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Catamaran: A Safe investment for the Future

April 24, 2014 | About:
shash63

shash63

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Pharmacy Benefit Management (PBM) industries did feel the effect of recession, but they rebounded fast and are poised to ride high on the back of rising insurance coverage and increased physician visits, resulting in a higher number of prescriptions filled. With population growing in the U.S., we will see more Americans relying on medication that increases demand for the services of insurance companies and employer sponsored coverage plans.

A look at Catamaran

The need of flexibility is the call of the hour to adapt in an ever changing health care environment. Most PBM management companies have an approach to fit within a fixed approach, but companies like Catamaran (CTRX) offer services that are tailored as per individual requirements. This flexibility has enabled Catamaran to establish itself as an administrator for the employers and individuals to avail the best therapy for the lowest cost. It provides flexible, holistic solutions to improve patient care and empower individuals to take charge of their health plans.

The company was also recognized as one of the Top 100 Fastest Growing Companies for the fourth consecutive year by Fortune magazine. Based on quality standards for the healthcare industry, BriovaRx™, a specialty brand of the company, was awarded with Specialty Pharmacy Accreditation from URAC. Also, the company's Employer Group Waiver Plan received a five-star rating from the Center for Medicare & Medicaid Services for the second consecutive year.

Solid growth

Catamaran is seeing high growth in its membership and prescriptions. It has over 32 million members and manages over 350 million prescriptions. This voluminous member count has enabled Catamaran to maintain an impressive top and bottom line with growth every year.

In fiscal 2013, it recorded total revenue of $14.8 billion, recording a 49% growth when compared to fiscal 2012. The bottom line also witnessed growth on an annual basis. It recorded $262.2 million in fiscal 2013 as against $116.7 million in 2012. The Restat acquisition also influenced the top line and bottom line of Catamaran.

The company is primarily focused on providing uniquely configured PBM offerings for complex health plans with structured drug delivery solution to employers. This strategy has enabled to acquire a wider share of the PBM market and would certainly be catalytic for future growth.

Various synergistic alliances and acquisitions further add up to the healthy future of the company. The company signed up a 10 year strategic partnership with Cigna Corporation. Cigna Corporation is a global health insurance company offering diversified insurance plans with wide coverage.

Outlook

For the fiscal 2014, Catamaran estimates revenue to be in the range of $20-$21 billion. The company anticipates EBITDA to be $760-$810 million, with GAAP EPS of $1.35-$1.50.

The acquisition and the synergistic partnership will be the key for attaining the anticipated financial outlook for 2014.

Conclusion

Catamaran’s cash flow recorded 90% growth as compared to last year, which goes on to show that it’s a good sign for investors. The cash generated from operations also helped it to repay $263 million on the company's credit facility. So, all of this makes Catamaran a pretty good investment.

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