elements of growth ANNUAL REPORT

Transcription

1 elements of growth ANNUAL REPORT 2014

2 Letter to shareholders Reliable. Accountable. Tailored. Simple. Proactive. Collaborative. These are the six elements that comprise what we call The Catamaran Difference. These are the principles we live and work by to be the PBM of choice for health plans, employers, the public sector and all the diverse market sectors we serve. These are the principles that ensure we are truly aligned with our clients and their priorities so we can deliver exceptional experiences and results was an incredible year for Catamaran. We put up a recordbreaking financial performance. We scaled our operations, helping us achieve high marks from the new clients we onboarded for January We completed a successful CMS Program Audit of our Medicare Part D Prescription Drug Plan and achieved one of the best scores in the industry. We continued to use data and analytics in new and innovative ways to drive better cost and clinical outcomes. In the pages that follow, you will read more about the six elements of The Catamaran Difference and how they drive successes like these for our company and clients. I d like to take a few minutes to highlight some of the standouts from the past year. Catamaran is a leader in specialty care and management. It s no surprise that these therapies are continuing to be a significant driver of cost for every payer. Catamaran is committed to helping our clients address their specialty needs through our BriovaRx specialty pharmacy offering. We have continued to invest in scaling our specialty operations and capabilities by opening up and taking advantage of opportunities to grow our specialty footprint, and by developing additional programs and tools designed to increase adherence and improve outcomes. Catamaran is using data and analytics in powerful ways to identify opportunities to drive better clinical outcomes. Our newest clinical offering the Safe & Effective Compound Use Reassurance Effort (SECURE) uses multiple clinical and credentialing interventions to monitor and better manage the safety and cost-effectiveness of compound medications for our clients and members. Catamaran will continue to invest in innovation in order to bring powerful new solutions like SECURE to market. Catamaran is also heavily engaged and invested in managing prescription costs in emerging markets. As health plans battle to keep up with the constantly changing regulatory environment and compliance requirements, Catamaran has become the partner of choice for health plans and Consumer Oriented and Operated Plans (CO-OPs), helping them turn these challenges into opportunities for success. We count among our successes some healthy growth in the Health Insurance Marketplace (HIM), significantly moving the needle for clients on Star Ratings and being an integral contributor to our health plan clients growth in the HIM. Catamaran is breaking new ground with the industry s first of its kind outcomes-based program. We recently announced a new clinical outcomes-based program for hepatitis C that allows for overall treatment costs to take clinical results into account. This is the latest example of how Catamaran is forging new paths with programs that align better care with better cost outcomes for our clients. Expect to see Catamaran continue to break new ground with superior technology, a solid service model, true flexibility in plan and program design, and innovative analytics and solutions that make a measurable difference for our clients and their members. Now, on to our results: Catamaran delivered yet another year of outstanding financial performance. We achieved record sales, earnings and cash flow. Revenue was $21.6 billion, up 46 percent compared to Net income attributable to the company was $317 million, an increase of 21 percent on a year-over-year basis. EBITDA grew to $787 million from $651 million in And cash flow from operations increased 24 percent to $590 million during 2014, compared to $475 million in This record-breaking performance landed Catamaran on the Fortune list of 100 Fastest Growing Companies for the fifth year in a row. Catamaran is one of just 10 companies to have made the list five or more consecutive times in the past 15 years, and it was the only healthcare services company named to the list this year. As we enter a new selling season, more doors are opening to Catamaran than ever before. The investments we have made in infrastructure, analytics, and new programs and capabilities are resonating with our targets. Our flexible model continues to stand out as a meaningful point of differentiation. Catamaran s innovative approaches to managing emerging trends in our space have sparked great discussions with payers and consultants alike. Having been in many conversations with prospective clients, I can definitively say that Catamaran has built a unique and desirable solution. And our ability to execute, as proven through our most recent implementation cycle, is making a difference. I am very proud of the impressive results our company delivered this year for our clients, our business and our shareholders. I am most proud of all the talented and hardworking Catamaran employees who made it happen. Individually, and as part of the Catamaran team, our employees truly are The Catamaran Difference. On behalf of the board of directors, Catamaran s management team, and all of our hardworking and talented employees, I d like to thank you for your enthusiasm and support. Here s to staying well ahead. Mark A. Thierer Chairman & CEO 1 2

