LISLE, IL, Aug. 3, 2011 /PRNewswire/ - SXC Health Solutions Corp. ("SXC") (NASDAQ: SXCI) (TSX: SXC) announced today that it has entered into a definitive agreement to acquire PTRx, Inc. ("PTRx"), a full-service PBM, and SaveDirectRx, Inc. ("SaveDirectRx"), its exclusive mail-order pharmacy provider, both based in San Antonio. The purchase price of $77 million in cash is to be paid from SXC's existing cash balance, subject to certain customary post-closing adjustments, with an additional $4.5 million subject to the achievement of certain performance targets through 2012.
"We are pleased to welcome PTRx, SaveDirectRx, and their employees into the SXC fold," said Mark Thierer, Chairman and CEO of SXC. "PTRx has been a client and a partner since 2006, initially as an HCIT client and later the relationship expanded to include PBM services. This transaction is in keeping with our strategy to acquire assets that currently utilize SXC's technology platform and can be easily integrated. The transaction will allow us to leverage our existing partnership, the PTRx book-of-business, the SaveDirectRx mail volume, and the combined entity's ability to drive mail penetration to contribute to the organic growth of the SXC business."
"PTRx has had a long term, collaborative relationship with SXC and coming together is a natural fit for both of us. The strength of our relationship, combined with the resources that SXC brings to the table, will bring additional opportunities for PTRx and SaveDirectRx clients," said Greg Webb, Chief Executive Officer of both PTRx and SaveDirectRx.
These acquisitions are subject to various closing conditions and are expected to be completed in the fourth quarter of 2011. Combined, PTRx and SaveDirectRx manage approximately $90 million in annual drug spend and are expected to generate approximately $10 million in EBITDA in 2011. SXC expects to realize an additional $5 million in annualized cost synergies, including tax benefits from the acquisition, within 12 months after the closing of the transaction. The acquisition is expected to be $0.10 to $0.14 accretive to SXC's adjusted earnings per share ("EPS") in 2012, which includes transaction costs but excludes deal amortization currently expected to be approximately $5-6 million (or $0.05 to $0.06 per share) in the first year.
About PTRx, Inc. and SaveDirectRx, Inc.
PTRx is a full-service pharmacy benefit manager with proven success driving down pharmacy costs for clients and members. PTRx has a sophisticated, data-driven approach to designing, implementing, and managing prescription drug plans. Utilizing a benefit plan designed to drive cost savings, PTRx has become a valuable partner to employers and third-party administrators (TPA). PTRx employs SaveDirectRx's mail-order capabilities to drive cost savings by optimizing the most cost-efficient drug delivery channel. SaveDirectRx is a fully licensed mail-order pharmacy with a concentration in the southern United States. Both PTRx and SaveDirectRx are based in San Antonio, Texas. For more information, please visit www.ptrx.com and www.savedirectrx.com.
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. SXC'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.
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 earnings before interest, taxes, depreciation and amortization ("EBITDA"), which are both non-GAAP financial measures. SXC's management believes that these two measures provide useful supplemental information regarding the performance of SXC's business operations.
Adjusted EPS adds back the impact of all amortization expense, 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's 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 expenses will recur in future periods. The 2012 full year guidance of adjusted EPS was computed by taking the estimated GAAP EPS impact and adding back the expected impact of certain acquisition-related amortization expenses, net of tax. SXC's management believes that adjusted EPS provides useful supplemental information regarding the performance of SXC's business operations and facilitates comparisons to its historical operating results. SXC's management also uses this information internally for forecasting and budgeting as it believes that the measures are indicative of SXC's core operating results. Note however, that these items are performance measures only, and do not provide any measure of SXC'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.
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 expenses. 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.
Adjusted EPS and 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, may not be comparable to similarly titled measures used by other companies.
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 complete the acquisition of PTRx and SaveDirectRx; 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 cost synergies from 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, and ability to retain, 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 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.
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