10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2011

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number: 000-52073

SXC HEALTH SOLUTIONS CORP.

(Exact name of registrant as specified in its charter)

Yukon Territory	75-2578509
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)

2441 Warrenville Road, Suite 610, Lisle, IL 60532-3642

(Address of principal executive offices, zip code)

(800) 282-3232

(Registrant’s phone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer x	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of October 31, 2011, there were 62,343,552 of the Registrant’s common shares, no par value per share, outstanding.

TABLE OF CONTENTS

	Page
PART I — FINANCIAL INFORMATION	3
Item 1. Financial Statements (unaudited)	3
Consolidated Balance Sheets as of September 30, 2011 and December 31, 2010	3
Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2011 and 2010	4
Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2011 and 2010	5
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2011 and 2010	6
Consolidated Statements of Shareholders’ Equity for the Nine Months Ended September 30, 2011 and 2010	7
Notes to Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3. Quantitative and Qualitative Disclosures About Market Risk	29
Item 4. Controls and Procedures	29
PART II — OTHER INFORMATION	30
Item 1. Legal Proceedings	30
Item 1A. Risk Factors	30
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3. Defaults Upon Senior Securities	30
Item 4. Reserved	30
Item 5. Other Information	30
Item 6. Exhibits	30
SIGNATURE	31
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2
Exhibit 101

2

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

SXC HEALTH SOLUTIONS CORP.

Consolidated Balance Sheets

(in thousands, except share data)

	September 30, 2011		December 31, 2010
	(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	405,111	$	321,284
Restricted cash	14,971		13,790
Accounts receivable, net of allowance for doubtful accounts of $3,215 (2010 — $3,553)	217,791		122,175
Rebates receivable	32,439		34,249
Prepaid expenses and other current assets	6,676		10,173
Inventory	15,222		8,736
Deferred income taxes	5,583		6,647
Total current assets	697,793		517,054
Property and equipment, net of accumulated depreciation of $40,628 (2010 — $35,861)	17,146		20,896
Goodwill	229,193		220,597
Other intangible assets, net of accumulated amortization of $42,812 (2010 — $31,687)	49,657		56,282
Other assets	3,309		1,961
Total assets	$	997,098	$	816,790
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	15,092	$	30,930
Accrued expenses and other current liabilities	69,471		61,038
Pharmacy benefit management rebates payable	58,866		61,364
Pharmacy benefit claims payable	190,210		84,599
Total current liabilities	333,639		237,931
Deferred income taxes	13,890		15,111
Other liabilities	10,091		10,492
Total liabilities	357,620		263,534
Commitments and contingencies (Note 12)
Shareholders’ equity
Common shares: no par value, unlimited shares authorized; 62,287,716 shares issued and outstanding at September 30, 2011 (December 31, 2010 — 61,602,997 shares)	393,616		381,736
Additional paid-in capital	34,213		24,973
Retained earnings	211,649		146,547
Total shareholders’ equity	639,478		553,256
Total liabilities and shareholders’ equity	$	997,098	$	816,790

See accompanying notes to the unaudited interim consolidated financial statements.

3

SXC HEALTH SOLUTIONS CORP.

