June Investor Presentation

Transcription

1 June 2014 Investor Presentation

2 Safe Harbor Certain statements included herein, including guidance and those that express management's objectives and the strategies to achieve those objectives, as well as information with respect to the Company's beliefs, plans, expectations, anticipations, estimates and intentions, constitute forward-looking statements within the meaning of applicable securities laws. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management at this time, are inherently subject to significant business, economic and competitive uncertainties and contingencies. We caution that such forward-looking statements involve known and unknown risks, uncertainties and other risks that may cause our actual financial results, performance, or achievements to be materially different from our estimated future results, performance or achievements expressed or implied by those forward-looking statements. Numerous factors could cause actual results to differ materially from those in the forward-looking statements, including without limitation, our ability to achieve increased market acceptance for our product offerings and penetrate new markets; our ability to compete successfully; our dependence on, and ability to retain, key customers; customer demands for enhanced services levels or loss or unfavorable modification with our customers; the risks and challenges associated with our PBM partnering agreement with Cigna Corporation due to the size of the client and the complexity and term of the agreement; consolidation in the healthcare industry; our ability to identify and complete acquisitions, manage our growth, integrate acquisitions and achieve expected synergies from acquisitions; changes in industry pricing benchmarks and continuing market and economic challenges; our ability to maintain our relationships with pharmacy providers, pharmaceutical manufacturers, third-party rebate administrators and suppliers; compliance with existing laws, regulations and industry initiatives and future change in laws or regulations in the healthcare industry; our ability to maintain our relationships with suppliers; the outcome of any legal or tax proceeding that has been or may be instituted against us; the existence of undetected errors or similar problems in our software products; potential liability for the use of incorrect or incomplete data; interruption of our operations due to outside sources and breach of our security by third parties; our dependence on the expertise of our senior management and other personnel; maintaining our intellectual property rights and litigation involving intellectual property rights; our ability to obtain, use or successfully integrate third-party licensed technology; our ability to accurately forecast our financial results; our level of indebtedness and the covenants and restrictions in the agreements governing our outstanding indebtedness; our access to sufficient capital to fund our future requirements; and potential write-offs of goodwill or other intangible assets. When relying on forward-looking information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. In making the forward-looking statements contained herein, the Company does not assume any future significant acquisitions, dispositions or one-time items. It does assume, however, the renewal of certain customer contracts. Every year, the Company has major customer contracts that come up for renewal. In addition, the Company also assumes new customer contracts. In this regard, the Company is pursuing large opportunities that present a very long and complex sales cycle which substantially affects its forecasting abilities. The Company has assumed certain timing for the realization of these opportunities which it believes is reasonable but which may not be achieved. Furthermore, the pursuit of these larger opportunities does not ensure a linear progression of revenue and earnings since they may involve significant up-front costs followed by renewals and cancellations of existing contracts. The Company has assumed certain revenues which may not be realized. The Company has also assumed that the material factors referred to in the previous paragraph will not cause such forward-looking information to differ materially from actual results or events. There can be no assurance that such assumptions will reflect the actual outcome of such items or factors. Accordingly, investors are cautioned not to put undue reliance on forward-looking statements. The foregoing list of factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors. Other factors that should be considered are discussed from time to time in Catamaran's filings with the U.S. Securities and Exchange Commission, including the risks and uncertainties discussed under the captions Risk Factors and Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K and subsequent Form 10-Qs, which are available at Investors are cautioned not to put undue reliance on forward-looking statements. All subsequent written and oral forward-looking statements attributable to Catamaran or persons acting on our behalf are expressly qualified in their entirety by this notice. We disclaim any intent or obligation to update publicly these forward-looking statements, whether as a result of new information, future events or otherwise. THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS RELEASE REPRESENTS THE COMPANY S CURRENT EXPECTATIONS AND, ACCORDINGLY, IS SUBJECT TO CHANGE. HOWEVER, THE COMPANY EXPRESSLY DISCLAIMS ANY INTENTION OR OBLIGATION TO UPDATE OR REVISE ANY FORWARD-LOOKING INFORMATION, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE, EXCEPT AS REQUIRED BY APPLICABLE LAW. All figures are in US dollars unless otherwise stated. 2

3 Catamaran at a Glance Headquarters Employees Exchange Symbols Chicago Share Price (NASDAQ: June 2, 2014) 4,000 Shares Outstanding NASDAQ: CTRX TSX: CCT Market Cap (NASDAQ) US$ MM (f/d) ~$9.0B 3

4 Catamaran Redefining the Pharmacy Benefit Catamaran is a scaled alternative to the traditional PBM model Best-in-class technology platform providing unequalled flexibility Unsurpassed, high-touch service model Aggressive management of pharmacy costs through skill and scale Delivering superior, client-centric solutions to healthcare payers 4

