Catamaran Slides as Analyst Suggests Cigna May Keep Unit

Catamaran Corp., the fourth-biggest drug-benefits manager, fell the most in almost a month after a Wedbush Securities report suggested the company may not have a chance to buy Cigna Corp.’s pharmacy plans.

Catamaran, based in Lisle, Illinois, dropped 3.3 percent to $51.48 at the close in New York, the shares’ biggest decline since Jan. 11. Sarah James, a Wedbush analyst in Los Angeles, said yesterday in a note to clients that recent job postings suggest Cigna may want to expand its drug-benefits unit rather than sell it.

Pharmacy benefit managers serve governments, unions and private employers. Catamaran has a contract handling some drug plans for Cigna, the third-largest U.S. health insurer. Winning the rest of the carrier’s business would give Catamaran more negotiating power with drug manufacturers, James said.

“There was speculation the PBM would sell and most likely to Catamaran,” said Brooks O’Neil, a Minneapolis-based analyst at Dougherty & Co. who follows Catamaran, in an e-mail. “We never thought Cigna would sell its PBM and there’s opportunity for Catamaran at Cigna. Clearly, investors think differently.”

Cigna has posted openings online for at least four “senior-level” employees to “develop a multi-year PBM growth strategy,” James wrote in her note. While the postings don’t guarantee Bloomfield, Connecticut-based Cigna will keep the unit, “we see more indications the company will keep the PBM in-house than sell it,” she said.

The insurer is evaluating its options for the unit and expects to make a decision in the first half of this year, Chief Executive Officer David Cordani said yesterday on a conference call. Cigna rose 1 percent to $61.93.