Consolidated Statements of Operations

(in thousands, except share and per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(unaudited)						(unaudited)
Revenue:
PBM	$	1,256,369		$	463,042		$	3,511,148		$	1,341,839
HCIT	30,921			26,880			85,833			79,677
Total revenue	1,287,290			489,922			3,596,981			1,421,516
Cost of revenue:
PBM	1,188,197			423,773			3,330,886			1,225,620
HCIT	16,751			13,285			45,973			39,064
Total cost of revenue	1,204,948			437,058			3,376,859			1,264,684
Gross profit	82,342			52,864			220,122			156,832
Expenses:
Product development costs	3,598			3,075			10,624			9,169
Selling, general and administrative	33,773			21,607			93,440			64,403
Depreciation of property and equipment	1,588			1,463			4,764			4,482
Amortization of intangible assets	3,899			1,942			11,125			5,915
	42,858			28,087			119,953			83,969
Operating income	39,484			24,777			100,169			72,863
Interest income	(115		)	(199		)	(375		)	(524		)
Interest expense and other expense, net	1,221			373			2,351			1,343
Income before income taxes	38,378			24,603			98,193			72,044
Income tax expense (benefit):
Current	14,289			8,837			34,587			21,575
Deferred	(1,177		)	(410		)	(1,496		)	2,356
	13,112			8,427			33,091			23,931
Net income	$	25,266		$	16,176		$	65,102		$	48,113
Earnings per share:
Basic	$	0.41		$	0.27		$	1.05		$	0.79
Diluted	$	0.40		$	0.26		$	1.03		$	0.77
Weighted average number of shares used in computing earnings per share:
Basic	62,271,267			60,820,197			62,050,573			60,569,027
Diluted	63,070,519			62,929,186			62,907,064			62,558,202

See accompanying notes to the unaudited interim consolidated financial statements.

4

SXC HEALTH SOLUTIONS CORP.

Consolidated Statements of Comprehensive Income

(in thousands)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
	(unaudited)				(unaudited)
Net income	$	25,266	$	16,176	$	65,102	$	48,113
Other comprehensive income, net of tax
Unrealized gain on short-term investments (net of income tax expense of $1 for the nine months ended September 30, 2010)	—		—		—		1
Comprehensive income	$	25,266	$	16,176	$	65,102	$	48,114

See accompanying notes to the unaudited interim consolidated financial statements.

5

SXC HEALTH SOLUTIONS CORP.

Consolidated Statements of Cash Flows

(in thousands)

	Nine Months Ended September 30,
	2011			2010
	(unaudited)
Cash flows from operating activities:
Net income	$	65,102		$	48,113
Items not involving cash:
Stock-based compensation	6,507			4,527
Depreciation of property and equipment	6,815			6,312
Amortization of intangible assets	11,125			5,915
Deferred lease inducements and rent	(397		)	(365		)
Deferred income taxes	(1,496		)	2,356
Tax benefit on stock-based compensation plans	(9,322		)	(6,071		)
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable	(93,838		)	(13,185		)
Rebates receivable	4,616			(20,459		)
Restricted cash	(1,181		)	(162		)
Prepaid expenses and other current assets	(1,742		)	(1,350		)
Inventory	(6,486		)	(825		)
Income tax	24,586			7,692
Accounts payable	(17,107		)	(288		)
Accrued expenses and other current liabilities	(1,308		)	(6,693		)
Pharmacy benefit claims payable	105,611			19,160
Pharmacy benefit management rebates payable	(5,304		)	17,177
Other	(1,469		)	1,020
Net cash provided by operating activities	84,712			62,874
Cash flows from investing activities:
Acquisitions	(12,421		)	—
Purchases of property and equipment	(3,073		)	(4,033		)
Proceeds from sales of short term investments	—			6,828
Purchases of short term investments	—			(2,208		)
Net cash (used) provided  by investing activities	(15,494		)	587
Cash flows from financing activities:
Tax benefit on stock-based compensation plans	9,322			6,071
Proceeds from exercise of options	5,291			5,040
Net cash provided by financing activities	14,613			11,111
Effect of foreign exchange on cash balances	(4		)	119
Increase in cash and cash equivalents	83,827			74,691
Cash and cash equivalents, beginning of period	321,284			304,370
Cash and cash equivalents, end of period	$	405,111		$	379,061

See accompanying notes to the unaudited interim consolidated financial statements.

6

SXC HEALTH SOLUTIONS CORP.

