, an increase of $3.0 billion, or 84.9%, as compared to the same period in 2011. The increase in revenue for both periods is primarily due to the recent Merger with Catalyst, which was completed on July 2, 2012, other previous acquisitions, including HealthTran, as well as the implementation of new customer contracts in 2012. As a result of these customer additions, adjusted prescription claim volume for the PBM segment was 64.0 million for the third quarter of 2012 as compared to 23.3 million for the third quarter of 2011. Adjusted prescription claim volume was 131.3 million for the nine months ended September 30, 2012 as compared to 67.5 million for the same period in 2011.

Cost of revenue was $2.9 billion for the three months ended September 30, 2012 as compared to $1.2 billion for the same period in 2011. Cost of revenue was $6.1 billion for the nine months ended September 30, 2012 as compared to $3.3 billion for the same period in 2011. Cost of revenue has increased in line with the increase in PBM revenue and is driven by the increase in prescriptions processed. Cost of revenue in the PBM segment is predominantly comprised of the cost of prescription drugs from retail network transactions, and the cost of prescriptions dispensed at the Company's mail and specialty pharmacies.

Gross profit was $210.7 million for the three months ended September 30, 2012 as compared to $68.2 million for the same period in 2011. Gross profit was $398.4 million for the nine months ended September 30, 2012 as compared to $180.3 million for the same period in 2011. Gross profit increased during the three and nine months ended September 30, 2012 as compared to the same period in 2011 due to the the integration of Catalyst customers acquired as of July 2, 2012 as well as incremental revenue as a result of the HealthTran acquisition and new customer contract implementations. Gross profit percentage was 6.7% and 5.4% for the three months ended September 30, 2012 and 2011, respectively. Gross profit percentage was 6.1% and 5.1% for the nine months ended September 30, 2012 and 2011, respectively. As noted previously, the gross profit percentage has increased for the three and nine months ended September 30, 2012 as compared to the same period in 2011 primarily as a result of synergies realized from the integration of Catalyst and HealthTran customers during 2012.

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HCIT

HCIT revenue consists of transaction processing, professional services, system sales and maintenance contracts on system sales. Total HCIT revenue increased $9.1 million, or 29.4%, to $40.0 million for the three months ended September 30, 2012, as compared to $30.9 million for the same period in 2011. HCIT revenue increased $31.7 million, or 37.0%, to $117.6 million for the nine months ended September 30, 2012, as compared to $85.8 million for the same period in 2011. The increase was primarily due to an increase in revenues earned from transaction processing as a result of increased volume or rates from existing customers and additional revenues earned from Catalyst and HealthTran customers included in the HCIT segment. These increases in revenue were slightly offset by a decrease in transaction processing revenues as a result of the Merger with Catalyst due to Catalyst being a former HCIT customer. There is not a net profit impact of this lost revenue stream on the Company's consolidated results since Catalyst no longer has an associated cost from the HCIT services provided.

Cost of revenue was $15.8 million and $16.8 million for the three months ended September 30, 2012 and 2011, respectively. Cost of revenue was $48.1 million and $46.0 million for the nine months ended September 30, 2012 and 2011, respectively. Cost of revenue includes the direct support costs for the HCIT business, as well as depreciation expense of $0.9 million and $0.6 million for the three-month periods ended September 30, 2012 and 2011, respectively. Depreciation expense included in cost of revenue was $2.4 million and $2.1 million for the nine months ended September 30, 2012 and 2011, respectively. Cost of revenue increased for the three and nine month periods ended September 30, 2012 as compared to the same periods in 2011, primarily due to costs associated with HealthTran customers as a result of the Company's acquisition of HealthTran completed in January 2012.

Gross profit increased by $10.0 million, or 70.8%, to $24.2 million for the three months ended September 30, 2012 as compared to $14.2 million for the same period in 2011. The gross profit percentage was 60.5% for the three months ended September 30, 2012 as compared to 45.8% for the three months ended September 30, 2011. Gross profit increased by $29.6 million, or 74.2%, to $69.4 million for the nine months ended September 30, 2012 as compared to $39.9 million for the same period in 2011. The gross profit percentage was 59.1% for the nine months ended September 30, 2012 as compared to 46.4% for the nine months ended September 30, 2011. The increases in gross profit and gross profit percentage are attributable to revenue increases from transaction processing sales from existing customers as a result of increased volumes and pricing, as well as an increase in system sales, both which carry high gross profit percentages as compared to the Company's other HCIT products.

