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SXC Health solutions announces second quarter financial results

^{Published on 2010-08-05 03:20:57 - Market Wire}
 

 Q2 2010 Highlights ------------------ - Revenue grew 49% on a year over year basis to $479.4 million, compared to $320.8 million in Q2 2009 - Gross profit was $53.7 million, compared to $47.2 million in Q2 2009 - Adjusted EBITDA(1) was $31.5 million, compared to $23.7 million in Q2 2009 - GAAP net income increased to $17.1 million, or $0.55 per share (fully-diluted), compared to $12.0 million, or $0.47 per share (fully-diluted), in Q2 2009 - Non-GAAP adjusted earnings per share(1) (diluted) was $0.58, which excludes the NMHC transaction-related amortization, compared to $0.53 in Q2 2009 - Cash from operations was $39.5 million, compared to $19.8 million in Q2 2009 - Adjusted prescription claim volume(1) for the PBM segment was 11.8 million, compared to 8.9 million in Q2 2009 - Transaction processing volume for the HCIT segment was 99.6 million, compared to 98.8 million in Q2 2009 - Mail order penetration was 11.5%, compared to 8% in Q2 2009 - Successfully converted another HCIT client to PBM services in the quarter - Completed development and testing of software to support the National Council for Prescription Drug Programs (NCPDP) version D.0 of the NCPDP Telecommunication Standard, well ahead of the January 1, 2011 compliance date 

 Financial Review ---------------- 

 Three months ended June 30, (unaudited, in thousands) PBM HCIT Consolidated --------------------- --------------------- --------------------- 2010 2009 2010 2009 2010 2009 ---------- ---------- ---------- ---------- ---------- ---------- Revenue $ 451,295 $ 293,906 $ 28,151 $ 26,923 $ 479,446 $ 320,829 Cost of revenue 412,681 259,376 13,026 14,242 425,707 273,618 ---------- ---------- ---------- ---------- ---------- ---------- Gross profit $ 38,614 $ 34,530 $ 15,125 $ 12,681 $ 53,739 $ 47,211 Gross profit % 8.6% 11.7% 53.7% 47.1% 11.2% 14.7% Six months ended June 30, (unaudited, in thousands) PBM HCIT Consolidated --------------------- --------------------- --------------------- 2010 2009 2010 2009 2010 2009 ---------- ---------- ---------- ---------- ---------- ---------- Revenue $ 878,797 $ 561,686 $ 52,797 $ 50,103 $ 931,594 $ 611,789 Cost of revenue 801,847 498,374 25,780 27,020 827,627 525,394 ---------- ---------- ---------- ---------- ---------- ---------- Gross profit $ 76,950 $ 63,312 $ 27,017 $ 23,083 $ 103,967 $ 86,395 Gross profit % 8.8% 11.3% 51.2% 46.1% 11.2% 14.1% 

 - Revenue of $1.9 to $2.0 billion, remains unchanged - Gross profit of $202 to $210 million versus prior estimate of $198 to $208 million - Adjusted EBITDA of $115 to $117 million versus prior estimate of $111 to $115 million - Fully-diluted GAAP EPS (including all transaction-related amortization) of $1.96 to $2.00 versus prior estimate of $1.84 to $1.92 - Fully-diluted Non-GAAP adjusted EPS(1) (excluding the NMHC transaction-related amortization) of $2.09 to $2.13 versus prior estimate of $1.96 to $2.05 