Consolidated Statements of Shareholders’ Equity

(in thousands, except share data)

	Common Shares			Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Loss
	Shares	Amount										Total
Balance at December 31, 2010	61,602,997	$	381,736	$	24,973		$	146,547	$	—		$	553,256
Activity during the period (unaudited):
Net income	—	—		—			65,102		—			65,102
Exercise of stock options	605,567	7,530		(2,239		)	—		—			5,291
Vesting of restricted stock units	79,152	4,350		(4,350		)	—		—			—
Tax benefit on options exercised	—	—		9,322			—		—			9,322
Stock-based compensation	—	—		6,507			—		—			6,507
Balance at September 30, 2011 (unaudited)	62,287,716	$	393,616	$	34,213		$	211,649	$	—		$	639,478
Balance at December 31, 2009	60,114,562	$	361,530	$	15,153		$	81,812	$	(1	)	$	458,494
Activity during the period (unaudited):
Net income	—	—		—			48,113		—			48,113
Exercise of stock options	677,886	7,169		(2,129		)	—		—			5,040
Vesting of restricted stock units	61,458	2,248		(2,248		)	—		—			—
Tax benefit on options exercised	—	—		6,071			—		—			6,071
Stock-based compensation	—	—		4,527			—		—			4,527
Other comprehensive income, net of tax	—	—		—			—		1			1
Balance at September 30, 2010 (unaudited)	60,853,906	$	370,947	$	21,374		$	129,925	$	—		$	522,246

See accompanying notes to the unaudited interim consolidated financial statements.

7

SXC HEALTH SOLUTIONS CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Description of Business

SXC Health Solutions Corp. (the “Company”) is a leading provider of pharmacy benefits management (“PBM”) services and healthcare information technology (“HCIT”) solutions to the healthcare benefits management industry. The Company’s product offerings and solutions combine a wide range of PBM services, software applications, application service provider (“ASP”) processing services and professional services designed for many of the largest organizations in the pharmaceutical supply chain, such as federal, provincial, state and local governments, pharmacy benefit managers, managed care organizations, retail pharmacy chains and other healthcare intermediaries. The Company is headquartered in Lisle, Illinois with several locations in the U.S. and Canada. The Company trades on the Toronto Stock Exchange under ticker symbol “SXC” and on the Nasdaq Global Market under ticker symbol “SXCI.” For more information please visit www.sxc.com.

2. Basis of Presentation

Basis of presentation:

The unaudited interim consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), pursuant to the Securities and Exchange Commission’s (“SEC”) rules and regulations for reporting on Form 10-Q, and following accounting policies consistent with the Company’s audited annual consolidated financial statements for the year ended December 31, 2010. The unaudited interim consolidated financial statements of the Company include its majority-owned subsidiaries and all significant intercompany transactions and balances have been eliminated in consolidation. Amounts in the unaudited interim consolidated financial statements and notes thereto are expressed in U.S. dollars, except where indicated. The financial information included herein reflects all adjustments (consisting only of normal recurring adjustments), which, in the opinion of management, are necessary for a fair presentation of the results for the interim periods presented. Certain reclassifications have been made to conform the prior year's consolidated financial statements to the current year's presentation.The results of operations for the three and nine month periods ended September 30, 2011 are not necessarily indicative of the results to be expected for the full year ending December 31, 2011. As of the issuance date of the Company’s financial statements, the Company has assessed whether subsequent events have occurred that require adjustment to or disclosure in these unaudited interim consolidated financial statements in accordance with Financial Accounting Standards Board’s (“FASB”) guidance.

Pursuant to the SEC rules and regulations for reporting on Form 10-Q, certain information and note disclosures normally included in the annual consolidated financial statements prepared in accordance with GAAP have been condensed or excluded. As a result, these unaudited interim consolidated financial statements do not contain all the disclosures required to be included in the annual consolidated financial statements and should be read in conjunction with the most recent audited annual consolidated financial statements and notes thereto for the year ended December 31, 2010.

Use of estimates:

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the period. Significant items subject to such estimates and assumptions include revenue recognition, rebates, purchase price allocation in connection with acquisitions, valuation of property and equipment, valuation of intangible assets acquired and related amortization periods, impairment of goodwill, income tax uncertainties, contingencies and valuation allowances for receivables and income taxes. Actual results could differ from those estimates.

