October 5, 2009 - Catalyst Health Solutions, Inc. (CHSI-NASDAQ) together with its subsidiaries, operates as a pharmacy benefit management company. The company provides its clients with plan designs,clinical programs, physician orientation programs, and member education through an electronic point-of-sale system for eligibility verification and plan design information, as well as offers access to rebate arrangements for various branded pharmaceuticals.

The company was formerly known as HealthExtras, Inc. and changed its name to Catalyst Health Solutions, Inc. in 2008. Catalyst Health Solutions, Inc. was founded in 1994 and is headquartered in Rockville, Maryland.

The story here is all about revenues and earnings. Both are moving notably higher in spite of an economic recession, a rare event among stocks. On the sales side, 2006 showed $1.271 billion. In 2007, the total was $1.857. Last year, the results were $2.543 billion. This year, analysts expect $2.94 billion, then $3.35 billion in 2010. Analysts predict average annual revenue gains of 16% over the next 5 years.

While those numbers look good, check out earnings. In 2006, they were 75 cents a share, then rose to 91 cents a share. Last year, they were $1.16. Over the last 5 years, the average annual gain was 27.5%. Over the next 5 years, analysts see average annual growth of 19.25%. For 2009, the consensus estimate for 14 analysts is for earnings of $1.48, then in 2010, $1.73. For third quarter results, due out in October, look for 38 cents a share, up from 29 cents in last year's third period. For the fourth quarter, expect 41 cents, up from 33 cents last year in the fourth.

In the second quarter, sales were up 17% compared to the second quarter of 2008. Results were good for same-store sales but were also aided by new acquisitions over the last year. The company has a high customer retention rate (97%) which suggests that its products and services are competitive in pricing but also that future sales and profits are somewhat predictable.

Profits wre bolstered by several factors: more use of generic drugs by patients and an increased use of mail order services. Generic utilization rates were almost 67% during the second quarter compared to 64% in the same period last year. Hurting the bottom line for the period was higher selling and administrative costs, but those were mostly from acquisition related items and won't be repeated.

More numbers: Market cap is $1.24 billion. Trailing P/E is 21.77 while the Forward P/E is 16.33. Price to book is 3.09. Operating margin for the last 12 months was 3.19% while the Profit margin was 2.06%. Total cash is $118.68 million, making $2.70 a share in cash. There is no debt. Current ratio is 1.25. Book value per share if $9.22. 52-week low was $14.63, hit on October 8, 2008 while the 52-week high was $31.17 on September 23, 2009. In March of this year, the stock traded at $15.70. There are 43.97 million shares outstanding with a Float of 42.54 million. Insiders own 14.58%, institutions have 81.30%. There is no dividend.

Look deeper in Catalyst since this story is a good one. Management has proven its ability to manage capital, grow the business internally and externally, and deliver strong growth in sales and profits. The future appears very bright at Catalyst.

- Company Web site: www.catalysthealthsolutions.com

Ted Allrich