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View More Press Releases by Cigna

Press release:

Cigna Retains and Builds on Success of Pharmacy Business Delivering Market-Leading Value to Customers

Issued by: Cigna

Date: June 11, 2013

  • Cigna and Catamaran announce ten-year agreement to enhance pharmacy solutions for Cigna's Pharmacy Benefits Management (PBM) business.
  • Clients and customers will realize greater value through enhanced affordability from combined scale, continued high quality clinical care, and an exceptional service experience.
  • The arrangement links Cigna's proven clinical management and customer engagement capabilities with Catamaran’s innovative technology solutions, while leveraging the two companies’ scale for network choice and efficient procurement to deliver market-leading value.
  • This strategic relationship with Catamaran will result in estimated annualized earnings per share accretion for Cigna of approximately $0.50 in 2015.
BLOOMFIELD, Conn. & LISLE, Ill., June 10, 2013 -- Cigna Corporation (NYSE: CI) today announced it will build on its pharmacy benefits business by entering into a ten-year strategic PBM partnering agreement with Catamaran (NASDAQ: CTRX, TSX: CCT) which combines the customer focus and clinical excellence of Cigna's pharmacy team with the capabilities of Catamaran, and the combined purchasing scale of the two companies.

Cigna will continue to offer fully integrated management of medical and pharmacy benefits consistent with its business strategy. These two market leading organizations will partner on sourcing, fulfillment, and clinical services to drive superior cost and clinical outcomes for clients and customers. Delivering this integrated benefit approach brings increased opportunity to create value for customers, clients and shareholders, and better positions the companies for future growth.

“Our integrated pharmacy benefit management business has delivered exceptional results for our customers and clients and continues to be an essential part of our strategy,” said David M. Cordani, President and Chief Executive Officer. “This strategic PBM partnering agreement will complement Cigna’s strengths of partnering with physicians to engage customers in their overall health and wellness. Connected to Catamaran’s industry-leading health care information technology and service solutions, we will deliver differentiated options for clients and more affordable customer solutions in a rapidly evolving market.”

“We are excited to be Cigna’s partner of choice,” said Mark Thierer, Chairman and CEO of Catamaran. “The Catamaran Center of Excellence, combined with our flexible technology and client-centered delivery model, will add great value to Cigna’s offering by augmenting Cigna’s core service capabilities and providing a tailored service to meet the needs of its clients and members. We will unite the two companies’ skill and scale to deliver a best-in-class pharmacy solution.”

Under the terms of the agreement, Cigna will continue to lead formulary management, clinical and product development and sales and marketing, while also managing all day-to-day customer- and client-facing functions. Cigna will also continue to provide differentiated clinical services to over eight million customers and integration of medical care and disability management with clinical and pharmacy programs. In retaining its direct engagement with physicians and health care professionals, Cigna will build on its commitment to provide better health outcomes for customers.

Catamaran will bring a leading technology and service platform to better serve Cigna's existing and future pharmacy customers. Catamaran will also provide prescription drug procurement and inventory management, order fulfillment for Cigna's home-delivery pharmacy, retail network contracting, and claims processing.

Cigna will continue to be the brand for all pharmacy-related customer interactions. All home delivery prescription drugs and refills will be dispensed and distributed under the Cigna name and label.

Financial Impact

Cigna expects to record one-time transaction costs, primarily for advisory fees associated with this agreement, in the second quarter of 2013, resulting in an after-tax charge of approximately $25 million that will be reported as a special item.

Cigna expects this agreement will have an immaterial impact to adjusted income from operations1 in 2013. The Company estimates that this agreement will begin making a positive contribution to earnings in 2014 and will create annualized earnings per share accretion of approximately $0.50 per share2 in 2015 through improved clinical management, purchasing and administrative efficiencies.

BofA Merrill Lynch acted as sole financial advisor to Cigna on the agreement.

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