Ahead of the Bell: PBM Catamaran's stock soars

Shares of Catamaran Corp. soared in premarket trading Tuesday a day after health insurer Cigna Corp. said it will enter into a 10-year partnership with the pharmacy benefits manager.

Cigna, the fourth-largest U.S. health insurer, said Monday that Catamaran will provide prescription drug claims processing, inventory management and fill orders for Cigna's home-delivery pharmacy, among other tasks. Catamaran had worked with Medicare Advantage provider HealthSpring, which Cigna acquired last year.

Pharmacy benefit managers, or PBMs, run prescription drug plans for employers, government agencies and other clients. Catamaran also provides health care information technology services.

Shares of Catamaran, based in Lisle, Ill., had dipped below $50 last month, a move analysts attributed to the possible demise of its relationship with Cigna, which was evaluating its PBM options.

The new agreement should add as much as $5.5 billion in additional revenue for Catamaran beyond the more than $3 billion it already receives through its HealthSpring work, BMO Capital Markets analyst Jennifer Lynch said in a research note. The analyst repeated her "outperform" rating on Catamaran shares.

"Cigna's deliberation process was thorough, taking into consideration an expansive range of options," Lynch wrote. "Emerging successfully from this bidding process should allay concerns around Catamaran's ability to compete for large business."

Catamaran shares climbed 12.9 percent, or $6.29, to $54.95 in premarket trading 30 minutes before Tuesday's market opening. Cigna shares slipped 12 cents to $68.88 in premarket trading.