 For the three months ended For the six months ended June 30, June 30, 2010 2009 2010 2009 -------------------------- ------------------------ (unaudited) (unaudited) Adjusted EBITDA $ 31,458 $ 23,657 $ 59,178 $ 39,988 Amortization of Intangible Assets (1,978) (2,415) (3,973) (5,240) Depreciation of Property & Equipment (2,146) (1,968) (4,235) (3,944) Stock-Based Compensation (1,617) (817) (2,881) (1,430) Other (Expense) income, net (60) (283) (259) 42 Net Interest Expense (143) (979) (388) (1,689) Income Tax (Expense) (8,369) (5,218) (15,505) (8,068) ------------- ----------- ----------- ----------- Net Income $ 17,145 $ 11,977 $ 31,937 $ 19,659 ------------- ----------- ----------- ----------- ------------- ----------- ----------- ----------- For the three months ended For the six months ended June 30, June 30, 2010 2009 2010 2009 -------------------------- ------------------------ (unaudited) (unaudited) Non-GAAP Adjusted EPS Net Income $ 17,145 $ 11,977 $ 31,937 $ 19,659 Amortization of NMHC Intangibles (Net of Taxes) 1,007 1,320 2,016 2,996 ------------- ----------- ----------- ----------- Adjusted Net-Income $ 18,152 $ 13,297 $ 33,953 $ 22,655 ------------- ----------- ----------- ----------- ------------- ----------- ----------- ----------- Adjusted EPS (diluted) $ 0.58 $ 0.53 $ 1.09 $ 0.91 