Non-GAAP Measures

The Company reports its financial results in accordance with GAAP, but Company management also evaluates and makes operating decisions using EBITDA and Adjusted EPS. The Company's management believes that these measures provide useful supplemental information regarding the performance of business operations and facilitate comparisons to its historical operating results. The Company also uses this information internally for forecasting and budgeting as it believes that the measures are indicative of the Company's core operating results. Note however, that these items are performance measures only, and do not provide any measure of the Company's cash flow or liquidity. Non-GAAP financial measures should not be considered as a substitute for measures of financial performance in accordance with GAAP, and investors and potential investors are encouraged to review the reconciliations of EBITDA and Adjusted EPS.

EBITDA Reconciliation

EBITDA is calculated as income prior to interest and other expense, net, income taxes, depreciation and amortization. Management believes it is useful to exclude depreciation, amortization, interest and other expense, net, as these are essentially fixed amounts that cannot be influenced by management in the short term. Note, the add back for depreciation is net of depreciation recorded for the non-controlling interest for the three and nine month periods ended September 30, 2012.

Below is a reconciliation of the Company's reported net income to EBITDA for the three and nine month periods ended September 30, 2012 and 2011.

EBITDA Reconciliation	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2012		2011		2012		2011
	(unaudited)				(unaudited)
Net income attributable to the Company (GAAP)	$	20,477	$	25,266	$	74,129	$	65,102
Add:
Depreciation of property and equipment	6,632		2,235		12,928		6,815
Amortization of intangible assets	51,380		3,899		70,710		11,125
Interest expense	11,668		435		14,544		1,382
Other expense, net	175		671		520		594
Income tax expense	12,828		13,112		43,311		33,091
EBITDA	$	103,160	$	45,618	$	216,142	$	118,109

EBITDA for the three months ended September 30, 2012 was $103.2 million, compared to $45.6 million for the same period of 2011. EBITDA for the nine months ended September 30, 2012 was $216.1 million, compared to $118.1 million for the same period of 2011. The EBITDA growth in both periods was primarily due to additional business generated from the recent Merger with Catalyst, prior acquisitions, as well as

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new customer contract implementations during 2012. This was partially offset by increased costs incurred to support the Company's business growth and recent Merger with Catalyst as well as prior acquisitions.

Adjusted EPS Reconciliation

Adjusted EPS adds back the impact of all amortization of intangible assets, net of tax. Amortization of intangible assets arises from the acquisition of intangible assets in connection with the Company's business acquisitions. The Company excludes amortization of intangible assets from non-GAAP Adjusted EPS because it believes (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of the Company's business operations and (ii) such expenses can vary significantly between periods as a result of new acquisitions and full amortization of previously acquired intangible assets. It should be noted that the use of these intangible assets contributes to revenue in the period presented as well as future periods and that such expenses will recur in future periods.

Below is a reconciliation of the Company's reported net income to Adjusted EPS for the three and nine month periods ended September 30, 2012 and 2011.

Adjusted EPS Reconciliation
(in thousands, except per share data)
	Three Months Ended September 30,												Nine Months Ended September 30,
	2012						2011						2012						2011
	Operational Results			Per Diluted Share			Operational Results			Per Diluted Share			Operational Results			Per Diluted Share			Operational Results			Per Diluted Share
	(unaudited)												(unaudited)
Net income attributable to the Company (GAAP)	$	20,477		$	0.10		$	25,266		$	0.20		$	74,129		$	0.48		$	65,102		$	0.52
Amortization of intangible assets	51,380			0.25			3,899			0.03			70,710			0.45			11,125			0.09
Tax effect of reconciling item	(20,449		)	(0.10		)	(1,333		)	(0.01		)	(26,304		)	(0.17		)	(3,749		)	(0.03		)
Non-GAAP net income attributable to the Company	$	51,408		$	0.25		$	27,832		$	0.22		$	118,535		$	0.76		$	72,478		$	0.58

Adjusted EPS for the three months ended September 30, 2012 was $0.25 as compared to $0.22 in the same period of 2011. Adjusted EPS for the nine months ended September 30, 2012 was $0.76 as compared to $0.58 in the same period of 2011. Increased gross profit as a result of new customer contract implementations, as well as increased business due to the recent acquisitions, helped improve the Company's Adjusted EPS during 2012. This was partially offset by increased costs incurred to support the Company's business growth and recent acquisitions along with an increase in the number of diluted shares during 2012 as compared to 2011, primarily due to the Company's issuance of 12.0 million common shares in May 2012 and the issuance of 66.8 million shares to complete the Merger with Catalyst.

