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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Catamaran (NASDAQ: CTRX ) , a pharmacy-benefits management and health care information technology services provider, jumped as much as 15% after the company announced a long-term deal with CIGNA (NYSE: CI ) .
So what: CIGNA and Catamaran announced on Monday that they'd be forming a 10-year partnership whereby Catamaran would process drug claims, manage inventory levels, and fill orders for CIGNA's home-delivery pharmacy. The deal makes even more sense when you consider that Catamaran had been partnered with HealthSpring, a health-benefits provider that CIGNA purchased last year, so this should be a relatively seamless partnership. According to research firm BMO Capital Markets, this deal could add an additional $5.5 billion in revenue on top of the $3 billion it already nets through its HealthSpring partnership.
Now what: This seems like a win-win for both parties involved. Catamaran gains a significantly larger partner in CIGNA (the fourth-largest health-benefits provider in the U.S.), while CIGNA gets the assurance that integrating the partnership into its distribution network should be relatively quick and easy. All told, both companies could still be attractive investments at their current levels.
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