Catamaran Corp.: A Different Way to Diversify Your Portfolio

Catamaran Corp. (TSX:CCT)(NASDAQ:CTRX) provides pharmacy benefit management services and healthcare information technology solutions for portfolio diversification.

The Motley Fool

Catamaran Corp. (TSX: CCT) (NASDAQ: CTRX) connects pharmacists, doctors, and caregivers with the prescription data required to improve health results. It offers clinical intelligence, technology, and scale for lowering payer costs while bettering member health.

The company provides pharmacy benefit management (PBM) services and healthcare information technology (HCIT) solutions. Here are five reasons for considering Catamaran as a possible addition to your stock portfolio:

1. Its differentiated, broad-based business model

Catamaran’s differentiated business model encompasses the above-mentioned PBM and HCIT, as well as specialty pharmacy management. It has over 68,000 network pharmacies.

PBM solutions focus on the challenges facing healthcare payers and administrators, with Catamaran identifying the most effective paths for clients to lessen pharmacy expenditures, realize lower overall healthcare costs, and help their members stay well.

HCIT solutions foster innovation. They empower customization across a company’s products and services. Furthermore, speciality pharmacy management centers on the specialty component of pharmacy expenditures. Catamaran serves patients who need specialty pharmaceuticals, injectable medications, and complex treatment regimens.

2. Its growth

Recently, Catamaran announced that it’s been ranked as one of Fortune’s fastest-growing companies for the fifth consecutive year. The Fortune list ranks companies with market capitalization of $250 million or greater (based on revenue growth rate), earnings per share growth rate, and three-year annualized total return for the period ended June 30, 2014. This year, Catamaran was the only healthcare services company named to the list.

Catamaran’s profits increased 125% in 2013. For the past four quarters, its revenue totaled 16.475 billion. The company’s earnings per share (three-year annual growth rate) is 30%, and its total return (three-year annual rate) is 14%. Its current market capitalization equals $11.14 billion.

3. Its volume

Catamaran serves more than 32 million members. In addition, its annual prescription volume is greater than 350 million adjusted PBM scripts. Catamaran is the fourth-largest PBM and the fourth-largest specialty pharmacy.

The company processes one out of every five pharmacy claims nationally. Catamaran’s 2013 revenue was close to $15 billion. Important initiatives for Catamaran include growth and expansion of Medicare Part D services as well as comprehensive specialty medication management. The company has more than 50 offices across North America.

4. Its continued investment in technology and service platforms

Catamaran’s proprietary technology platform fuels greater than one-third of the industry.  The company’s emphasis is its flexible technology platform, which will select vast amounts of data to unlock understanding and take actions based on these understandings.

The company integrates patient-level risk scoring with electronic medical records. Moreover, last year Catamaran launched a unique video consultation program. It enhances member care through face-to-face virtual interactions with pharmacists.

5. Its acquisitions and contracts

Catamaran believes the most useful way to employ capital for company and investor returns is to constantly assess mergers and acquisitions opportunities. Last year, it acquired Restat, LLC. Restat is one of the largest privately held pharmacy benefit managers and provides prescription claim processing and PBM services for self-funded employers, third-party administrators, workers’ compensation plans, health plans, and unions.

In 2013 Catamaran won a 10-year contract to manage prescription drug benefits for Cigna Corp.’s clients. For Q2 2014, Catamaran had revenues of $5.4 billion. This represents an increase of 58% over Q2 2013. The strong growth was achieved via continuous build in Cigna drug expenditures, Catamaran’s new client implementations, and the acquisition of Restat. In a recent conference call, Catamaran said it has the “financial and operational capacity to deliver capital through acquisitions”.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Michael Ugulini has no position in any stocks mentioned. The Motley Fool owns shares of Catamaran.

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