On Sep 18,
) revealed that it will offer employer-sponsored health insurance
coverage in 2014 to its 160,000 eligible employees. This health
insurance will be through private health exchange. This
disclosure set in motion a flurry in the stock price of players
in the pharmacy benefit management (PBM) space.
CATAMARAN CORP (CTRX): Free Stock Analysis
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The most notable impact was on PBM provider
) as its shares tanked 8.20% (or $4.54) to $50.82 following the
announcement. A possible explanation is that Walgreens' move to
switch to private health exchange through Aon Hewitt Corporate
Health Exchange will be a drag on Catamaran going forward.
Catamaran was formed way back in Jul 2012 when Catalyst Health
Solutions and SXC Health Solutions Corp. merged and rebranded the
combined entity. The erstwhile Catalyst Health Solutions, now
under Catamaran has been providing health insurance coverage to
Walgreens' employees since fiscal 2011 when it purchased
Walgreens Health Initiatives Inc., the PBM wing of Walgreens.
Hence, Walgreens' recent announcement will hurt Catamaran's
revenues. This raised market concern as reflected in Catamaran's
However, Catamaran is not the only PBM provider that was in the
red during the trading hours. Investor concerns that other
players in the retail market might follow suit and opt for
private health exchange adversely affected other PBM providers as
well. Shares of PBM major
Express Scripts Holding Company
) declined 4.64% (or $3.06) on Sep 18.
On the other hand, shares of Walgreens touched a new 52-week high
of $55.73 on the said day. The closing price of $55.63 of the
largest drug store chain in the U.S. represents a robust
year-to-date return of 46.16%. Currently, Walgreens, at an all
time high, carries a Zacks Rank #3 (Hold).
Catamaran and Express Scripts are also Zacks Rank #3 stocks.
While investors may consider buying these PBM providers on dips,
), carrying a Zacks Rank #2 (Buy) certainly warrants a look.