SXC Health Solutions Corp. (SXCI)
Q2 2010 Earnings Call
August 05, 2010 08:30 pm ET
Mark Thierer - President and CEO
Jeff Park - EVP and CFO
David MacDonald - SunTrust Robinson Humphrey
Constantine Davides - JMP Securities
Tom Liston - Versant Partners
Amanda Murphy - William Blair
Glenn Garmont - ThinkEquity
Michael Baker - Raymond James
Michael Minchak - JPMorgan
Charles Rhyee - Oppenheimer
Previous Statements by SXCI
» SXC Health Solutions Corp. Q1 2010 Earnings Call Transcript
» SXC Health Solutions Corp. Q4 2009 Earnings Call Transcript
» 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 second 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 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. I would like to remind everyone that this call is being recorded on Thursday, August 5
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.
Thank you. Good morning everyone and thank you again for joining us on today's call. This morning we issued our 2010 second quarter financial results by press release and a copy of those results are available on our website sxc.com. With me today is Jeff Park, our EVP and CFO. I'll summarize the key events of the quarter and then Jeff will review our financial results for 2Q and update our guidance for 2010 fiscal year. I'll enclose with a few comments and open it up for Q&A.
The second quarter represented another strong quarter for us here at SXC. We posted significant growth in a number of our core financial metrics including revenue, EBITDA, net income all of which Jeff will address in a moment.
From a new business perspective, we are now in peak selling season with Q3 and early Q4, the primary decision making periods for new contracts. We have a robust pipeline of targets and have reached the final bid stage with a number of good opportunities. As in previous quarters, during Q2 we won a number of small employer contracts for which we do not intend to make individual announcements.
Over the course of the coming months, we expect to receive decisions from opportunities on our pipeline which primarily relate to larger managed care plans and employers with a number of smaller state fee for service Medicaid contracts. While it's impossible to predict our win rate, what we do know is that with certainty, this year we've reached the best and final process with the largest number of counts ever in our history.
Two of the reasons for this success are because of the improvements we've made in our sales coverage along with our competitive fitting process. We've allocated additional resources to the sales team to expand coverage and to ensure that we're well covered in each of our sales territories. We've been fortunate to add some exceptionally qualified new sales leadership and we really like our chances now at the best and final presentations.
In addition, we focus this year in particular on investing resources to evaluate the quality and messaging of our responses to the competitive bid processes. Under leadership of our marketing team and with input from recognized industry consultants, we're redefined and focused our messaging, emphasizing the flexibility and customization of the SXC service offering.
These improvements have provided us with what we believe are world class caliber RFP responses. We are now seeing the initial results of these improvements based on the number of best and final invitations we perceive during this year's selling season. We expect the combination of sales strength and our compelling message to yield favorable results for the organic growth of our business.
Obviously organic growth depends on wining new business, coupled with strong client retention. As I mentioned on previous calls, with the successful retention of Huawei and BMC over the past 12 months, we've essentially eliminated any retention risk for the remainder of 2010. In our informedRx trend report released in June, we highlight our best-in-class clients who use the full suite of informedRx services combined with strong plan designs. These clients have achieved an overall trend of 2.7% an aggressive trend number we're very proud of. Our overall book of business trend was consistent with the industry average of 5.2%. If you've not already read our trend report, I encourage you to visit the informedRx website at www.informedrx.com and download a copy.
As part of our retention strategy, we continually work with clients to create programs and interventions designed to address specific issues for their populations. Our experienced account management and clinical teams used their knowledge of the market along with our propriety IT tools to deliver analyses and insights to help guide decision making around programs.
A great example is our relationship with employer's occupational health, a specialty provider of worker's compensation insurance. Working collaboratively with employers, we implemented edits in our system, to identify patients who receive multiple controlled substance prescriptions from more than one provider. Employers and informedRx then work together to implement interventions to reduce the overuse and abuse issues as well as drug and drug interactions. In recognition of these efforts to promote patient safety, employers nominated this program for the year best practices award. As a finalist for this prestigious sector award, it demonstrates our ability to work with clients to take PBM services beyond just dollars and cents to address strategic issues that are important to their business.