SXC Health Solutions CEO Discusses Q3 2010 Results - Earnings Call Transcript
SXC Health Solutions Corp (
)
Q3 2010 Earnings Call
November 04, 2010 08:30 a.m. ET
Executives
Mark Thierer - President & CEO
Jeff Park - EVP & CFO
Analysts
Glenn Garmont - ThinkEquity
David MacDonald - SunTrust
Larry Marsh - Barclays Capital
Amanda Murphy - William Blair
Charles Rhyee - Oppenheimer
Constantine Davides - JMP Securities
Tom Liston - Versant Partners
Gavin Weiss - UBS
Tony Perkins - First Analysis
Michael Minchak - JPMorgan
Brooks O'Neil - Dougherty & Company
Michael Baker - Raymond James
David Larsen - Leerink Swann
Presentation
Operator
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SXC Health Solutions Corp. Q1 2010 Earnings Call Transcript
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SXC Health Solutions Corp. Q3 2009 Earnings Call Transcript
Good morning ladies and gentlemen. Thank you for standing by. Welcome to the SXC Health Solutions Corporation 2010 Third Quarter Results Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions. (Operator Instructions). Listeners are reminded that portion of today's discussions may contain forward-looking statements that reflect current views with respect to future events. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in forward-looking statements.
For more information on the company's risks and uncertainties related to these forward-looking statements, please refer to SXC's annual information Form 10-K. I would like to remind everyone that this call is being recorded on Thursday, November 4th 2010 at 8:30 am Eastern Time.
I would now like to turn the conference over to Mr. Mark Thierer, President and Chief Executive Officer. Please go ahead sir.
Mark Thierer
Good morning everyone and thank you for joining us today. This morning we issued our 2010 third quarter financial results by a press release and a copy of those results is available on our website sxc.com. With me today is Jeff Park, our Executive VP and CFO. I'll summarize the key events of the quarter and then Jeff will review our financial results for third quarter and update our guidance for 2010 fiscal year. I'll then close with a few comments and open it up for Q&A.
Well we have just completed our most successful selling season in the history of SXC which began with the announcement earlier in the year of the HealthSpring contract a five year deal valued over $1 billion annually and culminated just couple of weeks ago with the announcement of a three year $720 million PBM contract for an East Coast health plan.
These contracts together with other business that we have successfully sold and brought during this selling season represent approximately 1.1 million new lives under management ranging from new middle market PBM business, employers unions, health plans and workers compensation customers.
This momentum we have established is a direct result of the ground what we laid over the past year and the focus that we have put on our go to market strategy of delivering customized and flexible pharmacy management solutions.
As I mentioned on our previous earnings calls, we have made significant improvements in our sales and RFP process combining that with the sales team is now at full fighting force and together we have been able to drive very strong organic growth.
By way of review here at SXC we are growing this business by focusing on four key areas first winning new clients, second retaining our existing clients, third cross selling and pulling through additional services and finally prudent cost management across our enterprise.
In terms of our pipeline most of our 2011 targets have now made their decisions at this stage although we do plan and continue to track a number of employer and TPA prospects who will decide between now and year end.
Our health plan targets include a good number slated for mid-2011 and more important 2012 start dates. We're active across all five segments of our business with a continued emphasis on our HCIT business and a good number of state fee for service Medicaid opportunities coming up in 2011.
This continues to be a market that we like a lot.
In terms of client retention, 2010 was also our best year in our history with a 99% retention rate. All of our major contracts were renewed; we had zero large defections and zero material losses.
We accomplished this in large part due to a brand new account management process that is yielding an all time high in terms of client satisfaction. We've also made many improvements in our service to our members, including turn around time on mail order prescriptions and response times to incoming calls. As a result, our member satisfaction rating is also running at an all time high for our company. Operationally this business is in very good shape.
We have a very aggressive plan in place to pursue client satisfaction, starting with our account team and extending through all areas of the organization. In fact this year we took every employee who is bonus eligible and tied their compensation directly to client satisfaction.
Beyond incentives we have built loyal client relationships by gaining a deep understanding of their needs and their goals at multiple levels within our company and building those customized solutions to address their managed pharmacy issues.
As an example to our commitment to client collaboration, we recently a gold URAC best practices award in conjunction with our client employers occupational health. As a workers comp payer, employers manages the care of individuals who are injured or become ill on the job.
Schedule two or controlled substances are a central part of these treatment plans and actually have the tremendous potential for overuse and abuse. The award winning program with employers is actually jointly operated and includes this system to identify and intervene in cases where there is a risk of over utilization of narcotics. This program has produced a significant impact on both quality of life and a reduction in drug costs.
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