Liquidity and Capital Resources

The Company’s sources of liquidity have primarily been cash provided by operating activities, proceeds from its public offerings, proceeds from credit facilities and stock option exercises. On July 2, 2012, the Company completed its previously disclosed Merger with Catalyst. To complete the Merger, the Company issued approximately 66.8 million shares of its common stock, and paid $1.4 billion in cash to Catalyst shareholders. To raise the capital required to complete the Merger, the Company entered into the 2012 Credit Agreement in July 2012, as discussed previously, and in May 2012, issued 12.0 million of its common shares in a public offering. The Company utilized $1.4 billion of the available $1.8 billion under the 2012 Credit Agreement in July 2012, to partially finance the aggregate cash consideration payable to Catalyst stockholders in the Merger, repay and discharge existing indebtedness of the Company and Catalyst and pay related transaction fees and expenses. Concurrently, the Company terminated its credit agreement it entered into in December 2011 with JPMCB and the other lenders named therein (the" 2011 Credit Agreement") after repaying its outstanding balance in July 2012. As a result of the borrowings from the 2012 Credit Agreement in July 2012, the Company incurred a significant increase in its interest expense during the three months ended September 30, 2012 and expects this expense and the related payments to continue for the remainder of 2012 and throughout the term of the 2012 Credit Agreement. As part of the Merger with Catalyst, the Company assumed approximately $312 million in debt from Catalyst. The Company repaid this outstanding debt in July 2012. Additionally, during September 2012, the Company repaid $100 million of its revolving debt. As of September 30, 2012, the Company had approximately $1.3 billion of outstanding debt under its 2012 Credit Agreement and $500 million of available borrowing capacity thereunder. Refer to Note 8 — Debt in the notes to the unaudited consolidated financial statements for more information regarding the 2012 Credit Agreement and termination of the 2011 Credit Agreement.

The May 2012 public offering of 12.0 million common shares raised approximately $518.8 million in net proceeds. Refer to Note 9 — Common Shares and Stock-Based Compensation in the notes to the unaudited consolidated financial statements for more information regarding the May 2012 public offering.

At September 30, 2012 and December 31, 2011, the Company had cash and cash equivalents totalling $393.0 million and $341.4 million, respectively. As disclosed previously, the Company completed its acquisition of HealthTran in January 2012 and disbursed approximately $243.9 million, net of cash acquired, from cash on hand and borrowings from a draw on the Company's 2011 Credit Agreement. In July 2012, the Company disbursed approximately $1.4 billion from cash on hand and proceeds from the Company's 2012 Credit Agreement to complete the

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Merger, and additionally disbursed $412.7 million from cash on hand and proceeds from the Company's 2012 Credit Agreement to repay the outstanding balance on the 2011 Credit Agreement and the outstanding Catalyst debt assumed by the Company in the Merger. The Company believes that its cash on hand, together with cash generated from operating activities and cash available through the 2012 Credit Agreement, will be sufficient to support planned operations for the foreseeable future, service our outstanding debt obligations, and support the completion of the Merger and integration of Catalyst. At September 30, 2012, cash and cash equivalents consist of cash on hand, deposits in banks, and bank term deposits with original maturities of 90 days or less.

As of September 30, 2012, all of the Company’s cash and cash equivalents were exposed to market risks, primarily changes in U.S. interest rates. Declines in interest rates over time would reduce interest income related to these balances.

Consolidated Balance Sheets

Selected balance sheet highlights at September 30, 2012 are as follows:

• Accounts receivable are comprised of trade accounts receivable from both the PBM and HCIT segments' customers. Accounts receivable increased $435.7 million to $676.1 million at September 30, 2012, from $240.4 million at December 31, 2011, driven by increases in revenue during 2012, largely attributable to the Merger with Catalyst, as well as the implementation of new customer contracts and the integration of HealthTran customers on January 1, 2012. The accounts receivable balance is impacted by changes in revenues, as well as the timing of collections, and is continually monitored by the Company to ensure timely collections and to assess the need for any changes to the allowance for doubtful accounts. The increase in accounts receivable corresponds to the increase in pharmacy benefit claims payable.

• Rebates receivable of $248.2 million relate to billed and unbilled PBM receivables from pharmaceutical manufacturers and third party administrators in connection with the administration of the rebate program where the Company is the principal contracting party. The receivable and related payable are based on estimates, which are subject to final settlement. Rebates receivable increased $214.4 million from $33.8 million at December 31, 2011. The increase in the rebate receivable balance was mostly attributable to Merger with Catalyst, as well as the timing of receipts from pharmaceutical manufacturers and third party administrators.

• As of September 30, 2012, goodwill and other intangible assets were $4.5 billion and $1.3 billion, respectively, increasing $4.2 billion and $1.2 billion, respectively, from December 31, 2011 to September 30, 2012. Goodwill and other intangible assets increased primarily as a result of the Company's Merger with Catalyst. Amortization expense related to the other intangible assets recorded on the Company's balance sheet as of September 30, 2012 is expected to be $51.4 million for the remainder of 2012.