3 Honoring our commitments while committing to growth. Counting on good results begins with counting on good people. Catamaran is reliable. Providing pharmacy benefi ts for more than 35 million people and processing over 400 million prescriptions a year, we serve more types of healthcare payers than any other PBM. Our effi cient operations and superior technology infrastructure drive repeatable and predictable success. From the fi rst days of go-live to outcomesbased programs and ongoing performance reviews, Catamaran delivers every step of the way. 57 implementations unique successfully executed in 2014 representing 1,450 unique benefi t plans. A Focus on Outcomes Catamaran offers the industry s fi rst clinical outcomes-based program for hepatitis C that allows for overall treatment costs to take clinical results into account. Our clinical approach yields better adherence to these costly drugs. Catamaran is accountable. Our senior leadership, clinical consultants and account management teams serve as true partners to our clients. Our analytics and clinical programs help our clients take advantage of opportunities in the environment at large and within their own member populations to enhance patient safety and member well-being. Our programs drive improvements in costs and clinical outcomes. Catamaran has built a reputation and a business on being accountable for results that matter. 98º/ overall º cited by Catamaran members in our 2014 member satisfaction survey. satisfaction BriovaRx 9.1º/ º better adherence 100º/ of new º members received their ID cards and benefi t information prior to January Non-BriovaRx Pharmacy Sovaldi Adherence Rates 3 4

4 Yes, there is one best solution. It s just different for every client. A better experience for members means better results for our clients. Catamaran makes it tailored. While other PBMs make clients fi t their model, we bring an approach that fi ts our clients needs. We smartly customize our solutions around each client s environment and requirements, with a wide choice of options and services. We offer the industry s most fl exible and comprehensive formulary design. We provide true member choice in pharmacy and prescription fi ll options. And we continuously analyze market, client and member data for unique insights empowering us to recommend solutions that will deliver the greatest value. Catamaran keeps it simple. We understand that positive health outcomes start with more engaged members. That s why we are constantly developing new and better ways to involve consumers in their own healthcare. Delivering the right member touch points, at the right times, in the right ways. Ensuring members have easy access to the information they need to make informed medication choices. Better program results start with better member engagement. That s why Catamaran approaches every client relationship with a focus on making it simple for members. Formulary Options A formulary is the foundation of a client s benefi t plan. Catamaran offers multiple formulary options for clients to choose from. The Catamaran Value Formulary gives clients the ideal balance between cost control and member choice. managed formulary Value Formulary generics-based formulary Engaging Technology 359º/ º 97º/ º 98º/ º Member Impact all-inclusive formulary Increase in downloads of our member mobile app year over year. Increase in registrations for our online member portal year over year patient satisfaction rate for our specialty video consults, BriovaLive. Client Savings 5 6

5 Because today s obstacle often holds the key to tomorrow s opportunity. Working with the client to ensure everything is working for the client. Catamaran is proactive. When clients work with us, they get a PBM that is committed to helping them anticipate and address the emerging trends big and small that affect the industry and their specifi c populations. Our team of clinical specialists and analysts continuously evaluates the impact of pipeline drugs, regulatory changes and new therapies. This enables us to help our clients prepare in advance for issues and events that will potentially drive up pharmacy costs so they can stay well ahead. $3.7M $0.5M Early Course Correction In 2014, Catamaran identifi ed a concerning trend in compound medication use and quickly developed a program to help clients not only manage, but reverse this trend. Many clients are already realizing the benefi ts of this strategic solution. See one client s results highlighted below. One client s $3.2M annual savings on compound medication 71º/ º Decrease in the 30-day hospital readmission rate following partnership with a large health plan to implement our hospital transition program. $ Annualized per-member savings achieved after working with a client on a randomized control trial to evaluate the impact of medication therapy management and retrospective drug utilization review on a sizable commercial population. 42º/ º Case completion rate for comprehensive medication reviews, helping to drive higher Star Ratings and better fi nancial results for Medicare Part D clients. Catamaran is collaborative. We constantly fi nd or create opportunities to work together with our clients. From inviting clients to engage with and observe our Pharmacy and Therapeutics Committee to hosting open discussions in our groundbreaking Innovation Center to piloting cutting-edge clinical programs with them, Catamaran sees every client relationship as a true partnership. And our solutions and programs are better for it because they are built from a deep understanding of real-world needs. Us + Clients Collaboration delivered great results in