5 Increased Complexity Requires Flexible Tools & Services RxExchange RxAuth RxPortal Mobile Retail Network RxMax RxExpress RxBuilder Specialty Pharmacy Medication Therapy Mgmt. RxClaim Clinical Services Customized Plan Design RxTrack Enhanced COB RxBuilder RxProvider Portal RxInterAct 5 Source: Catamaran

6 Growing Market Opportunity Increased drug utilization Aging population Growth of chronic diseases Drug price inflation $ Rx Spend $ 342B $300.0 $250.0 $200.0 $150.0 $ Rx Claims 4.4B $ $ Source: IMS Health and CMS, Office of the Actuary

7 Trends in the Industry - More effective clinical intervention and patient support - Real-time collaboration across the continuum Shift from Cost to Care Rise of Mass Individualization - More effective prescriptive analytics and individualized drugs - Use of real-time biometric and environmental data - Highly customized therapies and patient support Integrated Insight - Holistic view of the drug therapy and spend - Data and connectivity enable coordination of care - PBM is central to maximizing value and positive outcomes 7

8 Catamaran Manages Clients Drug Trend Catamaran leverages every touch point to minimize cost and maximizing outcomes Catamaran utilizes data and analytics to drive critical connections and innovative interventions Catamaran Drug Trend 2.7% 3.5% 2.6% 2.4% Source: Catamaran Trend Reports 2011, 2012, 2013, 2014

9 Catamaran Drug Trend Insights Generic utilization controls drug trend and aligns incentives with clients 10x Difference in Average Cost Average Cost of a Prescription Hepatitis C patients were being warehoused in 2013 waiting for emerging technologies Hepatitis C Class 42.5% Utilization decreases in 2013 $307 Brand $30 Generic 70% * of Hepatitis C therapy utilizers are using Sovaldi either alone or in combination with another agent *Data from Q utilization in Catamaran PBM s book of business Source: Catamaran Trend Report 2014

10 Growth in Rx Spend Driven by Medicare/Medicaid Overall growth in drug spend driven by Medicare and Medicaid Catamaran is an established leader in Medicare Part D Outpaced growth in Medicaid spend should help fuel Catamaran s growth Medicaid % 12.3% CAGR CAGR Medicare 8.6% CAGR % CAGR All Other Rx Spend 6.7% CAGR 6.7 % CAGR Source: CMS - National Health Expenditure Projections

11 Affordable Care Act Drives Rx Growth million newly covered individuals expected by 2018 Projected U.S. Spending on Retail Prescription Drugs (billions) Pharmacy benefits are mandated Out-of-pocket maximums are in place Penalties increase over time incentivizing healthcare coverage Dependents up to 26 years old are covered $500 $450 $400 $350 $300 $ With ACA Without ACA Source: Centers for Medicare and Medicaid Services, Office of the Actuary - National Health Statistics 11

12 Affordable Care Act - Coverage Channels Newly Insured 26M people by 2017 CO-OP Health Plan Health Plan Exchange Health Plan Managed Medicaid Fee-for- Service Medicaid 1 Traditional PBMs 2 3 Source: Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) 12

13 Catamaran Is Well Positioned for Success in 2014 and Beyond Catamaran s Client Breakdown Based on Revenue Other Employers Health Plans 13 Source: Catamaran

14 Catamaran PBM Market Share Growth Potential Catamaran Channel-agnostic PBM 9% Other PBMs 35% 22% Retailer-owned PBM 34% Mail-centric PBM 14 Market share based on PBM script volume Source: IMS Catamaran

15 Ideally Positioned in a Changing World Catamaran is a credible alternative in the industry taking market share from competitors Possess a core competency of sourcing and integrating accretive acquisitions Track record of financial growth unmatched in the industry 15

16 Catamaran Financials

17 Catamaran Business Model Revenue Drivers: Aging population drives drug spend increase New sales wins and ACA lives Conversion of HCIT clients to full-service PBM Acquisitions Profit Drivers: Generic launches Growth in specialty pharmacy Skill and scale in purchasing power Synergies realized from acquisitions 17

18 Financial Results (millions, except EPS) Fiscal 2013 Q Q Fiscal 2014 Guidance* Revenue $14,780.1 $3,219.7 $4,914.5 $20,000 21,000 EBITDA 1 $651.1 $143.5 $170.9 $ GAAP EPS (f/d) $1.27 $0.25 $0.31 $ ADJ EPS 1 (f/d) $2.00 $0.42 $0.50 $ ($ millions) As at: Dec 31, 2013 Mar 31, 2014 Cash & Equivalents $387.2 $ See Summary Non-GAAP Financial Measures slide for reconciliations of Non-GAAP measures * The guidance provided herein reflects the most recent earnings press release and does not imply a reiteration or update of guidance.

