SXC Health solutions announces second quarter financial results

SXC posts record results and revises guidance upward

LISLE, IL, Aug. 5 /CNW/ - SXC Health Solutions Corp. ("SXC" or the "Company") (NASDAQ: SXCI, TSX: SXC), announces its financial results for the three-month and six-month periods ended June 30, 2010. Financial references are in U.S. dollars unless otherwise indicated.

    
    Q2 2010 Highlights
    ------------------
    -   Revenue grew 49% on a year over year basis to $479.4 million,
        compared to $320.8 million in Q2 2009
    -   Gross profit was $53.7 million, compared to $47.2 million in Q2 2009
    -   Adjusted EBITDA(1) was $31.5 million, compared to $23.7 million in Q2
        2009
    -   GAAP net income increased to $17.1 million, or $0.55 per share
        (fully-diluted), compared to $12.0 million, or $0.47 per share
        (fully-diluted), in Q2 2009
    -   Non-GAAP adjusted earnings per share(1) (diluted) was $0.58, which
        excludes the NMHC transaction-related amortization, compared to $0.53
        in Q2 2009
    -   Cash from operations was $39.5 million, compared to $19.8 million in
        Q2 2009
    -   Adjusted prescription claim volume(1) for the PBM segment was 11.8
        million, compared to 8.9 million in Q2 2009
    -   Transaction processing volume for the HCIT segment was 99.6 million,
        compared to 98.8 million in Q2 2009
    -   Mail order penetration was 11.5%, compared to 8% in Q2 2009
    -   Successfully converted another HCIT client to PBM services in the
        quarter
    -   Completed development and testing of software to support the National
        Council for Prescription Drug Programs (NCPDP) version D.0 of the
        NCPDP Telecommunication Standard, well ahead of the January 1, 2011
        compliance date
    

"We have carried the positive momentum from 2009 into 2010 as evidenced by our significant growth in revenue, adjusted EBITDA and net income. Our implementation of the HealthSpring Inc. contract is on schedule and during Q2 we began to ramp up activity with the speciality pharmaceuticals portion of that agreement," said Mark Thierer, President and CEO of SXC. "We have a robust pipeline of new sales opportunities which over the next few months will reach the decision-making phase. In addition to these new contract opportunities, we continue to focus on existing client retention, HCIT to PBM conversions and cross-selling opportunities to drive organic growth within our business."

    
    Financial Review
    ----------------
    

SXC evaluates segment performance based on revenue and gross profit. A reconciliation of the Company's PBM and HCIT business segments to the consolidated financial statements for the three-month and six-month periods ended June 30, 2010 and 2009 is as follows:

    
    Three months ended June 30, (unaudited, in thousands)

                     PBM                   HCIT              Consolidated
            --------------------- --------------------- ---------------------
               2010       2009       2010       2009       2010       2009
            ---------- ---------- ---------- ---------- ---------- ----------
    Revenue $ 451,295  $ 293,906  $  28,151  $  26,923  $ 479,446  $ 320,829
    Cost of
     revenue  412,681    259,376     13,026     14,242    425,707    273,618
            ---------- ---------- ---------- ---------- ---------- ----------
    Gross
     profit $  38,614  $  34,530  $  15,125  $  12,681  $  53,739  $  47,211
    Gross
     profit %    8.6%      11.7%      53.7%      47.1%      11.2%      14.7%


    Six months ended June 30, (unaudited, in thousands)

                     PBM                   HCIT              Consolidated
            --------------------- --------------------- ---------------------
               2010       2009       2010       2009       2010       2009
            ---------- ---------- ---------- ---------- ---------- ----------
    Revenue $ 878,797  $ 561,686  $  52,797  $  50,103  $ 931,594  $ 611,789
    Cost of
     revenue  801,847    498,374     25,780     27,020    827,627    525,394
            ---------- ---------- ---------- ---------- ---------- ----------
    Gross
     profit $  76,950  $  63,312  $  27,017  $  23,083  $ 103,967  $  86,395
    Gross
     profit %    8.8%      11.3%      51.2%      46.1%      11.2%      14.1%
    

Revenue

Q2 2010 PBM revenue was $451.3 million, compared to $293.9 million for Q2 2009. PBM revenue for the year-to-date (YTD) period was $878.8 million, compared to $561.7 million in the prior period. The increase in revenue is primarily due to new customer starts as of January 1, 2010. Revenues have also increased as compared to the same period in 2009 due to an increase in PBM services sold to several HCIT customers during 2010 and the second half of 2009.

