Catamaran Corporation (NASDAQ:CTRX)

Classic disruptor that has been successful. There is a lot to like in this business.

Strengths
- Transparent business model is disruptive to the traditional PBM market.
- CTRX's technology is superior to competitors.
- Now that they are established in difficult customer segments (public-sector institutions and state Medicaid claims), there are high switching costs for customers to leave.

Opportunities
- Healthcare reform is putting a lot of pressure on Managed Care Organizations to take costs out of the system (which would reduce costs to the final consumers).
- The flood of generics into pharmaceuticals offers opportunity for PBM's to take additional costs out.

Reducing costs is a huge opportunity for Catamaran. Their fixed-price, transparent business model is aligned with the direction the industry appears to be heading. If they can upsell to larger clients, they could go from disruptor to the industry standard.

good stock, just experienced pullback

Shares diluted for acquisitions and too expensive right now for thin margins. 2012 PEG 2.25. Forward (2013) PEG 1.29. Further dilution of thin margins by interest on LTDebt of 1.2B.
See garifolle pitch on 14-Sept-12

Big outperformer for four years. Good caps. Have to take the jump on high P/E growers some time. Hope this is the time!

Very clean Balance Sheet with plenty of cash and no debt. Good cash flow and earnings growth history. The main financial con as I see it is the razor thin margin. Yikes! Not much room for error here, but good cash position to survive any missteps.

2014 EPSe is 2.32. Price <46 represents 20 multiple

Need to reassess after 2 year hiatus from CAPS. Sector to face headwinds in 2013? Do I care?

Good market, good growth, and good strategy.

The very ambiguous way CTRX announced " a nominal dividend on the issued and outstanding common shares of the Company to effect a two-for-one stock split."
Well no it is NOT a dividend, it is yet another stock split, another dilution, that's it that's all.
Not much has changed since I last "downgraded" the previous SXC, which was my highest points earning on My CAP, since I do not play very actively.
I had closed the position because the stock was gaining some strength, due partly to analysts high targets, partly to short covering.
The short float has now diminished to a comfortable 0.95%.
The insiders have only sold more, the higher the price went, and since over a year not one insider has bought (except for one small position a few days ago).

Catamaran was present at the CIBC Institutional Investor Conference (September 13), and I do not know if important upgrades will come out.
But it is surprising that right the day after, the stock start going down.

The year-over-year revenue growth of 115.7% was tremendous: is this sustainable?
SXC was together a growth and a defensive stock, even without a dividend.
Everyone talks about APPL: SXC was certainly the Apple of the techno-pharmaceutical companies.
In the past 5 years, APPL has beaten the Nasdaq by more then 400%... and SXC by more then 600%!
APPL has started to give a dividend, CTRX / SXC has not.

CTRX has more competitors then it used to.
My negative call could be only for a few weeks, and sometime after the split, the stock might make a come back.
But (like Cisco), once a prestigious company is not a fantastic growth stock anymore, it should buy back stock (CTRX makes the opposite, because it does not sits on "tons of cash"), and distribute a dividend, and this will be very difficult.

And finally, but not the least, my concern is about the acquisition of Catalyst Health Solution at a price of $4.14 billions.
I am not sure if this will bring real returns before many, many years: I have calculated approximately 35 years!

2nd Q REV. $27.9 B.more than doubled $11.4 B reported 1 yr ago price /book 2.3 price 1 cash book 2.3 price /cash flow 12.9 debt / eqiuity 415.7%

Pharmacy Benefit Management is the wave of the future and SXCI is at the forefront. They are in the sweet spot. They are the up and comer in an industry dominated by old-school rules. SXCI pulls back the veil and provides transparency where non existed before. By providing a better price, better service and transparency, they have carved out a nitch for themselves and tend to profit greatly as firms look to save money. They also have the silver tsunami of the baby boomers retiring in mass to drive future business opportunties.

Strong 5yr and QOQ sales growth, P/S < 5.

Thankfully I had this in my real money portfolio at a split adjusted $10 a share. I still think they will continue to outperform the S&P from here.

Top stock with stable earnings in an ever growing sector...

Buy out target

Maintaining the momentum from a year ago and supporting it with continued revenue and earnings growth. Owned some since a year ago and still do.

Would still like to snatch some up... Going strong

Good 3 Yr EPS & Revenue Growth.

This is a small/mid cap high growth stock that should outperform the S&P during the bull market.