SXC Health Solutions Corporation (SXCI) recently announced pricing for a public offering of common shares, sending its volume through the roof and pushing its share price higher by more than 11%.
SXC is a leading provider of pharmacy benefit management (PBM) services and Healthcare Information Technology (HCIT) solutions to the healthcare benefits management industry. It is the only company from the Internet Software industry on today’s Zacks #1 Rank List, which includes 223 stocks.
Normally SXC has a volume around 328,000, but today the volume has soared to almost 2.6 million.
Pricing of Public Offering
On Monday, SXC announced a public offering of common shares, which was increased to 4.5 million from 3.5 million yesterday. (This enhancement is a good sign that the company’s shares are in demand.) On Thursday, the company also announced the pricing to the public of $41.50 per share. The offering is expected to close on Sep 23.
Net proceeds from the offering is anticipated at around $176.6 million, or $203.3 million if underwriters exercise their over-allotment option in full. It plans to use these proceeds for “general corporate purposes”, which could include financing for acquisitions and transactions, capital expenditures funding and providing working capital.
Earnings Estimates
The Zacks Consensus Estimates for this year and next are at $1.49 and $1.85 per share, respectively. They have both displayed solid improvement over the past 2 months.
The estimate for this year is up 52% from 98 cents on the back of 13 covering analysts, while the expectation for next year has risen 53% from $1.21 with 15 analysts.
At the moment, next year’s profit is expected to advance by about 24% over this year.
Strong Second Quarter
In addition to the offering, SXC has a solid record of beating quarterly earnings expectations. Over the past 4 quarters, it has amassed an average surprise of 104%.
The company announced second-quarter results on Aug 6, which included record sales and profitability. This performance was attributed to new contract wins, strong client retention, cross-sell success and operational synergies.
Specifically, the company earned 53 cents per share, excluding items, which surpassed the Zacks Consensus Estimate by as much as 152%. It was also well ahead of the year-ago performance.
Revenue advanced to $320.8 million from $227.8 million.
The performance convinced SXC to raise its fiscal 2009 outlook. It now plans on revenue between $1.35 billion and $1.4 billion, compared to the prior estimate of $1.25 billion to $1.35 billion.
Earnings per share are now expected between $1.42 and $1.50, compared to 93 cents to $1.01 previously. (Adjusted earnings per share are seen between $1.62 and $1.70, instead of $1.13 to $1.21.)
