HealthExtras shares fall after missing 1Q earnings estimates
ROCKVILLE, Md.—Shares of HealthExtras Inc. fell Wednesday, after the pharmacy benefit manager reported a first-quarter profit that missed Wall Street expectations.
The company earned $11.6 million, or 27 cents per share, up from $9.7 million, or 23 cents per share, in the prior-year period. Revenue soared 45 percent to $588.6 million from $406.3 million a year ago.
But the results missed estimates of analysts polled by Thomson Financial, who expected profit of 28 cents per share on revenue of $590.2 million.
Shares fell 32 cents, or 1.2 percent, to $26.96.
HealthExtras said that the earnings boost in the quarter was due to an increase in the number of prescriptions filled, greater operating margin and the launch of the company's Medicare Part D medical card systems businesses. In April, the company also acquired privately held pharmacy benefit manager HospiScript in a $100 million deal.
But BMO Capital Markets analyst Dave Shove said Wednesday that the company's earnings and profitability were not as strong as anticipated.
"Script volumes and revenues were better than our expectation, a direct result of new account wins and strong growth," he wrote in a note to clients. "However, likely a result of business mix, profitability was not. We anticipated better margin expansion from generic drug penetration." He still holds an "Outperform" rating and $35 price target on shares.
BB&T Capitals Market analyst K. Newton Juhng, who rates shares at "Hold," said that the quarter is the fifth consecutive where the company's revenue came in short of Street expectations.
While Banc of America Securities analyst Robert M. Willoughby expected the stock to trade lower Wednesday, he said the weakness may be short-lived, given the market's support for acquisitions in the PBM sector.
"While HLEX is moving into more capital intensive businesses, the profit opportunities associated with established mail and specialty pharmacy franchises are too compelling for the company not to add these capabilities," he said in a note to investors. He backed a "Neutral" rating on the stock, awaiting more detail on the HospiScript transaction and other deals he thinks are imminent.
