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Final UPS Team Paper!

Sxc health solutions an illinois based pharmacy

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SXC Health Solutions, an Illinois-based pharmacy benefit management company, sells services pertaining to that and medical record keeping and works as a third party verifier. One of our largest amounts of investment had been put into this company, as 18.8% of our $100 million in funds had been used from this, which is relatively large compared to the other stock allocations. Being a pharmacy benefits manager as well as a service provider to PBMs, SXC had a lot of positive expectations. Over $72 billion in brand-named drugs are going to eventually lose patent protection within the next five years. Since this is expected by popular names, generic alternatives are expected to rise drastically. As previously stated, SXC is a third party verifier between the insurance company and the pharmacy. Since its PBM unit is in charge of this, it will generate even more every time someone applies a generic drug over a branded one. In addition to health care reformations, more people will be covered by Medicaid, which would benefit both of SXC’s business lines. By looking at the company’s three-year average, SXC Health Solution’s profit growth is 65% while its total return is 105% (Fortune’s Fastest-Growing Companies). Based on Barchart, the company is also seen as a strong buy, while in the long-term, the company should be expected as doing much better than what it currently is doing (SXC Health Solutions). Throughout the holding period of our stocks, SXC had not endured many external events that would significantly affect the portfolio. However, the company had recently made an acquisition of competitor Catalyst Health Solutions. Investors
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believe that the acquisition will substantially increase the company’s operations and will expectedly place it in the same league as the three largest PBM companies, Express Scripts Holding, CVS Caremark, and UnitedHealth Group as the membership base of the company should grow to 25 million as a result (SXC Health to Buy Catalyst Health). Our second stock chosen from the pharmaceutical company is Intuitive Surgical (ISRG). Intuitive came to be a leader in the medical and surgical industries due to their da Vinci Robot, a device that allows surgeons to perform with greater accuracy and efficiency. From a technical standpoint, Intuitive is the strongest company in the industry. Its stock price has grown from $90.96 on February 23, 2009 to $247.50 on November 15, 2010, and eventually to $588.28 on April 30, 2012. This demonstrates a constant and steep growth in stock price over the past three years as seen by the chart on the right. In addition, this stock price reflects investors’ confidence in the company and shows the value of the company’s product. It has a strong ROA at 15.67%, which is an important ratio when looking at a sales company. Fundamentally, the stock has a beta of 1.59, which indicates that the stock has high yield that would benefit our pension plan to try to catch up to the major deficit. Intuitive boasts a 44.45 P/E ratio that is about double the 23.06 P/E ratio of the industry, making Intuitive a worthwhile stock to invest in. It also
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