6 Financial Highlights Company Highlights in millions Revenue $ 25,000 20,000 15,000 10,000 5, increase in revenue YOY Announced the acquisition of Salveo Specialty Pharmacy, an independent specialty pharmacy company. Ranked as one of Fortune s 100 Fastest Growing Companies for the fi fth consecutive year. Launched SECURE, the Safe & Effective Compound Use Reassurance Effort, to better manage cost and utilization of compound drugs. Introduced the Catamaran Value Formulary to offer clients additional options to balance cost control and choice. Gross Profit $ 1,500 1, Net Income $ Achieved an overall pharmacy trend of 5.7%. Partnered with our 10 state Consumer Oriented and Operated Plans (CO-OPs) to increase plan enrollment in the fi rst year of operation. Completed a year-long pilot that produced a 71% decrease in the 30-day hospital readmission rate following implementation of our hospital transition program by a large health plan. roughly 104 pages of financial info increase in net income YOY EBITDA * $ Performed a year-long, randomized control trial to evaluate the impact of medication therapy management and retrospective drug utilization review on a sizable commercial population, achieving annualized per-member savings of $ Achieved a 42% comprehensive medication review case completion rate, helping drive higher Star Ratings and better fi nancial results for plans that serve the Medicare Part D population. Awarded the ehealthcare Leadership Gold Award for our 2014 Trend Report digital and traditional marketing efforts. 200 Received full URAC reaccreditation for our pharmacy benefi t management and home delivery services * A reconciliation of EBITDA to net income for 2014, 2013 and 2012 is included in Item 7 of this annual report. A reconciliation of 2011 and 2010 EBITDA is included in Item 7 of our 2012 annual report, which can be accessed on our website.

7 Board of Directors Corporate Officers Independent Auditor last page of financial info. Mark A. Thierer Chairman of the Board & Chief Executive Officer Catamaran Corporation Peter J. Bensen (c) Chief Administrative Officer McDonald s Corporation Steven D. Cosler (n, i) Operating Partner Water Street Healthcare Partners William J. Davis (a) Chief Financial Officer Blackboard Inc. Steven B. Epstein (n) Founder Epstein Becker & Green, P.C. Betsy D. Holden (n, a) Senior Advisor McKinsey & Company Karen L. Katen (c) Senior Advisor Essex Woodlands Healthcare Venture Capital and Growth Equity Mark Thierer Chairman & Chief Executive Officer Jeffrey Park Executive Vice President, Operations Michael Shapiro Senior Vice President & Chief Financial Officer Joel Saban Executive Vice President, Pharmacy Operations Cliff Berman Senior Vice President, General Counsel & Corporate Secretary Legal Advisors Baker & McKenzie LLP 181 Bay Street, Suite 2100 Toronto, ON M5J 2T3 Canada Sidley Austin LLP 1 South Dearborn Street Chicago, IL KPMG LLP 200 East Randolph Street Suite 5500 Chicago, IL Banker JP Morgan Chase 10 South Dearborn Street Chicago, IL Investor Relations Tony Perkins Vice President, Investor Relations tony.perkins@catamaranrx.com NASDAQ Symbol: CTRX TSX Symbol: CCT Harry M. Kraemer Jr. (a) Executive Partner Madison Dearborn Partners Anthony R. Masso (c) Retired Independent Consultant Transfer Agent CST Trust Company 320 Bay Street Toronto, ON M5H 4A6 Canada a = Audit Committee c = Compensation Committee n = Nominating and Corporate Governance Committee i = Lead Independent Director Annual & Special Meeting of Shareholders May 12, 2015, 10:00 a.m. CST Catamaran Innovation Center 300 N. LaSalle Street Suite 1600 Chicago, IL Design and production by The Mx Group

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