 SXC HEALTH SOLUTIONS CORP. Consolidated Balance Sheets (in thousands, except share data) June 30, December 31, ------------ ------------ 2010 2009 ------------ ------------ (unaudited) ASSETS Current assets Cash and cash equivalents $ 352,624 $ 304,370 Restricted cash 14,321 14,169 Short term investments - 4,639 Accounts receivable, net of allowance for doubtful accounts of $3,363 (2009 - $2,871) 103,938 97,330 Rebates receivable 34,931 17,630 Prepaid expenses and other assets 6,053 4,483 Inventory 8,228 7,451 Deferred income taxes 6,358 9,875 ------------ ------------ Total current assets 526,453 459,947 Property and equipment, net of accumulated depreciation of $31,655 (2009 - $27,421) 19,171 19,880 Goodwill 141,787 141,787 Other intangible assets, net of accumulated amortization of $27,804 (2009 - $23,831) 33,601 37,574 Deferred income taxes 1,294 1,641 Other assets 252 1,251 ------------ ------------ Total assets $ 722,558 $ 662,080 ------------ ------------ ------------ ------------ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $ 8,227 $ 9,916 Customer deposits 15,372 14,832 Salaries and wages payable 9,343 12,349 Accrued liabilities 23,792 30,786 Pharmacy benefit management rebates payable 59,570 46,606 Pharmacy benefit claim payments payable 72,915 61,669 Deferred revenue 10,435 7,304 ------------ ------------ Total current liabilities 199,654 183,462 Deferred income taxes 13,676 13,597 Deferred lease inducements 2,511 2,748 Deferred rent 1,336 1,337 Other liabilities 1,753 2,442 ------------ ------------ Total liabilities 218,930 203,586 Shareholders' equity Common shares: no par value, unlimited shares authorized; 30,402,790 shares issued and outstanding at June 30, 2010 (December 31, 2009 - 30,057,281 shares) 369,869 361,530 Additional paid-in capital 20,010 15,153 Retained earnings 113,749 81,812 Accumulated other comprehensive loss - (1) ------------ ------------ Total shareholders' equity 503,628 458,494 ------------ ------------ Total liabilities and shareholders' equity $ 722,558 $ 662,080 ------------ ------------ ------------ ------------ SXC HEALTH SOLUTIONS CORP. Consolidated Statements of Operations (in thousands, except share and per share data) Three Months Ended Six Months Ended June 30, June 30, ------------------------- ------------------------- 2010 2009 2010 2009 ------------ ------------ ------------ ------------ (unaudited) (unaudited) ------------ ------------ ------------ ------------ Revenue: PBM $ 451,295 $ 293,906 $ 878,797 $ 561,686 HCIT 28,151 26,923 52,797 50,103 ------------ ------------ ------------ ------------ Total revenue 479,446 320,829 931,594 611,789 Cost of revenue: PBM 412,681 259,376 801,847 498,374 HCIT 13,026 14,242 25,780 27,020 ------------ ------------ ------------ ------------ Total cost of revenue 425,707 273,618 827,627 525,394 ------------ ------------ ------------ ------------ Gross profit 53,739 47,211 103,967 86,395 Expenses: Product development costs 3,021 3,027 6,094 6,190 Selling, general and administrative 21,486 21,907 42,792 42,704 Depreciation of property and equipment 1,537 1,405 3,019 2,887 Amortization of intangible assets 1,978 2,415 3,973 5,240 ------------ ------------ ------------ ------------ 28,022 28,754 55,878 57,021 ------------ ------------ ------------ ------------ Operating income 25,717 18,457 48,089 29,374 Interest income (175) (225) (324) (471) Interest expense 318 1,204 712 2,160 ------------ ------------ ------------ ------------ Net interest expense 143 979 388 1,689 Other expense (income), net 60 283 259 (42) ------------ ------------ ------------ ------------ Income before income taxes 25,514 17,195 47,442 27,727 Income tax expense: Current 7,209 4,403 12,738 6,604 Deferred 1,160 815 2,767 1,464 ------------ ------------ ------------ ------------ 8,369 5,218 15,505 8,068 ------------ ------------ ------------ ------------ Net income $ 17,145 $ 11,977 $ 31,937 $ 19,659 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Earnings per share: Basic $ 0.56 $ 0.49 $ 1.06 $ 0.81 Diluted $ 0.55 $ 0.47 $ 1.02 $ 0.79 Weighted average number of shares used in computing earnings per share: Basic 30,346,466 24,638,986 30,220,682 24,417,241 Diluted 31,389,017 25,270,639 31,200,704 25,001,382 SXC HEALTH SOLUTIONS CORP. Consolidated Statements of Cash Flows (in thousands) Three Months Ended Six Months Ended June 30, June 30, ------------------------- ------------------------- 2010 2009 2010 2009 ------------ ------------ ------------ ------------ (unaudited) (unaudited) Cash flows from operating activities: Net income $ 17,145 $ 11,977 $ 31,937 $ 19,659 Items not involving cash: Stock-based compensation 1,617 817 2,88 1,430 Depreciation of property and equipment 2,146 1,968 4,235 3,944 Amortization of intangible assets 1,978 2,415 3,973 5,240 Deferred lease inducements and rent (117) (324) (238) (369) Deferred income taxes 1,160 815 2,767 1,464 Tax benefit on option exercises (1,506) (544) (5,588) (2,106) Changes in operating assets and liabilities, net of effects from acquisitions: Accounts receivable 4,664 3,489 (6,624) (374) Rebates receivable (2,801) 1,375 (17,301) 7,074 Restricted cash (16) (507) (152) (1,637) Prepaid expenses and other assets (1,412) (743) (1,571) (1,164) Inventory 11 (60) (1,122) 597 Income tax recoverable 3,462 2,150 7,108 2,238 Accounts payable 698 1,282 (1,685) 84 Accrued liabilities 38 2,601 (10,696) (6,016) Pharmacy benefit claim payments payable 8,909 (9,951) 11,246 (9,466) Pharmacy benefit management rebates payable 967 6,989 12,964 9,530 Deferred revenue 1,719 (2,775) 3,107 472 Customer deposits (111) (1,402) 540 772 Other 917 266 1,020 308 ------------ ------------ ------------ ------------ Net cash provided by operating activities 39,468 19,838 36,801 31,680 Cash flows from investing activities: Purchases of property and equipment (2,556) (2,457) (3,526) (5,746) Sales of short term investments - - 6,828 - Purchases of short term investments - - (2,208) - Acquisitions, net of cash acquired - (1,996) - (2,176) ------------ ------------ ------------ ------------ Net cash provided (used) by investing activities (2,556) (4,453) 1,094 (7,922) Cash flows from financing activities: Proceeds from exercise of options 960 2,003 4,727 4,349 Tax benefit on option exercises 1,506 544 5,588 2,106 Repayment of long-term debt - (1,200) - (1,320) ------------ ------------ ------------ ------------ Net cash provided by financing activities 2,466 1,347 10,315 5,135 Effect of foreign exchange on cash balances 5 (68) 44 26 ------------ ------------ ------------ ------------ Increase in cash and cash equivalents 39,383 16,664 48,254 28,919 Cash and cash equivalents, beginning of period 313,241 79,970 304,370 67,715 ------------ ------------ ------------ ------------ Cash and cash equivalents, end of period $ 352,624 $ 96,634 $ 352,624 $ 96,634 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------