LISLE, Il, Nov. 17, 2011 /CNW/ - SXC Health Solutions Corp. ("SXC" or
the "Company") (NASDAQ: SXCI, TSX: SXC), a leading provider of pharmacy
benefit management (PBM) services and healthcare information technology
(HCIT) solutions to the healthcare benefits management industry,
announces that it has entered into a definitive agreement to acquire
HealthTrans LLC ("HealthTrans"), a middle-market PBM service company
based in Colorado, for a purchase price of $250 million in cash,
subject to certain customary post-closing adjustments.
HealthTrans provides PBM and HCIT services to approximately 260 clients.
Its PBM business includes a full suite of PBM offerings including a
nationwide retail network, formulary and rebate management, Part D
services and mail order. HealthTrans is an existing HCIT customer of
SXC and utilizes an SXC platform for its claims adjudication.
HealthTrans also provides claims adjudication services to a number of
other PBMs using the same SXC platform, so this acquisition will
provide additional HCIT clients to SXC. Headquartered in the Denver
area, HealthTrans employs more than 250 employees with additional
offices in Florida, Georgia and Illinois.
"The acquisition of HealthTrans is a great fit with our strategy to
acquire mid-market PBM customers that already utilize our HCIT
services," said Mark Thierer, Chairman and CEO of SXC. "HealthTrans is
one of the largest, privately held PBMs in the country. It has a
diverse customer base and a track record of strong cash flow. The
acquisition not only adds to our scale, but also provides us the
opportunity to bring our full suite of PBM services to their clients.
HealthTrans' existing HCIT customers expand our pool of potential
"SXC brings new products and services to cross-sell to our customer base
along with the financial resources to help further strengthen our
competitive position. The transaction also provides our staff with an
opportunity to join a dynamic company with a proven track record for
growth. We look forward to becoming part of the SXC family," said Jack
McClurg, CEO of HealthTrans.
HealthTrans generated approximately $270 million in annual revenue from
its PBM and HCIT segments and approximately $20 million in annual
adjusted EBITDA prior to the acquisition. SXC expects annual synergies
of $10-15 million to be achieved in the integration timeframe of 12 to
18 months, following completion of the transaction. SXC expects
transaction costs and integration expenses of approximately $5 million
to be incurred over the same 12 to 18 month integration timeframe.
Synergies are expected to be generated from consolidation of
infrastructure, operating savings from increased scale of the combined
company, and tax benefits from the transaction structure.
SXC expects deal amortization of $23-25 million in the first year
post-closing. The acquisition is expected to close in the first quarter
of 2012 and is subject to various closing conditions, including the
expiration or termination of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act.
The purchase price of $250 million is expected to be funded from SXC's
existing cash balance. SXC may also finance a portion of the purchase
price through a committed $50 million unsecured line of credit from
J.P. Morgan Chase Bank, N.A. The Company may pursue an increase of its
line of credit based on its review of market conditions and other
About SXC Health Solutions Corp.
SXC Health Solutions Corp. is a leading provider of pharmacy benefits
management (PBM) services and Health Care Information Technology (HCIT)
solutions to the healthcare benefits management industry. The Company's
product offerings and solutions combine a wide range of PBM services
and 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
health plans, employers, federal, provincial, and, state and local
governments, pharmacy benefit managers, retail pharmacy chains and
other healthcare intermediaries. SXC is headquartered in Lisle,
Illinois with multiple locations in the US and Canada. For more
information please visit www.sxc.com.
HealthTrans is a privately held healthcare management solutions company,
formed in 2000 with a diverse customer base that includes managed care
organizations (MCOs), pharmacy benefit managers (PBMs), workers'
compensation plans, specialty programs, third-party administrators
(TPAs), resellers and government-sponsored plans. HealthTrans'
full-spectrum of healthcare management products and services include
claims processing solutions, full PBM services, medical claims
processing, clinical programs, benefits administration services, mail
order options and discount healthcare programs. For more information,
please visit www.healthtrans.com.
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. One such measure is adjusted EBITDA, which is a non-GAAP
financial measure. SXC's management believes that this measure provides
useful supplemental information regarding the performance of SXC's
Adjusted EBITDA represents net income before net interest income
(expense), income taxes, depreciation, amortization and stock-based
compensation expense. 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 a non-cash expense.
Adjusted EBITDA of HealthTrans is calculated on the same basis as
Adjusted EBITDA of SXC. With respect to HealthTrans, there was no
stock-based compensation expense in the trailing twelve-month period.
Note, however, that Adjusted EBITDA is a performance measure only, and
does 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.
Adjusted EBITDA does not have standardized meanings prescribed by GAAP.
The Company's and HealthTrans' method of calculating Adjusted EBITDA
may differ from the methods used by other companies and, accordingly,
may not be comparable to similarly titled measures used by other
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 complete the acquisition of HealthTrans; our dependence
on, and ability to retain, key customers; 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,
integrate acquisitions and achieve expected synergies from acquisitions
(in the anticipated timeframe or at all); 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; 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 2010 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.
SOURCE SXC Health Solutions Corp.
For further information:
SXC Health Solutions Corp.