SXC Health Solutions (SXCI)
Q4 2011 Earnings Call
February 23, 2012 8:30 am ET
Mark A. Thierer - Chairman and Chief Executive Officer
Jeffrey Park - Chief Financial Officer, Principal Accounting Officer and Executive Vice President of Finance
George Hill - Citigroup Inc, Research Division
David S. MacDonald - SunTrust Robinson Humphrey, Inc., Research Division
Tom Liston - Versant Partners Inc., Research Division
Amanda Murphy - William Blair & Company L.L.C., Research Division
Brooks G. O'Neil - Dougherty & Company LLC, Research Division
Brian Tanquilut - Jefferies & Company, Inc., Research Division
Michael R. Minchak - JP Morgan Chase & Co, Research Division
Andrew Schenker - Morgan Stanley, Research Division
Lawrence C. Marsh - Barclays Capital, Research Division
Previous Statements by SXCI
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Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the SXC Health Solutions Corp. 2011 Fourth Quarter and 2011 Year-End Results Conference Call. SXC issued an earnings press release this morning, which has been filed with the SEC on Form 8-K and is also available on the Investor Information section of SXC's website at www.sxc.com.
Listeners are reminded that portions of today's discussions contain forward-looking statements that reflect current views with respect to future events such as SXC's outlook for future performance and revenue and earnings growth and various other aspects of its business. Any such statements are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those projected in the forward-looking statements. Please refer to the cautionary language in the earnings release and in SXC's filings with the SEC including the Risk Factor section of the SCX's most recent annual report on Form 10-K for additional information concerning factors that could cause actual results to differ materially from the forward-looking statements.
During the call, there will also be a discussion of some items that do not conform to generally accepted accounting principles including adjusted EPS and adjusted EBITDA. SXC has reconciled these items to the most comparable GAAP measures in the earnings release and on its website, www.sxc.com, under the Investor Information section.
I would like to remind everyone that this call is being recorded on Thursday, February 23, 2012, at 8:30 a.m. Eastern time. A replay of today's call will be available on the SXC's website approximately one hour after the conclusion of this call. This broadcast is the property of SXC, and any redistribution, retransmission or rebroadcast of this call in any form without the expressed written consent of the SXC is strictly prohibited.
I would now like to turn the conference over to Mr. Mark Thierer, Chairman and CEO. Please go ahead, sir.
Mark A. Thierer
Well, thank you, and good morning, everyone. Appreciate you joining us today. 2011 was truly a breakout year for SXC. We posted record results across the board, including strong fourth quarter results. For the full year, SXC delivered $5 billion in revenue and $176 million in adjusted EBITDA.
We were very pleased to have these results earn us FORTUNE Magazine's recognition as the #1 fastest-growing company in the United States. We were able to achieve these record results because we feel that a very strong team here that is executing on a very clear strategy. So for purposes of the call today, I'd like to highlight the 3 main drivers of our record performance.
First, we have demonstrated strong ability to grow organically. We closed more than $1.4 billion in new business during 2011, making it our most successful selling season in the company's history. And as you know, a record selling season in 2011 means we are very well positioned for 2012.
Our sales team is certainly on a roll. On Tuesday, we announced a major win to kick off the 2012 selling season, Blue Cross Blue Shield of Rhode Island. We signed a 3-year, full-service PBM contract that starts January 1, 2013, and the contract covers 450,000 lives with approximately $400 million in annual drug spend. This contract includes mail order, claims adjudication and a full suite of clinical programs as well. We're very excited about this new strategic win, and we've already begun the implementation process. This opportunity attracted every major PBM player in the industry, and we were honored to be selected. This client win is reflective of the larger opportunities that we are competing for today and winning.
As you all know, the level of disruption and uncertainty that exists today at the high end of the PBM industry is driving unprecedented levels of opportunities and many of them directly towards SXC. Our pipeline is very strong and opportunities exist in all our vertical markets, as payers and their consultants are evaluating alternatives and looking for new and flexible solutions tailored to meet their business requirements. SXC has emerged as a particularly strong competitor in the health plan space, where an unbundled, competitive and flexible offering truly sets us apart from the pack.
From a sales perspective, we have clearly moved up market in terms of targets, and we are now competing for a much larger opportunities. I've thought for some time about the importance of cost of goods leverage in this business. You simply have to have it to win. And SXC's skill and scale in the COGS arena is making us very competitive as we compete for larger plans.
The second driver of our performance is our acquisition strategy. We announced 3 acquisitions during the course of 2011. In the summer of 2011, we successfully completed the integration of MedMetrics, a middle-market PBM in the Northeast. Then in the fourth quarter, we completed our acquisition of PTRx in San Antonio and its exclusive mail-order pharmacy provider, SaveDirectRx. The integration process is on schedule and proceeding well as we are taking full advantage of their mail-order capabilities.