Q2 2010 HCIT revenue was $28.2 million, compared to $26.9 million for Q2 2009. For the YTD period, HCIT revenue was $52.8 million, compared to $50.1 million in the prior period. HCIT revenue grew in the quarter due to approximately $3 million related to performance awards earned in the quarter which are not expected to recur during the remainder of 2010.

Gross Profit

Gross profit for Q2 2010 increased $6.5 million to $53.7 million, compared to $47.2 million in Q2 2009. For the YTD period, gross profit increased $17.6 million to $104.0 million, compared to $86.4 million in the prior period. The year over year increase in gross profit during the Q2 and YTD periods, respectively, was primarily due to increased margins earned from incremental PBM revenues and the $3 million performance award in the HCIT segment earned in Q2 2010. Gross margin as a percentage of revenue was 11.2% for Q2 2010, compared to 14.7% in the prior period. The lower percentage is due to increases in PBM revenues which carry a lower margin percentage as compared to HCIT revenues.

Product Development Costs

Product development costs remained constant, with $3.0 million recorded in each of the Q2 2010 and Q2 2009 periods. Product development costs for the YTD period were $6.1 million, compared to $6.2 million in the prior period. Product development remains a key priority for SXC as the Company seeks to develop enhancements to existing products and launch new offerings.

Selling, General and Administration ("SG&A") Costs

SG&A costs for Q2 2010 were $21.5 million, compared to $21.9 million in Q2 2009. SG&A costs for the YTD period were $42.8 million, compared to $42.7 million in the prior period. The Company is focused on controlling costs and it was able to decrease SG&A costs on a year-over-year basis, despite increased costs attributable to stock-based compensation. The increase in stock-based compensation expense is mainly attributable to the increase in the value of SXC's common shares since the prior year periods.

Adjusted EBITDA(1)

Q2 2010 adjusted EBITDA was $31.5 million, compared to $23.7 million in Q2 2009. Adjusted EBITDA for the YTD period was $59.2 million, compared to $40.0 million in the prior period. The year-over-year growth in adjusted EBITDA was due primarily to new contract wins, HCIT to PBM conversions, as well as improved purchasing efficiencies on prescription drugs.

Income Taxes

The Company recognized income tax expense of $8.4 million in Q2 2010, representing an effective tax rate of 32.8%, compared to an income tax expense of $5.2 million in Q2 2009, representing an effective tax rate of 30.3%. Income tax expense for the YTD period was $15.5 million, representing an effective tax rate of 32.7%, compared to an income tax expense of $8.1 million in the prior period, representing an effective tax rate of 29.1%. The change in the effective tax rate is due primarily to higher earnings in 2010.

Net Income

The Company reported Q2 2010 net income of $17.1 million, or $0.55 per share (fully-diluted), compared to $12.0 million, or $0.47 per share (fully-diluted), in Q2 2009. Net income for the YTD period was $31.9 million, or $1.02 per share (fully-diluted), which also included $4.0 million of intangible asset amortization, compared to net income in the prior period of $19.7 million, or $0.79 per share (fully-diluted), which included $5.2 million of intangible asset amortization.

Cash from Operations

SXC continues to generate strong cash from operations. For Q2 2010, the Company generated $39.5 million of cash from operations, compared to $19.8 million during Q2 2009. The Company's quarterly cash flows can be impacted by the timing of pharmacy benefit claim payments and rebate payments it receives. For the YTD period, SXC generated cash from operations of $36.8 million, compared to $31.7 million in the prior period.

