Walgreens Health Initiatives, Inc.

Catamaran (formerly SXC Health Solutions) helps customers navigate prescription drug benefits. A provider of pharmacy benefit management (PBM) software and services, the company manages some 250 million prescriptions annually, designs drug benefit plans, and provides customized reporting and data analysis services to help individuals and organizations control health care costs. Its PBM software administers claims and offers cost control, Medicare Part D services, pharmacy network management, and drug review and analysis. Top customers include HealthSpring, which accounts for 30% of sales. SXC changed its name to Catamaran in 2012 after acquiring fellow PBM firm Catalyst Health.

Operations

Catamaran operates in two segments-- pharmacy benefit management (PBM) software and health care information technology (HCIT). Its PBM software, sold under the Catamaran PBM brand, accounts for nearly all of its revenues. In addition to pharmacy software, the company owns and operates a network of mail and specialty pharmacies.

Its HCIT offerings include RxCLAIM for prescription drug claims, rebate management system RxMAX, data warehouse and analysis system RxTRACK, and Zynchros, a pharmacy management system for retail, chain, institutional, and mail-order pharmacies. Subsidiary Health Business Systems (HBS), which offers pharmacy management software, operates under the HCIT segment. The HCIT only accounts for 2% of sales.

Geographic Reach

The company operates in the US and Canada.

Sales and Marketing

Health plans such as Blue Cross/Blue Shield, managed care organizations, other pharmacy benefit managers, self-insured employer groups, unions, third-party health care plan administrators, state and federal government entities, and retail pharmacy chains are also among the clients that use Catamaran services to control exploding health care costs. The company is also looking to target Fortune 500 companies as customers.

Financial Performance

The acquisition of Catalyst Health doubled Catamaran’s revenues to $10 billion in 2012. That’s after it landed top customer HealthSpring in 2011, which helped its sales jump from $2 billion in 2010 to $5 billion in 2011. (In 2012 HealthSpring was bought by CIGNA, but will be under contract with Catamaran for three years before it can move to a different provider without breaching the agreement.)

Revenue for 2012 was also propelled by new customers, ramped-up sales pushes, and acquisitions. Catamaran intends to use its expanding product line to keep attracting new customers, especially state-level public organizations and small to midsized retail pharmacy companies.

Strategy

Catamaran bought Catalyst in a 2012 cash and stock transaction valued at about $4.4 billion. The acquisition expands Catamaran's service offerings and access to larger clients. Because the two companies offer complementary rather than competing products, there is little overlap between customers. Catalyst served many state employers, while Catamaran had more state Medicaid clients. The deal created one of the largest independent companies in the pharmacy benefit management space, a market that is undergoing a great deal of consolidation in preparation for changes in health care laws.

Mergers and Acquisitions

Catamaran also uses acquisitions to diversify its services. Also in 2012 it bolstered the Health Business Systems (HBS) segment, as well as its main business with the acquisition of PBM provider HealthTrans for $250 million in cash. Since HealthTrans was itself one of the company's HCIT customers, the acquisition gives Catamaran additional PBM customers that already use its HCIT services.

In 2011 it bought PTRx, another pharmacy benefits manager, and SaveDirectRx, its mail-order pharmacy, for $77 million in cash. Also that year it bought MedMetrics Health Partners, a not-for-profit PBM organization affiliated with the University of Massachusetts Medical School.

In 2010 it bought MedfusionRX for $100 million in cash in order to build its specialty pharmaceuticals business. MedfusionRX specializes in drugs for chronic diseases such as multiple sclerosis, rheumatoid arthritis, and hepatitis C. Catamaran also owns a mail-order pharmacy and a specialty service pharmacy (Ascend SpecialtyRx).

Company Background

Catamaran was founded in 1993 as Systems Xcellence and changed its name to SXC in 2007. It again changed its name to Catamaran in 2012 after buying Catalyst Health Solutions.

Catamaran primarily offered IT-related health care services until 2008, when it bought pharmacy benefit company National Medical Health Card Systems (NMHC) for nearly $145 million in cash and stock. The acquisition enabled Catamaran to broaden its core claims processing and other pharmacy benefits management-related offerings. As a result, the company saw a dramatic increase in revenue -- from $93 million in 2007 to a whopping $1.4 billion in 2009.

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Walgreens Health Initiatives, Inc.


1417 Lake Cook Rd Ste 100
Deerfield, IL 60015-5238
Phone: 1 (847) 374-2640
Fax: 1 (847) 3742645
www.walgreens.com

STATS


  • Employer Type: Unknown
  • Chief Executive Officer: Sally Dorsey
  • Vp: Michele Garvey
  • Cfo: Robert Zimmerman

Major Office Locations

  • Deerfield, IL

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