Yikes. Catalyst Health Solutions
A look at the numbers
Revenue for the quarter surged 39% from year-ago levels to $1.23 billion. The increase was driven by higher prescription volumes and an increase in prices of branded drugs. Higher prescription volumes resulted from addition of new clients.
Gross profits in the quarter increased to $69.6 million, up 33% from last year. This was helped by higher revenue and generic utilization, the latter of which increased because of the acquisitions of FutureScripts and Walgreens Health Initiative.
Selling, general, and administrative expenses nearly doubled to $48 million due to transaction, transition, and integration costs associated with the WHI acquisition. This led to a 37% drop in net income to $12.3 million.
Why WHI makes sense
It's going to be tough competing in the pharmacy benefits space, especially after industry heavyweights Express Scripts
The Foolish bottom line
Despite a drop in profit, Catalyst's current quarter was not completely disappointing. It saw decent top-line growth and I expect this trend to continue in future. As WHI gets integrated into Catalyst's fold, it should add to revenue -- as well as earnings -- in the long run.