• Accounts payable predominantly relates to amounts owed to retail pharmacies for prescription drug costs and dispensing fees in connection with prescriptions dispensed by the retail pharmacies to the members of the Company’s customers when the Company is the principal contracting party with the pharmacy. Accounts payable increased $414.3 million to $633.7 million, from $219.4 million at December 31, 2011, due to increased prescription claim transactions driven by the Merger with Catalyst, the acquisition of HealthTran and new customer contracts implemented in 2012.

• Pharmacy benefit management rebates payable represents amounts owed to customers for rebates from pharmaceutical manufacturers and third party administrators where the Company administers the rebate program on the customer’s behalf, and the Company is the principal contracting party. The payable is based on estimates, which are subject to final settlement. Pharmacy benefit management rebates payable increased $189.3 million to $248.5 million from $59.2 million at December 31, 2011, primarily as a result of the rebates due to customers acquired in the Catalyst and HealthTran acquisitions.

• Accrued liabilities are mainly comprised of customer deposits, salaries and wages payables, contingent consideration and other accrued liabilities related to operating expenses of the Company. Accrued liabilities have increased to $268.4 million at September 30, 2012 from $66.7 million at December 31, 2011. The increase was driven primarily by liabilities assumed from the Merger with Catalyst, the HealthTran acquisition, contingent consideration that became a current liability in the first quarter of 2012, as well as increased operating expenses of the Company.

Cash flows from operating activities

For the nine months ended September 30, 2012, the Company generated $147.5 million of cash from operating activities, an increase of $62.8 million as compared to the amount of cash provided from operations for the same period in 2011. Cash from operating activities has increased during the nine months ended September 30, 2012 as compared to the same period in 2011 mainly due to an increase in items that decrease net income that do not involve cash, driven by an increase in amortization expense. Additionally, net income increased $9.0 million from the prior year to help increase operating cash flow. Although revenues have increased year over year as a result of increased transaction volume, driven by the Merger with Catalyst and the HealthTran acquisition, the Company's focus on timely customer payments yielded a significant improvement in cash flow impact from accounts receivable as compared to the prior year. Partially offsetting the positive impacts on cash flow during 2012 as compared to 2011 was the change in accounts payables and accrued expenses, due to the timing of when payments are made related to these accounts.

Changes in the Company’s cash from operations result primarily from increased gross profits and the timing of payments on accounts receivable, rebates receivable, and the payment or processing of its various accounts payable and accrued liabilities. The Company continually monitors its balance of trade accounts receivable and devotes ample resources to collection efforts on those balances. Rebates receivable and the related payables are primarily estimates based on claims submitted. Rebates are typically paid to customers on a quarterly basis upon receipt of the billed funds from third-party rebate administrators and pharmaceutical manufacturers. The timing of the rebate payments to customers and

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collections of rebates from third-party rebate administrators and pharmaceutical manufacturers causes fluctuations on the balance sheet, as well as in the Company’s cash from operating activities.

Changes in non-cash items such as depreciation and amortization are caused by the purchase and acquisition of capital and intangible assets. In addition, as assets become fully depreciated or amortized, the related expenses will decrease.

Changes in operating assets and liabilities, as well as non-cash items related to income taxes, will fluctuate based on working capital requirements and the tax provision, which is determined by examining taxes actually paid or owed, as well as amounts expected to be paid or owed in the future.

Cash flows from investing activities

For the nine months ended September 30, 2012, the Company used $1.6 billion of cash for investing activities. This included $1.6 billion used in connection with the Catalyst Merger as well as the acquisition of HealthTran. Additionally, the Company utilized $12.9 million for purchases of property and equipment to support growth in the business. As the Company grows, it continues to purchase capital assets to support increases in network capacity and personnel. The Company monitors and budgets these costs to ensure that the expenditures aid in its strategic growth plan.

Cash flows from financing activities

For the nine months ended September 30, 2012, the Company generated $1.5 billion of cash from financing activities, which consisted primarily of proceeds from the Company's $1.4 billion draw on the 2012 Credit Agreement to finance the Merger as well as the issuance of 12 million common shares in May 2012, which resulted in net proceeds of $518.8 million. Offsetting these proceeds was $18.8 million in fees the Company paid to lenders related to the 2012 Credit Agreement executed in July 2012 as well as the repayment of $512.0 million of debt to extinguish the Company's and Catalyst's previous debt agreements.

Cash flows from financing activities generally fluctuate based on payments for acquisitions, proceeds from or payments on debt borrowings and the timing of option exercises by the Company’s employees.

Future Capital Requirements

The Company’s future capital requirements depend on many factors, including servicing our outstanding debt and the integration of its recent acquisitions. The Company expects to fund its operating and working capital needs, and business growth requirements through cash flow from operations, its cash and cash equivalents on hand and its 2012 Credit Agreement. Refer to Note 8 — Debt in the notesto the unaudited consolidated financial statements for more information on the 2012 Credit Agreement.

