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 200 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 40% of sales. SXC changed its name to Catamaran in 2012 after acquiring fellow PBM firm Catalyst Health.
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.
Catamaran's PBM software accounts for nearly all of the company's revenues. In 2011 it landed a new client, HealthSpring, which offers Medicare Advantage plans in seven southern states. The new customer helped launch Catamaran's 2011 revenues 155% to $5 billion. In 2012 HealthSpring was bought by CIGNA, but it will be under contract with Catamaran for three years before it can move to a different provider without breaching the agreement. Later in the year Catamaran won another three-year deal, a $720 million contract with an unnamed health plan that operates on the East Coast.
Revenue for 2011 was also propelled by other new customers, ramped-up sales pushes, and acquisitions, such as the purchase of PTRx, a pharmacy benefits manager that includes mail-order pharmacy delivery among its services, for around $80 million. 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.
The smaller portion of Catamaran's revenue comes from offering health care IT (HCIT) services, including its online claims processing flagship product RxCLAIM, as well as products for pharmacy data warehousing, rebate management, and Web portal deployment. RxCLAIM processes more than 1 billion transactions every year for providers such as the Mayo Foundation. RxCLAIM and RxTRACK, its data warehousing and analysis tool, are marketed to residential care management providers such as long-term care facilities and institutionally based pharmacies. Subsidiary Health Business Systems (HBS), which offers pharmacy management software, operates under the HCIT segment.
In 2012 Catamaran bolstered that 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.
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.
Catamaram also uses acquisitions to diversify its services. The company acquired MedfusionRX in late 2010 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).
In addition to HealthSpring, top customers include Boston Medical Center, and the state of Hawaii. Health plans such as Blue Cross/Blue Shield, managed care organizations, other pharmacy benefit managers, and retail pharmacy chains are also among the clients that use Catamaran services to control exploding health care costs.
Catamaran was founded in 1993 as Systems Xcellence and changed its name to SXC in 2007. The company changed its name to Catamaran in 2012 after it acquired Catalyst Health Solutions. – less