19 Catamaran Growth Strategies 1) 2) 3) 4) Grow organically by providing flexible solutions to payers to control drug trend and overall healthcare spend Empower health plan clients to be successful winning ACA lives Continue to deliver outsized growth in BriovaRx, Catamaran s specialty pharmacy operation Pull-through of PBM services to clients 5) Strategic business combinations and acquisitions Catamaran Revenue

20 Thank You

21 21 Appendix

22 Catamaran Financial Definitions EBITDA Net income attributable to the Company +/- Income tax expense +/- Interest and other expense, net + Depreciation of property and equipment + Amortization of intangible assets +/- Adjustments related to noncontrolling interest = EBITDA Adjusted EPS Net income attributable to the Company + Amortization of intangible assets (net of tax) = Non-GAAP net income attributable to the Company Weighted avg. diluted shares = Adjusted EPS (diluted) 22

23 1 Non-GAAP Reconciliations Reconciliations of EBITDA to net income are shown below EBITDA Reconciliation (in thousands) Three Months Ended Year Ended March 31, December 31, Net Income Attributable to the Company (GAAP) $63,445 $51,408 $262,170 Add: Depreciation of Property & Equipment 13,359 8,103 42,232 Amortization of Intangible Assets 54,986 50, ,192 Interest and Other Expense, Net 11,336 11,039 41,626 Income Tax Expense 28,108 23, ,403 Adjustments related to non-controlling interest (384) (92) (1,527) EBITDA $170,850 $143,542 $651,096 23

24 1 Non-GAAP Reconciliations Reconciliations of GAAP EPS (fully-diluted) to adjusted EPS (fully-diluted) are shown below Adjusted EPS Reconciliation (in thousands, except per share data) Net Income Attributable to the Company (GAAP) Amortization of Intangible Assets Tax Effect of Reconciling Item Non-GAAP Net Income Attributable to the Company Operational Results Three Months Ended March 31, Year Ended December 31, Per Diluted Share Operational Results Per Diluted Share Operational Results Per Diluted Share $63,445 $0.31 $51,408 $0.25 $ 262,170 $ , , , (14,681) (0.07) (14,466) (0.07) (52,220) (0.25) $103,750 $0.50 $86,998 $0.42 $ 413,142 $

25 1 Summary Non-GAAP Financial Measures Non-GAAP Financial Measures Catamaran reports its financial results in accordance with generally accepted accounting principles in the United States ( GAAP ). Catamaran s management also evaluates and makes operating decisions using various other measures. Such measures are adjusted earnings per share and EBITDA, which are non-gaap financial measures. Catamaran s management believes that these measures provide useful supplemental information regarding the performance of Catamaran s business operations. Adjusted EPS is a non-gaap measure which takes earnings per share and adds back the impact of amortization of intangible assets, net of tax. Amortization of intangible assets arises from the acquisition of intangible assets in connection with the Company s acquisitions. Catamaran excludes amortization of intangible assets from adjusted EPS because it believes (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of Catamaran business operations and (ii) such expenses can vary significantly between periods as a result of new acquisitions and full amortization of previously acquired intangible assets. Investors should note that the use of these intangible assets will contribute to revenue in the future period presented and periods beyond that and should also note that such expense will recur in future periods. EBITDA is a non-gaap measure that management believes is a useful supplemental measure of operating performance prior to interest and other expense, net, income taxes, depreciation, and amortization. Management believes it is useful to exclude depreciation, amortization and interest and other expense, net, as these are essentially fixed amounts that cannot be influenced by management in the short term. Management believes that adjusted EPS and EBITDA provide useful supplemental information to management and investors regarding the performance of the Company s business operations and facilitate comparisons to its historical operating results. Management also uses this information internally for forecasting and budgeting as it believes that the measures are indicative of the Company s core operating results. Note however, that both items are performance measures only, and do not provide any measure of the Company s cash flow or liquidity. Non-GAAP financial measures should not be considered as a substitute for measures of financial performance in accordance with GAAP, and investors and potential investors are encouraged to review the reconciliation of adjusted EPS and EBITDA in our filings with the SEC. Adjusted EPS and EBITDA do not have standardized meanings prescribed by GAAP. The Company's method of calculating adjusted EPS and EBITDA may differ from the methods used by other companies and, accordingly, it may not be comparable to similarly titled measures used by other companies. Reconciliations of adjusted EPS and EBITDA to net income is available in our filings with the SEC. 25