The Company expects that purchases of property and equipment will increase in comparison with prior years due to the recent completion of the Merger with Catalyst. The Company cannot provide assurance that its actual cash requirements will not be greater than expected as of the date of this quarterly report. In order to meet business growth goals, the Company will, from time to time, consider the acquisition of, or investment in, complementary businesses, products, services and technologies, which might impact liquidity requirements or cause the issuance of additional equity or debt securities. Any issuance of additional equity or debt securities may result in dilution to shareholders, and the Company cannot be certain that additional public or private financing will be available in amounts or on terms acceptable to the Company, or at all.

If sources of liquidity are not available or if it cannot generate sufficient cash flow from operations during the next twelve months, the Company might be required to obtain additional funds through operating improvements, capital markets transactions, asset sales or financing from third parties or a combination thereof. The Company cannot provide assurance that these additional sources of funds will be available or, if available, will have reasonable terms.

If adequate funds are not available to finance the Company's business growth goals,the Company may have to substantially reduce or eliminate expenditures for expanding operations, marketing, and research and development, or obtain funds through arrangements with partners that require the Company to relinquish rights to certain of its technologies or products. There can be no assurance that the Company will be able to raise additional capital if its capital resources are exhausted. A lack of liquidity and an inability to raise capital when needed may have a material adverse impact on the Company’s ability to continue its operations or expand its business.

Contingencies

For information on legal proceedings and contingencies, refer to Note 12 — Commitments and Contingencies in the notes to the unaudited consolidated financial statements.

Contractual Obligations

For the nine months ended September 30, 2012, there have been no significant changes to the Company’s contractual obligations as disclosed in its 2011 Annual Report on Form 10-K other than as disclosed below with respect to the required principal payments under the 2012 Credit Agreement, and additional leases assumed in the Merger with Catalyst or entered into by the Company.

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	Payments due by period (in millions)
	Total		Less than one year		1-3 years		3-5 years*		More than 5 years
Long-Term Debt Obligations**	$	1,300.0	$	—	$	116.8	$	1,183.2	$	—
Leases	$	130.0	$	9.5	$	23.6	$	24.0	$	72.9

* The Revolving Credit Facility is due on the 2012 Credit Agreement's maturity date, July 2, 2017. The amount noted contains the amount borrowed under the Revolving Credit Facility as of September 30, 2012 by the Company. This amount will fluctuate based on the principal outstanding under the Revolving Credit Facility.

**The commitment amounts are exclusive of interest payments. Currently, the Company's long-term debt obligations carry an annual interest rate of 2.52% on $500 million which has been fixed through the Company's interest rate swap agreements and 2.25% on the remaining $800 million of its long-term debt obligations. The interest rate applicable to the Company's long-term debt may fluctuate in the future based on changes in the LIBOR rate. See Note 8 — Debt for further information on the terms of the Company's long-term debt obligations.

Outstanding Securities

As of October 31, 2012, the Company had 205,137,882 common shares outstanding, 1,725,274 stock options outstanding, and 1,641,234 RSUs outstanding. The stock options are exercisable on a one-for-one basis into common shares. The outstanding RSUs are subject to time-based and performance-based vesting restrictions. The number of outstanding RSUs as of October 31, 2012 assumes the associated performance targets will be met at the maximum level for the performance-based RSUs. Upon vesting, the RSUs convert into common shares on a one-for-one basis.

Critical Accounting Policies and Estimates

Refer to Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates in the 2011 Annual Report on Form 10-K for a discussion of the Company’s critical accounting policies and estimates.

Recent Accounting Standards

Refer to Note 3 — Recent Accounting Pronouncements in the notes to the unaudited consolidated financial statements for information on recent updates to accounting guidance that the Company has assessed for any impact to the Company's financial statements.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

In July, 2012, the Company entered into the 2012 Credit Agreement and borrowed $1.4 billion under that agreement which will increase the Company's exposure to market risks in relation to interest rate fluctuations. The 2012 Credit Agreement carries a floating interest rate based on market indexes. There have been no other material changes in the Company’s exposure to market risk during the nine months ended September 30, 2012.

The Company is exposed to market risk in the normal course of its business operations, primarily the risk of loss arising from adverse changes in interest rates. The Company generates some revenue in Canadian dollars, and is therefore also subject to foreign exchange rate risk when those results are translated into U.S. dollars for financial reporting purposes. In addition, the Company is subject to interest rate risk related to $800 million of the $1.3 billion drawn on its 2012 Credit Agreement entered into in July 2, 2012 as $500 million is not impacted due to the interest rate swaps the Company has in place. As of September 30, 2012, assuming a hypothetical 1% fluctuation in the interest rate of the loan, the Company's pre-tax income would vary by $8 million on an annual basis.

