SXC Health Solutions announces re-alignment plan to optimize costs and drive growth; Updates 2007 outlook



    - Program cost savings of approximately $3.0 million annually -

    LISLE, IL, Oct. 1 /CNW/ - SXC Health Solutions, Inc. ("SXC" or the
"Company") (NASDAQ:   SXCI, TSX: SXC), a leading provider of pharmacy benefits
management ("PBM") services and healthcare IT solutions to the healthcare
benefits management industry, today unveiled a re-alignment plan to optimize
its cost structure and enhance its growth prospects. This program is expected
to generate annual cost savings of approximately $3.0 million, a portion of
which will be re-deployed to support the fastest growing segments of the
Company's business.
    To generate cost savings, the Company has reduced its workforce by
approximately 7%. These reductions were focused on the provider and
administrative segments of the business. Most of the reductions took place at
the Company's Lisle, Illinois location. SXC now employs 425 people.
    "Having completed a thorough review of the business, we believe this is
the right time to reduce costs in certain areas of our operations in order to
focus our resources on our PBM services and transaction processing business
segments, the most rapidly growing segments of the Company," said Gordon S.
Glenn, Chairman and CEO of SXC. "We believe that these re-alignment measures
will allow us to deliver on our full potential and achieve our long-term
revenue growth objectives and margin expansion."
    SXC will incur one-time severance costs of approximately $0.8 million,
which will be reflected in the Company's third quarter fiscal 2007 financial
results. The Company expects that this charge will be partially offset by
related cost savings in the fourth quarter of fiscal 2007. However, starting
in the fourth quarter and into fiscal 2008, SXC intends to hire new personnel
in sales and to support the areas of the business with the most promising
growth opportunities, effectively re-investing a portion of the savings from
the staff reductions back into the business.
    In addition, the Company continues to experience higher then expected
legal and professional fees related to delayed and protested contracts as well
as additional receivable reserves, resulting in an additional charge in the
third quarter of approximately $0.8 million. This charge and the severance
cost are expected to have a combined impact of approximately ($0.05) on
earnings per share ("EPS") in 2007.

    2007 Guidance

    SXC is lowering its 2007 revenue guidance in two areas: 1) a reduction of
$2.5-$3.0 million of system sales revenue due to continued delays in the
signing of certain contracts as well as slower than expected retail pharmacy
sales and implementations; and 2) the deferral of $0.4-$0.8 million in
transaction processing revenue from certain informedRx contracts relative to
service level objectives which may not be met in 2007. The Company believes
that it will be successful signing a majority these delayed agreements and
recognizing a significant portion of the deferred revenue in 2008.
    SXC's guidance for fiscal 2007 is now the following: revenue of
$92-$93 million; adjusted EBITDA of $19 - 20 million; Pre-tax net income of
$15.5-$16.5 million; and EPS of $0.51-$0.55. Severance costs of $0.8 million
are included in the revised EPS forecast.
    Mr. Glenn added: "Although we are very dissatisfied to be revising our
outlook for this year, we expect to be successful with our delayed contract
signings and to rebound in 2008. We remain confident that we have the right
strategy and technology platform to continue to grow our market share and that
the actions we are taking to re-allocate resources within the organization are
essential steps to enhance our operational efficiency and to best position the
Company to resume its historical growth trend."
    The Company will provide additional updates on its re-alignment plan
during its third quarter 2007 conference call on November 8, 2007.

    About SXC Health Solutions

    SXC Health Solutions, Inc. (SXC) is a leading provider of pharmacy
benefits management (PBM) services and healthcare IT solutions to the
healthcare benefits management industry. The Company's product offerings and
solutions combine a wide range of software applications, application service
provider (ASP) processing services and professional services, designed for
many of the largest organizations in the pharmaceutical supply chain, such as
Federal, provincial, and, state and local governments, pharmacy benefit
managers, managed care organizations, retail pharmacy chains and other
healthcare intermediaries. SXC is based in Lisle, Illinois with locations in;
Scottsdale, Arizona; Warminster, Pennsylvania; Alpharetta, Georgia; Milton,
Ontario and Victoria, British Columbia. For more information please visit
www.sxc.com.

    Forward-Looking Statements

    Certain statements included herein, including those that express
management's expectations or estimates of our future performance, 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; consolidation in the healthcare industry; the existence of
undetected errors or similar problems in our software products; our ability to
identify and complete acquisitions, manage our growth and integrate
acquisitions; our ability to compete successfully; potential liability for the
use of incorrect or incomplete data; the length of the sales cycle for our
healthcare software solutions; interruption of our operations due to outside
sources; our dependence on key customers; maintaining our intellectual
property rights and litigation involving intellectual property rights; our
ability to obtain, use or successfully integrate third-party licensed
technology; compliance with existing laws, regulations and industry
initiatives and future change in laws or regulations in the healthcare
industry; breach of our security by third parties; our dependence on the
expertise of our key personnel; our access to sufficient capital to fund our
future requirements; and potential write-offs of goodwill or other intangible
assets. This list is not exhaustive of the factors that may affect any of our
forward-looking statements. Investors are cautioned not to put undue reliance
on forward-looking statements. All subsequent written and oral forward-looking
statements attributable to SXC 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. Risks and uncertainties
about our business are more fully discussed in our Annual Information Form.
    Certain of the assumptions made in preparing forward-looking information
and management's expectations include: maintenance of our existing customers
and contracts, our ability to market our products successfully to anticipated
customers, the impact of increasing competition, the growth of prescription
drug utilization rates at predicted levels, the retention of our key
personnel, our customers continuing to process transactions at historical
levels, that our systems will not be interrupted for any significant period of
time, that our products will perform free of major errors, our ability to
obtain financing on acceptable terms and that there will be no significant
changes in the regulation of our business.

    %SEDAR: 00001439E




For further information:

For further information: Jeff Park, Chief Financial Officer, SXC Health
Solutions, Inc., Tel: (630) 577-3206, investors@sxc.com; Dave Mason, Investor
Relations, The Equicom Group Inc., (416) 815-0700 ext. 237,
dmason@equicomgroup.com; Susan Noonan, Investor Relations - U.S., The SAN
Group, LLC, (212) 966-3650, susan@sanoonan.com

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