INVESTING IN STSTEM ECELLENCE {SXC-T}Investing in Systems Xcellence
Wall Street Transcript Interview with SX's President, Gordon Glenn
SX (SXC:TSE) has focused its strategy on the development and marketing of a robust suite of healthcare products and on delivering cost effective technology solutions to its expanding blue chip customer base.
Also view our Analyst Report created by TAURUS CAPITAL MARKETS LTD. as of October, 2000. Click here to view the report in PDF format.
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KEY INVESTMENT HIGHLIGHTS
Focus on large and growing market
SX focuses on the managed care segment of the $13 billion US healthcare information technology market
20-30% of US healthcare expenditures are associated with processing of paperwork for over 25 billion transactions per year
The managed care sector is under-invested in technology systems and has a significant need to eliminate costs, enhance decision-making processes and streamline operations
The healthcare sector is increasingly looking to vendor supplied software and outsourced information technology services to answer its IT needs
The Internet market opportunity for SX is significant, particularly in the areas of transaction processing, e-commerce, decision support and process automation. Spending in these areas is estimated to grow from $300 million in 2000 to over $9 billion by 2005
Pharmacy benefit costs, measured at average wholesale price (AWP) of $329 per member per year in 1998, are forecast to grow 15% per year for the next several years. Health plan administrators have an increasing need to effectively manage their rapidly growing pharmacy budgets
SX has identified several significant market opportunities for it's products in Europe and South America and believes the international market for it's products is large and growing. We will work to establish partnerships with which to address these market opportunities.
Robust and proven software products and technology
Four-pronged growth strategy leveraging Company’s strength in transaction processing
SX will generate future revenue and earnings growth in four ways:
continue to expand presence as software solutions provider for PBMs and MCOs through expansion of customer base, market segments (e.g. vision and dental) and product offerings
HxBenefit will provide customers with ability to outsource their benefits processing functions such as claims processing, adjudication and other PBM processing transactions to a central data center that SX will manage and operate (October 2000 startup)
create portal-based offering that will rapidly expand revenue through eAdvertising, eBusiness and eCommerce; provide transaction-based services such as formulary management eligibility checking, drug utilization review, provider networks and claims switching via the internet (March 2000 startup)
synergistic acquisitions of US based healthcare information technology companies that sell products and services designed to automate the processing and analysis of a wide range of health benefit transactions
Blue chip customer base with significant cross-selling opportunities
SX’s customer base of twenty-two organizations provides SX with diversification as well as significant cross-selling opportunities
Strong sales order backlog and growing sales pipeline.
Since initiating its restructuring plan in 1997, management has successfully refocused the company and returned it to profitability
Strong financial performance
Through end of fiscal 2000, SX has achieved six consecutive quarters of profitability
Revenues and EBITDA for FY 2000 were $26.7 million and $3.0 million, respectively, representing an increase of 38% and 33%, respectively over the prior year
The Company has a solid balance sheet with $8.4 million in cash and short-term investment and $9.1 million of working capital