ITEM 4. Controls and Procedures

The Company carried out an evaluation under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation”).

In designing and evaluating the disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. Based on the Evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures, as of the end of the period covered by this Quarterly Report on Form 10-Q, were effective at the reasonable assurance level to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in United States Securities and Exchange Commission rules and forms, and were effective to ensure that the information required to be disclosed in the reports filed or submitted by the Company under the Exchange Act, was accumulated and communicated to management, including to the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosure.

Except as noted below, there has been no change in the Company’s internal controls over financial reporting (as such term is defined in Exchange

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Act Rules 13a-15(f)) during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

On July 2, 2012, the Company completed its Merger with Catalyst. We are currently integrating policies, processes, technology and operations and will continue to evaluate our internal control over financial reporting as we develop and execute our integration plans. Until the companies are fully integrated, we will maintain the operational integrity of each company's legacy internal controls over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings

For information on legal proceedings, refer to Note 12 —Commitments and Contingencies in the notes to the unaudited consolidated financial statements.

ITEM 1A. Risk Factors

In the three months ended September 30, 2012, there have been no material changes from the risk factors previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2011 as updated by the risk factors presented in Part II, Item 1A of our Quarterly Reports on Form 10-Q for the three months ended March 31, 2012 and six months ended June 30, 2012. 

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

As previously disclosed, in connection with the Merger, certain unexpired and unexercised Catalyst warrants issued pursuant to a stock purchase agreement, dated as of June 18, 2004 were assumed by us and, pursuant to the terms of the Merger Agreement, became warrants to purchase 485,160 shares of our common stock at an exercise price of $8.12 per share.

In addition, pursuant to the terms of the Merger Agreement, at the effective time of the Merger, certain unexpired and unexercised Catalyst warrants issued pursuant to a stock purchase agreement, dated as of August 25, 2010 were cancelled and converted into the right to receive, upon payment of the aggregate exercise price of such warrants,132,120 shares of our common stock and $2.8 million cash merger consideration (without interest, and subject to deduction for any required withholding taxes). On July 5, 2012, the $4.5 million aggregate exercise price of such warrants was paid to us and such shares and cash merger consideration were promptly remitted to the holder of such warrants.

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information

None.

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ITEM 6.    Exhibits

Exhibit Number	Description of Document	Reference
2.1	Stock Purchase Agreement dated as of March 8, 2011 between Walgreen Co. and Catalyst Health Solutions, Inc.	Incorporated by reference to Exhibit 2.1 to Catalyst Health Solutions Inc.'s Form 8-K Current Report filed on March 14, 2011.
2.2	Agreement and Plan of Merger, dated as of April 17, 2012, among the Company, US Corp., Merger Sub, Merger LLC and Catalyst	Incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on April 20, 2012.
2.3	Amendment to Agreement and Plan of Merger, dated as of June 29, 2012, among the Company, US Corp., Merger Sub, Merger Sub LLC and Catalyst	Incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on June 29, 2012.
3.1	Articles of Continuance, as amended through July 3, 2012, of Catamaran Corporation (formerly named SXC Health Solutions Corp. and Systems Xcellence Inc.)	Incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q filed on August 3, 2012.
3.2	Amended and Restated Bylaws of Catamaran Corporation, as amended through July 3, 2012	Incorporated by reference to Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q filed on August 3, 2012.
10.1	Credit Agreement, dated as of July 2, 2012, among the Company, JPMCB, as administrative agent, the lenders party thereto, Bank of America, N.A., Barclays and SunTrust Bank, as co-syndication agents, Fifth Third Bank, PNC Bank, National Association and Royal Bank of Canada, as co-documentation agents, JPMorgan and Merrill Lynch, Pierce, Fenner & Smith Incorporated and Barclays, as joint bookrunners and joint lead arrangers.	Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on July 6, 2012.
10.2	Subsidiary Guaranty, dated as of July 2, 2012, made by the Subsidiary Guarantors in favor of JPMCB, as administrative agent.	Incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on July 6, 2012.
10.3	Security Agreement, dated as of July 2, 2012, among the Company, the Subsidiary Guarantors and JPMCB, as collateral agent.	Incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed on July 6, 2012.
10.4	Pledge Agreement, dated as of July 2, 2012, among the Company, the Subsidiary Guarantors and JPMCB, as collateral agent.	Incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed on July 6, 2012.
10.5+	2003 HealthExtras, Inc. Equity Incentive Plan	Incorporated by reference to Exhibit A to Catalyst's Schedule 14A Definitive Proxy Statement filed on April 30, 2003.
10.6+	Amendment to the 2003 HealthExtras, Inc. Equity Incentive Plan.	Incorporated by reference to Exhibit 10.6 to the Company's Current Report on Form 8-K filed on July 6, 2012.
10.7+	Catalyst Health Solutions, Inc. 2006 Stock Incentive Plan, as Amended and Restated on April 8, 2010.	Incorporated by reference to Appendix A to Catalyst's Schedule 14A Definitive Proxy Statement filed on April 23, 2010.
10.8+	Amendment to the Catalyst Health Solutions, Inc. 2006 Stock Incentive Plan, as amended.	Incorporated by reference to Exhibit 10.8 to the Company's Current Report on Form 8-K filed on July 6, 2012.
10.9+	SXC Health Solutions Corp. Restricted Stock Unit Award Agreement relating to the Catalyst Health Solutions, Inc. 2006 Stock Incentive Plan.	Incorporated by reference to Exhibit 10.9 to the Company's Current Report on Form 8-K filed on July 6, 2012.

