TORONTO: Pharmacy benefit manager Catamaran Corporation reported a 59 per cent jump in fourth-quarter profit, but the company’s forecast for the year and the lack of clarity on its deal pipeline dampened investor sentiment.
Shares of Catamaran, formerly named SXC Health Solutions, fell as much as 7 per cent to C$52.81 on the Toronto Stock Exchange. The stock has gained 20 per cent since the beginning of the year, outperforming the benchmark S&P/TSX composite index.
Chief Executive Mark Thierer said that the company’s deal pipeline was robust. “The deals we’re seeing now are bigger, there are more of them, and they’re coming sooner than in the past”, he said.
The company raised its forecast last year following its $4.4 billion acquisition of rival Catalyst Health Solutions and announced a three-year contract with US discount retailer Target Corp starting April 1, 2013. Leung added that some people had hoped to get some tangible contract announcements in conjunction with the results, which did not happen.
The company, which had a market value of C$11.48 billion as of close, competes with pharmacy benefit managers (PBM) Express Scripts Holding Co and CVS Caremark Corp.
“If you look at how the stock was trading prior to the release of the results, I think the market might have been expecting a little bit more in terms of the guidance,” analyst Gabriel Leung of Paradigm Capital said.
Leung said Catamaran’s forecast factored in deals they have already signed, so the company could increase its outlook over the course of the year if it signs additional deals.
Catamaran is growing fast and stealing some market share, but is quite a distance from the top two PBMs, analyst Tom Liston of Cantor Fitzgerald said.
PBMs administer health plans and drug benefits for employers and run mail-order pharmacies. They help cut costs of medication by encouraging more use of generic drugs.
The year stands to be a busy one for the healthcare sector as the United States prepares for 30 million people to join the ranks of insured patients under the Affordable Care Act, or “Obamacare,” starting 2014. There are also some concerns about Catamaran’s contract with Health insurer Cigna Corporation.