3. Recent Accounting Pronouncements

a) Recent accounting standards implemented

No new standards have been implemented by the Company during the three and nine month periods ended September 30, 2011.

b) Recent accounting standards issued

On September 15, 2011, the FASB issued an update to the goodwill impairment testing standard. The revised standard is intended to reduce the cost and complexity of the annual goodwill impairment test by providing entities an option to perform a "qualitative" assessment to determine whether further impairment testing is necessary. The revised standard is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011; however, an entity can choose to early adopt provided that the entity has not yet performed its 2011 annual impairment test or issued its financial statements. The Company will adopt this standard in the fourth quarter of 2011.

4. Stock Split

On September 2, 2010, the Company announced a two-for-one stock split effected by a dividend on the issued and outstanding common shares of the Company. On September 17, 2010, shareholders of record at the close of business on September 14, 2010 were issued one

8

additional common share for each share owned as of that date. All share and per share data presented in this report have been adjusted to reflect this stock split.

5. Business Combinations

MedfusionRx Acquisition

On December 28, 2010, the Company, through its direct wholly owned subsidiary SXC Health Solutions, Inc. (“SXC Inc.”), completed the acquisition of MedfusionRx, L.L.C. and certain affiliated entities and certain assets of Medtown South, L.L.C. (collectively, "MedfusionRx"), a specialty pharmacy services provider with significant expertise in providing clinical services to patients with complex chronic conditions. The purchase price for MedfusionRx was $101.5 million in cash, with an opportunity for the former owners of MedfusionRx to earn an additional $5.5 million in cash, subject to the satisfaction of certain performance targets in the 2012 fiscal year, in each case based upon the terms and subject to the conditions contained in the MedfusionRx Purchase Agreement. MedfusionRx's results of operations are included in the consolidated statements of operations commencing January 1, 2011. MedfusionRx's results of operations from the date of acquisition through December 31, 2010 were not material to the Company's results of operations for 2010.

The acquisition of MedfusionRx will help transform the Company's Specialty Service pharmacy business by expanding its presence and enhancing its capabilities in this rapidly growing segment of the PBM industry. The acquisition will also provide an opportunity to create new revenues and generate cost savings through purchasing synergies.

The purchase price of the acquired MedfusionRx operations was comprised of the following (in thousands):

Cash payment to MedfusionRx shareholders	$	101,514
Fair value of contingent purchase price	4,865
Total purchase price	$	106,379

The MedfusionRx Purchase Agreement includes contingent purchase price consideration in the form of an earn-out payment of up to $5.5 million contingent upon the MedfusionRx book of business meeting or exceeding certain gross profit targets for the 2012 fiscal year. The $4.9 million fair value of the contingent purchase price was accrued at the date of acquisition as part of the total consideration transferred. The Company utilized a probability weighted discounted cash flow method, with expected future performance of MedfusionRx and its ability to meet the target performance objectives as the main driver of the valuation, to arrive at the fair value of the contingent consideration. The Company will continue to reassess the fair value of the contingent purchase price until the applicable earn-out period has lapsed. Any future changes to the fair value of the contingent purchase price will be recognized in earnings of the Company. As the valuation for the contingent consideration is based on inputs not observable in the market, the measurement is classified as Level 3 in the fair value hierarchy.

Costs related to the MedfusionRx acquisition of $2.4 million were included in selling, general and administrative expenses for the year ended December 31, 2010. No additional acquisition costs were incurred during the three and nine months ended September 30, 2011. The costs incurred were comprised of legal, accounting, valuation, and professional services fees associated with the MedfusionRx acquisition.