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Exhibit Number	Description of Document	Reference
10.10+	SXC Health Solutions Corp. Performance-Based Restricted Stock Unit Award Agreement relating to the Catalyst Health Solutions, Inc. 2006 Stock Incentive Plan.	Incorporated by reference to Exhibit 10.10 to the Company's Current Report on Form 8-K filed on July 6, 2012.
10.11+	Amendment to the SXC Health Solutions Corp. Long-Term Incentive Plan.	Incorporated by reference to Exhibit 10.11 to the Company's Current Report on Form 8-K filed on July 6, 2012.
10.12+	Employment Agreement by and between Catalyst Health Solutions, Inc. and Richard A. Bates.	Incorporated by reference to Exhibit 10.1 to Catalyst's Form 8-K Current Report filed on August 7, 2009.
10.13+	Amendment to Employment Agreement by and between Catalyst Health Solutions, Inc. and Richard A. Bates, effective June 22, 2010.	Incorporated by reference to Exhibit 10.1 to Catalyst's Form 10-Q Quarterly Report filed on August 6, 2010.
10.14+	Agreement, dated as of July 2, 2012, by and among the Company, Catalyst and Richard A. Bates.	Incorporated by reference to Exhibit 10.14 to the Company's Current Report on Form 8-K filed on July 6, 2012.
10.15+	Amendment No. 3 to the Catamaran Corporation 2007 Employee Stock Purchase Plan, dated September 5, 2012.	Filed herewith
10.16	Amendment No. 1 to Credit Agreement, dated as of October 24, 2012, among the Company, JPMCB, individually and as administrative agent, and the other financial institutions signatory thereto.	Filed herewith
31.1	Rule 13a-14(a)/15d-14(a) Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act.	Filed herewith.
31.2	Rule 13a-14(a)/15d-14(a) Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act.	Filed herewith.
32.1	Section 1350 Certification of CEO as adopted by Section 906 of the Sarbanes-Oxley Act.	Filed herewith.
32.2	Section 1350 Certification of CFO as adopted by Section 906 of the Sarbanes-Oxley Act.	Filed herewith.
101	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011, (ii) the Consolidated Statements of Operations for the three and nine months ended September 30, 2012 and 2011, (iii) the Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2012 and 2011, (iv) the Consolidated Statements of Cash Flows for the nine months ended September 30, 2012 and 2011, (v) the Consolidated Statements of Shareholder's Equity for the nine months ended September 30, 2012 and 2011, and (vi) the notes to the Unaudited Consolidated Financial Statements.	Filed herewith.
+	Indicates management contract or compensatory plan.

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SIGNATURE

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Catamaran Corporation
November 2, 2012	By:	/s/ Jeffrey Park
		Jeffrey Park
		Executive Vice President and Chief Financial Officer (on behalf of the registrant and as principal financial and accounting officer)

