Why Catamaran Shares Ran Aground

Is this meaningful? Or just another movement?

Iain Butler

Chief Investment Advisor, Motley Fool Canada Fool since November 2012 Iain Butler, CFA, is Lead Advisor on Discovery Canada 2017. He is also the Chief Investment Advisor for Motley Fool Canada and is the lead advisor on its flagship Stock Advisor Canada product. Before joining the Fool, Iain was a “buy-side” analyst and through this experience is well-versed in the idiosyncratic ways of the Canadian market. His investing interests are centred on scouring the market for interesting businesses that trade at reasonable prices and offer an appealing risk/reward relationship. Since joining the Fool in 2012, Iain dedicates each day to spreading Foolishness throughout this great country!

Published September 18, 2013 4:34 pm EDT

Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.

What: Shares of pharmacy benefit management (PBM) services provider Catamaran (TSX:CCT, NASDAQ:CTRX) were down by more than 10% at one point today after Walgreen announced that it’s moving 120,000 employees to a private health insurance exchange where they can choose a plan from multiple insurers.

So what: This is a similar type service as the one that Catamaran and other PBM service providers, um, provide. Another big pure-play in this space, Express Scripts, was also off on the news.

Now what: While this was just an announcement and has no financial implications for Catamaran today, the possibility that other corporations might follow Walgreen’s lead has scared investors. The health insurance game in the U.S. is a tough one for us Canadians to get our heads around and given all the moving parts that go into it, investors would do well to have a complete understanding of all of the dynamics at work before wading in.

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Fool contributor Iain Butler doesn’t own shares in any companies mentioned. The Motley Fool doesn’t own shares in any of the companies mentioned.