Catalyst Health Solutions
Numbers matter
Catalyst has been helped recently by the acquisitions of FutureScripts and Walgreen's Health Initiative (WHI). The WHI tie-in will add more than 18 million subscribers and contribute 165 million prescriptions annually, going a long way toward adding to Catalyst's revenues going forward. However, the pharmacy benefits management space has become more competitive since Express Scripts
Helped by these acquisitions, and also by higher prescription volumes and a rise in branded-drug prices, Catalyst has seen it revenues soar. In the past 12 months, revenues have risen to $4.4 billion from $3.2 billion, up 38%. At the same time, net income has risen by only 6% to $76.7 million.
How’s it priced?
Let's look at how the company is valued when compared with its industry peers.
Company |
Trailing P/E |
Forward P/E |
TEV/FCF |
---|---|---|---|
Catalyst | 35.97 | 23.86 | 27.00 |
Express Scripts | 16.19 | 11.31 | 19.22 |
Medco | 14.54 | 11.46 | 13.32 |
Walgreen | 11.49 | 11.23 | 13.91 |
Source: Capital IQ, a division of Standard & Poor's.
As we can see, Catalyst has the highest P/E and TEV/FCF ratios and on those measures is the most expensive amongst its peers.
Even though I expect Catalyst to perform better in the long run given its recent acquisitions, its current price makes it look like an expensive bet. Maybe a price dip could be a good time to enter this stock. What say you, Fools?
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