At June 30, 2010 and December 31, 2009, SXC had cash and cash equivalents totalling $352.6 million and $304.4 million, respectively. The Company believes that its cash on hand, together with cash generated from operating activities will be sufficient to support planned operations through the foreseeable future.

2010 Full Year Financial Guidance

With today's announcement, SXC is revising certain of its 2010 full year financial targets:

    
    -   Revenue of $1.9 to $2.0 billion, remains unchanged
    -   Gross profit of $202 to $210 million versus prior estimate of $198 to
        $208 million
    -   Adjusted EBITDA of $115 to $117 million versus prior estimate of
        $111 to $115 million
    -   Fully-diluted GAAP EPS (including all transaction-related
        amortization) of $1.96 to $2.00 versus prior estimate of $1.84 to
        $1.92
    -   Fully-diluted Non-GAAP adjusted EPS(1) (excluding the NMHC
        transaction-related amortization) of $2.09 to $2.13 versus prior
        estimate of $1.96 to $2.05
    

Notice of Conference Call

SXC will host a conference call on Thursday, August 5, 2010 at 8:30 a.m. ET to discuss its financial results. Mark Thierer, President and CEO, and Jeff Park, EVP and CFO will co-chair the call. All interested parties can join the call by dialing 1-888-231-8191 or 647-427-7450. Please dial in 15 minutes prior to the call to secure a line. The conference call will be archived for replay until Thursday, August 12, 2010 at midnight. To access the archived conference call, please dial 1-800-642-1687 or 416-849-0833 and enter the reservation code 87826680 followed by the number sign.

A live audio webcast of the conference call will be available www.sxc.com and www.newswire.ca. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. An archived replay of the webcast will be available for 365 days.

(1)Non-GAAP Financial Measures

SXC reports its financial results in accordance with generally accepted accounting principles in the United States ("GAAP"). SXC's management also evaluates and makes operating decisions using various other measures. Two such measures are adjusted Earnings Per Share ("EPS") and adjusted EBITDA, which are non-GAAP financial measures. SXC's management believes that these measures provide useful supplemental information regarding the performance of SXC's business operations.

Adjusted EPS is a non-GAAP measure which takes EPS and adds back the impact of amortization expense related to the acquisition completed in Q2 2008 of NMHC, net of tax. Acquisition-related amortization expense is a non-cash expense arising from the acquisition of intangible assets in connection with the acquisition. SXC excludes acquisition-related amortization expense from non-GAAP adjusted EPS because it believes (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of SXC 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 contributes to revenue in the period presented as well as future periods and should also note that such expense will recur in future periods. The 2010 guidance of adjusted EPS was computed by taking the Company's GAAP EPS guidance and adding back the expected impact of acquisition-related amortization expense, net of tax.

Adjusted EBITDA is a non-GAAP measure that management believes is a useful supplemental measure of operating performance prior to net interest income (expense), income taxes, depreciation, amortization and stock-based compensation. Management believes it is useful to exclude depreciation, amortization and net interest income (expense) as these are essentially fixed amounts that cannot be influenced by management in the short term. In addition, management believes it is useful to exclude stock-based compensation as this is not a cash expense.

The 2010 full year guidance of adjusted EBITDA was computed by taking the Company's earnings before interest, taxes, depreciation and amortization as well as estimated stock compensation expense of $6.0 million. Adjusted EPS was computed by taking the Company's GAAP EPS (fully-diluted) guidance and adding back the expected impact of NMHC acquisition related amortization expense totaling $4.0 million (net of an estimated 33.5% tax rate).

Adjusted prescription volume equals SXC's Mail Service prescriptions multiplied by three, plus its retail and specialty prescriptions. The Mail Service prescriptions are multiplied by three to adjust for the fact that they typically include approximately three times the amount of product days supplied compared with retail prescriptions.

Management believes that adjusted EPS, adjusted EBITDA and adjusted prescription volume 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 these 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 adjusted EBITDA.

