| Stock (Symbol) | Stock Price | |
Catalyst Health Solutions (CHSI) |
$57 |
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| Data is as of | Expected to Report | Sector |
April 17, 2011 |
May 2 |
Healthcare |
| Sharek’s Take | ||
 Catalyst is aquiring big PBM businesses. Last year CHSI paid $255 million for FutureScripts from Independant Blue Cross. Now Catalyst pulled off a better coup in getting Walgreens’ (WAG) PBM unit for $525 million, bumping up its customer base from 7 million to 18 million. Catalyst Health Solutions is a big boy now and should me mentioned in the same breath as Medco (MRX) and Express Scripts (ESRX).What surprises me about this review is earnings estimates didn’t increase much even though business more than doubled and CHSI paid cash for WAG’s PMB business. Where’s the beef? The company did state it could issue more stock to help finance the deal, so that could be a reason EPS estimates didn’t jump. 2013 should be when WAG profits start rolling in. |
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| One-Year Chart | ||
 The one-year chart shows CHSI popped after the Walgreens deal was announced. Right now the stock has a P/E of 25 and that’s shaded in black because I don’t think the stock’s undervalued right now. |
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| Earnings Table | ||
 Revenues rose 49% last quarter and profits grew 37%. Profits have been growing solidly, but at an uneven pace.CHSI beat by 2 cents last quarter. This company can’t be graded on whether it beats the street or not. It often issues more stock to finance growth, and that cuts into EPS. Annual Profit Estimates rose slightly — a downer for me. I thought estimates would pop with the extra customers. Maybe they will.Quarterly estimates are solid but estimates decreased a bit for the next three quarters. |
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| Fair Value | ||
 I’m using a Fair Value P/E of 25 on this stock until Annual Profit Estimates start to increase. With that said, CHSI is selling around its 2011 Fair Value and there’s more then 20% upside for investors willing to hold CHSI a year. |
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| Ten-Year Chart | ||
 This company was formerly called HealthExtras (HLEX). I bought HLEX for the Growth Portfolio on 5/4/2004 at $14.CHSI has shown solid consistency in growing profits. The stock has been volitile and some of that is because the stock got ahead of itself in 2005 (P/E was in the 30s). This is a great stock to buy-and-hold. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
12 of 20 |
Catalyst Health Solutions is growing impressively well internally, but I wish pprofits would climb as fast as the customer base. Where’s the beef? Until management shows us the beef, CHSI is the 12th best stock in the 20 stock Growth Portfolio Power Rankings.CHSI isn’t in the Aggressive Growth Portfolio. | |
Aggressive Growth Portfolio
N/A |
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