Why Catamaran Shares Set Sail


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Catamaran , a pharmacy-benefits management and health care information technology services provider, jumped as much as 15% after the company announced a long-term deal with CIGNA .

So what: CIGNA and Catamaran announced on Monday that they'd be forming a 10-year partnership whereby Catamaran would process drug claims, manage inventory levels, and fill orders for CIGNA's home-delivery pharmacy. The deal makes even more sense when you consider that Catamaran had been partnered with HealthSpring, a health-benefits provider that CIGNA purchased last year, so this should be a relatively seamless partnership. According to research firm BMO Capital Markets, this deal could add an additional $5.5 billion in revenue on top of the $3 billion it already nets through its HealthSpring partnership.

Now what: This seems like a win-win for both parties involved. Catamaran gains a significantly larger partner in CIGNA (the fourth-largest health-benefits provider in the U.S.), while CIGNA gets the assurance that integrating the partnership into its distribution network should be relatively quick and easy. All told, both companies could still be attractive investments at their current levels.

Craving more input? Start by adding Catamaran to your free and personalized watchlist so you can keep up on the latest news with the company.

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The article Why Catamaran Shares Set Sail originally appeared on Fool.com.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of, and recommends, Catamaran. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Originally published