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EXHIBIT INDEX

Exhibit Number	Description of Document	Reference
2.1	Stock Purchase Agreement dated as of March 8, 2011 between Walgreen Co. and Catalyst Health Solutions, Inc.	Incorporated by reference to Exhibit 2.1 to Catalyst Health Solutions Inc.'s Form 8-K Current Report filed on March 14, 2011.
2.2	Agreement and Plan of Merger, dated as of April 17, 2012, among the Company, US Corp., Merger Sub, Merger LLC and Catalyst	Incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on April 20, 2012.
2.3	Amendment to Agreement and Plan of Merger, dated as of June 29, 2012, among the Company, US Corp., Merger Sub, Merger Sub LLC and Catalyst	Incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on June 29, 2012.
3.1	Articles of Continuance, as amended through July 3, 2012, of Catamaran Corporation (formerly named SXC Health Solutions Corp. and Systems Xcellence Inc.)	Incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q filed on August 3, 2012.
3.2	Amended and Restated Bylaws of Catamaran Corporation, as amended through July 3, 2012	Incorporated by reference to Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q filed on August 3, 2012.
10.1	Credit Agreement, dated as of July 2, 2012, among the Company, JPMCB, as administrative agent, the lenders party thereto, Bank of America, N.A., Barclays and SunTrust Bank, as co-syndication agents, Fifth Third Bank, PNC Bank, National Association and Royal Bank of Canada, as co-documentation agents, JPMorgan and Merrill Lynch, Pierce, Fenner & Smith Incorporated and Barclays, as joint bookrunners and joint lead arrangers.	Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on July 6, 2012.
10.2	Subsidiary Guaranty, dated as of July 2, 2012, made by the Subsidiary Guarantors in favor of JPMCB, as administrative agent.	Incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on July 6, 2012.
10.3	Security Agreement, dated as of July 2, 2012, among the Company, the Subsidiary Guarantors and JPMCB, as collateral agent.	Incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed on July 6, 2012.
10.4	Pledge Agreement, dated as of July 2, 2012, among the Company, the Subsidiary Guarantors and JPMCB, as collateral agent.	Incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed on July 6, 2012.
10.5+	2003 HealthExtras, Inc. Equity Incentive Plan	Incorporated by reference to Exhibit A to Catalyst's Schedule 14A Definitive Proxy Statement filed on April 30, 2003.
10.6+	Amendment to the 2003 HealthExtras, Inc. Equity Incentive Plan.	Incorporated by reference to Exhibit 10.6 to the Company's Current Report on Form 8-K filed on July 6, 2012.
10.7+	Catalyst Health Solutions, Inc. 2006 Stock Incentive Plan, as Amended and Restated on April 8, 2010.	Incorporated by reference to Appendix A to Catalyst's Schedule 14A Definitive Proxy Statement filed on April 23, 2010.
10.8+	Amendment to the Catalyst Health Solutions, Inc. 2006 Stock Incentive Plan, as amended.	Incorporated by reference to Exhibit 10.8 to the Company's Current Report on Form 8-K filed on July 6, 2012.
10.9+	SXC Health Solutions Corp. Restricted Stock Unit Award Agreement relating to the Catalyst Health Solutions, Inc. 2006 Stock Incentive Plan.	Incorporated by reference to Exhibit 10.9 to the Company's Current Report on Form 8-K filed on July 6, 2012.

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Exhibit Number	Description of Document	Reference
10.10+	SXC Health Solutions Corp. Performance-Based Restricted Stock Unit Award Agreement relating to the Catalyst Health Solutions, Inc. 2006 Stock Incentive Plan.	Incorporated by reference to Exhibit 10.10 to the Company's Current Report on Form 8-K filed on July 6, 2012.
10.11+	Amendment to the SXC Health Solutions Corp. Long-Term Incentive Plan.	Incorporated by reference to Exhibit 10.11 to the Company's Current Report on Form 8-K filed on July 6, 2012.
10.12+	Employment Agreement by and between Catalyst Health Solutions, Inc. and Richard A. Bates.	Incorporated by reference to Exhibit 10.1 to Catalyst's Form 8-K Current Report filed on August 7, 2009.
10.13+	Amendment to Employment Agreement by and between Catalyst Health Solutions, Inc. and Richard A. Bates, effective June 22, 2010.	Incorporated by reference to Exhibit 10.1 to Catalyst's Form 10-Q Quarterly Report filed on August 6, 2010.
10.14+	Agreement, dated as of July 2, 2012, by and among the Company, Catalyst and Richard A. Bates.	Incorporated by reference to Exhibit 10.14 to the Company's Current Report on Form 8-K filed on July 6, 2012.
10.15+	Amendment No. 3 to the Catamaran Corporation 2007 Employee Stock Purchase Plan, dated September 5, 2012.	Filed herewith
10.16	Amendment No. 1 to Credit Agreement, dated as of October 24, 2012, among the Company, JPMCB, individually and as administrative agent, and the other financial institutions signatory thereto.	Filed herewith
31.1	Rule 13a-14(a)/15d-14(a) Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act.	Filed herewith.
31.2	Rule 13a-14(a)/15d-14(a) Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act.	Filed herewith.
32.1	Section 1350 Certification of CEO as adopted by Section 906 of the Sarbanes-Oxley Act.	Filed herewith.
32.2	Section 1350 Certification of CFO as adopted by Section 906 of the Sarbanes-Oxley Act.	Filed herewith.
101	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011, (ii) the Consolidated Statements of Operations for the three and nine months ended September 30, 2012 and 2011, (iii) the Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2012 and 2011, (iv) the Consolidated Statements of Cash Flows for the nine months ended September 30, 2012 and 2011, (v) the Consolidated Statements of Shareholder's Equity for the nine months ended September 30, 2012 and 2011, and (vi) the notes to the Unaudited Consolidated Financial Statements.	Filed herewith.

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