Adjusted EPS and adjusted EBITDA do not have standardized meanings prescribed by GAAP. The Company's method of calculating these items may differ from the methods used by other companies and, accordingly, it may not be comparable to similarly titled measures used by other companies. A reconciliation of adjusted EBITDA to net income and adjusted net income to net income is shown below (in thousands, except per share data):

    
                         For the three months ended  For the six months ended
                                   June 30,                  June 30,
                              2010         2009         2010         2009
                         --------------------------  ------------------------
                                  (unaudited)               (unaudited)

    Adjusted EBITDA        $   31,458   $   23,657   $   59,178   $   39,988

    Amortization of
     Intangible Assets         (1,978)      (2,415)      (3,973)      (5,240)

    Depreciation of
     Property & Equipment      (2,146)      (1,968)      (4,235)      (3,944)

    Stock-Based
     Compensation              (1,617)        (817)      (2,881)      (1,430)

    Other (Expense)
     income, net                  (60)        (283)        (259)          42

    Net Interest Expense         (143)        (979)        (388)      (1,689)

    Income Tax (Expense)       (8,369)      (5,218)     (15,505)      (8,068)
                         -------------  -----------  -----------  -----------

    Net Income             $   17,145   $   11,977   $   31,937   $   19,659
                         -------------  -----------  -----------  -----------
                         -------------  -----------  -----------  -----------



                         For the three months ended  For the six months ended
                                   June 30,                  June 30,
                              2010         2009         2010         2009
                         --------------------------  ------------------------
                                  (unaudited)               (unaudited)

    Non-GAAP Adjusted EPS
    Net Income             $   17,145   $   11,977   $   31,937   $   19,659

    Amortization of NMHC
     Intangibles
     (Net of Taxes)             1,007        1,320        2,016        2,996
                         -------------  -----------  -----------  -----------

    Adjusted Net-Income    $   18,152   $   13,297   $   33,953   $   22,655
                         -------------  -----------  -----------  -----------
                         -------------  -----------  -----------  -----------

    Adjusted EPS (diluted) $     0.58   $     0.53   $     1.09   $     0.91
    

About SXC Health Solutions Corp.

SXC Health Solutions Corp. is a leading provider of pharmacy benefit management services and healthcare information technology solutions to the healthcare benefits management industry. As the industry's "Technology-Enabled PBM"(TM), SXC's product offerings and solutions combine a wide range of advanced PBM services, software applications, application service provider processing services, and professional services to help healthcare organizations reduce the cost of prescription drugs and deliver better healthcare to their members. SXC serves many of the largest organizations in the pharmaceutical supply chain, such as health plans; employers; Federal, provincial, and state governments; institutional pharmacies; pharmacy benefit managers; and retail pharmacy chains. SXC is headquartered in Lisle, Illinois with multiple locations in North America. Learn more at 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. Other factors that should be considered are discussed from time to time in SXC'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 2009 Annual Report on Form 10-K and subsequent Form 10-Qs, which are available at www.sec.gov. 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.

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.

    
                         SXC HEALTH SOLUTIONS CORP.
                         Consolidated Balance Sheets
                      (in thousands, except share data)

                                                      June 30,   December 31,
                                                    ------------ ------------
                                                        2010         2009
                                                    ------------ ------------
                                                     (unaudited)
                                   ASSETS

    Current assets
      Cash and cash equivalents                      $  352,624   $  304,370
      Restricted cash                                    14,321       14,169
      Short term investments                                  -        4,639
      Accounts receivable, net of allowance for
       doubtful accounts of $3,363 (2009 - $2,871)      103,938       97,330
      Rebates receivable                                 34,931       17,630
      Prepaid expenses and other assets                   6,053        4,483
      Inventory                                           8,228        7,451
      Deferred income taxes                               6,358        9,875
                                                    ------------ ------------
        Total current assets                            526,453      459,947

    Property and equipment, net of accumulated
     depreciation of $31,655 (2009 - $27,421)            19,171       19,880
    Goodwill                                            141,787      141,787
    Other intangible assets, net of accumulated
     amortization of $27,804 (2009 - $23,831)            33,601       37,574
    Deferred income taxes                                 1,294        1,641
    Other assets                                            252        1,251
                                                    ------------ ------------
    Total assets                                     $  722,558   $  662,080
                                                    ------------ ------------
                                                    ------------ ------------


