Catamaran Corp., the fourth-largest drug-benefits manager, will be “very active” this year in buying smaller competitors and sees opportunities in the state-run Medicaid program for the poor, Chief Executive Officer Mark Thierer said.
The company is evaluating half-a-dozen acquisition targets and has about $1 billion to spend in cash and available credit, Thierer said in an interview today. The likeliest targets are more than 30 smaller pharmacy benefit managers that use Catamaran’s drug-management technology, he said.
“One of the core strategies that we’ve executed in the last several years is a roll-up of the middle market in the PBM space,” Thierer said. “There’s nothing preventing us from entering the market in 2013” for acquisitions.
Catamaran, formed last year from SCX Health Solutions Corp. and Catalyst Health Solutions Inc., doubled sales in 2012 to $9.9 billion after the combination and the acquisition of HealthTrans, the Lisle, Illinois-based company said today in a statement. The benefits manager forecast 2013 sales of as much as $14.6 billion, less than the $14.9 billion average of 24 analyst estimates compiled by Bloomberg.
Catamaran fell 3.2 percent to $53.75 at 4 p.m. New York time. Fourth-quarter earnings, excluding one-time items, of 39 cents a share exceeded by 4 cents the average of 23 analyst estimates.
Medicaid may become a bigger market for Catamaran, Thierer said. The company has contracts with nine states, led by Georgia, to manage prescriptions for poor people enrolled in the $459 billion federal-state program.
States are deciding under the 2010 Affordable Care Act health-care law whether to expand Medicaid to cover more people earning near-poverty wages. Eight Republican governors who once opposed the law have agreed to the expansion, in large part because the federal government will pay 100 percent of the cost until 2017.
“You’re going to see Medicaid expansions throughout the country because of the guarantee of this 100 percent federal funding,” Thierer said. “Other than Texas, people are going to have to take this money.”
Catamaran recently won a Medicaid contract in Indiana and is “talking to” the government of its home state, Illinois, about the Medicaid business there, Thierer said. The state could generate “several hundreds of millions of dollars in savings” if it hires a managed-care firm to handle Medicaid prescriptions, he said.