                    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities
      Accounts payable                               $    8,227   $    9,916
      Customer deposits                                  15,372       14,832
      Salaries and wages payable                          9,343       12,349
      Accrued liabilities                                23,792       30,786
      Pharmacy benefit management rebates payable        59,570       46,606
      Pharmacy benefit claim payments payable            72,915       61,669
      Deferred revenue                                   10,435        7,304
                                                    ------------ ------------
        Total current liabilities                       199,654      183,462

    Deferred income taxes                                13,676       13,597
    Deferred lease inducements                            2,511        2,748
    Deferred rent                                         1,336        1,337
    Other liabilities                                     1,753        2,442
                                                    ------------ ------------
      Total liabilities                                 218,930      203,586


    Shareholders' equity
      Common shares: no par value, unlimited
       shares authorized;
      30,402,790 shares issued and outstanding at
       June 30, 2010 (December 31, 2009 -
       30,057,281 shares)                               369,869      361,530
      Additional paid-in capital                         20,010       15,153
      Retained earnings                                 113,749       81,812
      Accumulated other comprehensive loss                    -           (1)
                                                    ------------ ------------
        Total shareholders' equity                      503,628      458,494

                                                    ------------ ------------
    Total liabilities and shareholders' equity       $  722,558   $  662,080
                                                    ------------ ------------
                                                    ------------ ------------



                         SXC HEALTH SOLUTIONS CORP.
                    Consolidated Statements of Operations
              (in thousands, except  share and per share data)

                              Three Months Ended         Six Months Ended
                                   June 30,                   June 30,
                          ------------------------- -------------------------
                              2010         2009          2010         2009
                          ------------ ------------ ------------ ------------
                                 (unaudited)               (unaudited)
                          ------------ ------------ ------------ ------------
    Revenue:
      PBM                  $  451,295   $  293,906   $  878,797   $  561,686
      HCIT                     28,151       26,923       52,797       50,103
                          ------------ ------------ ------------ ------------
    Total revenue             479,446      320,829      931,594      611,789

    Cost of revenue:
      PBM                     412,681      259,376      801,847      498,374
      HCIT                     13,026       14,242       25,780       27,020
                          ------------ ------------ ------------ ------------
    Total cost of revenue     425,707      273,618      827,627      525,394
                          ------------ ------------ ------------ ------------
    Gross profit               53,739       47,211      103,967       86,395

    Expenses:
      Product development
       costs                    3,021        3,027        6,094        6,190
      Selling, general and
       administrative          21,486       21,907       42,792       42,704
      Depreciation of
       property and equipment   1,537        1,405        3,019        2,887
      Amortization of
       intangible assets        1,978        2,415        3,973        5,240
                          ------------ ------------ ------------ ------------
                               28,022       28,754       55,878       57,021
                          ------------ ------------ ------------ ------------
    Operating income           25,717       18,457       48,089       29,374

    Interest income              (175)        (225)        (324)        (471)
    Interest expense              318        1,204          712        2,160
                          ------------ ------------ ------------ ------------
      Net interest expense        143          979          388        1,689

    Other expense (income),
     net                           60          283          259          (42)
                          ------------ ------------ ------------ ------------
    Income before income
     taxes                     25,514       17,195       47,442       27,727
    Income tax expense:
      Current                   7,209        4,403       12,738        6,604
      Deferred                  1,160          815        2,767        1,464
                          ------------ ------------ ------------ ------------
                                8,369        5,218       15,505        8,068
                          ------------ ------------ ------------ ------------
    Net income             $   17,145   $   11,977   $   31,937   $   19,659
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------

    Earnings per share:
      Basic                $     0.56   $     0.49   $     1.06   $     0.81
      Diluted              $     0.55   $     0.47   $     1.02   $     0.79

    Weighted average number
     of shares used in
     computing earnings
     per share:
      Basic                30,346,466   24,638,986   30,220,682   24,417,241
      Diluted              31,389,017   25,270,639   31,200,704   25,001,382



                         SXC HEALTH SOLUTIONS CORP.
                    Consolidated Statements of Cash Flows
                               (in thousands)

                              Three Months Ended         Six Months Ended
                                   June 30,                   June 30,
                          ------------------------- -------------------------
                              2010         2009          2010         2009
                          ------------ ------------ ------------ ------------
                                 (unaudited)               (unaudited)

    Cash flows from
     operating activities:
      Net income           $   17,145   $   11,977   $   31,937   $   19,659
      Items not involving
       cash:
        Stock-based
         compensation           1,617          817        2,88         1,430
        Depreciation of
         property and
         equipment              2,146        1,968       4,235         3,944
        Amortization of
         intangible assets      1,978        2,415       3,973         5,240
        Deferred lease
         inducements and rent    (117)        (324)       (238)         (369)
        Deferred income taxes   1,160          815       2,767         1,464
        Tax benefit on option
         exercises             (1,506)        (544)     (5,588)       (2,106)
      Changes in operating
       assets and
       liabilities, net of
       effects from
       acquisitions:
        Accounts receivable     4,664        3,489      (6,624)         (374)
        Rebates receivable     (2,801)       1,375     (17,301)        7,074
        Restricted cash           (16)        (507)       (152)       (1,637)
        Prepaid expenses
         and other assets      (1,412)        (743)     (1,571)       (1,164)
        Inventory                  11          (60)     (1,122)          597
        Income tax
         recoverable            3,462        2,150       7,108         2,238
        Accounts payable          698        1,282      (1,685)           84
        Accrued liabilities        38        2,601     (10,696)       (6,016)
        Pharmacy benefit
         claim payments
         payable                8,909       (9,951)     11,246        (9,466)
        Pharmacy benefit
         management rebates
         payable                  967        6,989      12,964         9,530
        Deferred revenue        1,719       (2,775)      3,107           472
        Customer deposits        (111)      (1,402)        540           772
        Other                     917          266       1,020           308
                          ------------ ------------ ------------ ------------
          Net cash provided
           by operating
           activities          39,468       19,838      36,801        31,680

    Cash flows from
     investing activities:
      Purchases of
       property and
       equipment               (2,556)      (2,457)     (3,526)       (5,746)
      Sales of short term
       investments                  -            -       6,828             -
      Purchases of short
       term investments             -            -      (2,208)            -
      Acquisitions, net
       of cash acquired             -       (1,996)          -        (2,176)
                          ------------ ------------ ------------ ------------
      Net cash provided
       (used) by investing
       activities              (2,556)      (4,453)      1,094        (7,922)

    Cash flows from
     financing activities:
      Proceeds from
       exercise of options        960        2,003        4,727        4,349
      Tax benefit on
       option exercises         1,506          544        5,588        2,106
      Repayment of
       long-term debt               -       (1,200)           -       (1,320)
                          ------------ ------------ ------------ ------------
      Net cash provided
       by financing
       activities               2,466        1,347       10,315        5,135

    Effect of foreign
     exchange on cash
     balances                       5          (68)          44           26
                          ------------ ------------ ------------ ------------

    Increase in cash and
     cash equivalents          39,383       16,664       48,254       28,919

    Cash and cash
     equivalents,
     beginning of period      313,241       79,970      304,370       67,715
                          ------------ ------------ ------------ ------------

    Cash and cash
     equivalents,
     end of period         $  352,624   $   96,634   $  352,624   $   96,634
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------
    

%SEDAR: 00001439E

SOURCE Catamaran

For further information: For further information: Jeff Park, Chief Financial Officer, SXC Health Solutions, Inc., Tel: (630) 577-3100, investors@sxc.com; Dave Mason, Investor Relations - Canada, The Equicom Group Inc. S.A., (416) 815-0700 ext. 237, dmason@equicomgroup.com; Susan Noonan, Investor Relations - U.S., Noonan Communications, LLC, (212) 966-3650, susan@sanoonan.com

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