Purchase Price Allocation

The MedfusionRx acquisition was accounted for under the acquisition method of accounting with the Company treated as the acquiring entity. Accordingly, the consideration paid by the Company to complete the acquisition has been allocated to the assets acquired and liabilities assumed based upon their estimated fair values as of the date of acquisition. The carrying values for current assets and liabilities were deemed to approximate their fair values due to the short-term nature of their maturities. Fair values for acquired amortized intangible assets were determined as follows: customer lists are valued using an excess earnings model based on expected future revenues derived from the customers acquired, non-compete agreements were valued using discounted cash flow models based on expected future results of MedfusionRx, trademarks/tradenames and software were valued using a royalty savings model based on future projected revenues of MedfusionRx and applicable market royalty rates and licenses utilized a replacement cost approach. The excess of the purchase price over the estimated fair values of the net assets acquired was recorded as goodwill. All of the assets and liabilities recorded for the MedfusionRx acquisition are included within the Company's PBM segment. Goodwill is non-amortizing for financial statement purposes and the entire goodwill balance generated from the MedfusionRx acquisition is tax deductible. The goodwill recognized by the Company represents many of the synergies and business growth opportunities that may be realized from this acquisition. The synergies include the opportunity to realize more specialty sales from the Company's existing customer base, the expansion of the Company's product offerings and improved pricing from the Company's suppliers due to the increased volume of prescription drug purchases.

9

The following summarizes the preliminary fair values assigned to the assets acquired and liabilities assumed at the acquisition date and are subject to change. The purchase price allocation and related valuation process are not complete; however, the Company has completed its valuation of intangible assets, inventory, property and equipment, and accounts payable acquired. The Company is continuing to analyze the completeness of accrued liabilities acquired and the fair value of accounts receivables obtained in the acquisition. Final determination of the fair values may result in further adjustments to the amounts presented below (in thousands):

Current assets	$	20,781
Property and equipment	360
Goodwill	78,646
Intangible assets	26,262
Total assets acquired	126,049
Current liabilities	19,670
Total liabilities assumed	19,670
Net assets acquired	$	106,379

During the three and nine months ended September 30, 2011, the Company recognized $1.8 million and $5.3 million, respectively, of amortization expense from intangible assets acquired. Amortization for the remainder of 2011 is expected to be $1.8 million. Amortization for 2012 and 2013 is expected to be $4.9 million and $3.8 million, respectively.

The estimated fair values and useful lives of intangible assets acquired are as follows (dollars in thousands):

	Fair Value		Useful Life
Trademarks/Trade names	$	10,000	10 years
Customer relationships	14,562		5 years
Non-compete agreements	1,400		5 years
License	300		3 years
Total	$	26,262

None of the acquired intangible assets will have any residual value at the end of the amortization periods. There were no in-process research and development assets acquired.

Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information presents the combined historical results of operations of the Company and MedfusionRx as if the acquisition had occurred on the first day of the comparable period presented. The unaudited pro forma financial information includes certain adjustments related to the acquisition, such as increased amortization from the fair value of intangible assets acquired recorded as part of the purchase accounting, and consequential income tax effects from the acquisition. Unaudited pro forma results of operations are as follows (in thousands, except share and per share amounts):

	Three Months Ended September 30,		Nine Months Ended September 30,
	2010		2010
Revenue	$	552,933	$	1,605,575
Gross profit	$	57,393	$	176,643
Net income	$	16,430	$	52,570
Earnings per share:
Basic	$	0.27	$	0.87
Diluted	$	0.26	$	0.84
Weighted average shares outstanding:
Basic	60,820,197		60,569,027
Diluted	62,929,186		62,558,202

This unaudited pro forma financial information is not intended to represent or be indicative of what would have occurred if the transaction had taken place on the date presented and is not indicative of what the Company's actual results of operations would have been had the acquisition been completed at the beginning of the periods indicated above. Further, the pro forma combined results do not reflect one-time costs to fully merge and operate the combined organization more efficiently, or anticipated synergies expected to result from the combination and should not be relied upon as being indicative of the future results that the Company will experience.

10

MedMetrics Health Partners Acquisition

On June 1, 2011, the Company completed the acquisition of substantially all of the assets of MedMetrics Health Partners, Inc. (“MedMetrics”), the full-service PBM subsidiary of Public Sector Partners, Inc., which is affiliated with a major medical school. MedMetrics' results of operations are included in the 2011 consolidated statements of operations commencing June 1, 2011. Prior to the acquisition, MedMetrics was a customer of the Company and its associated revenue was accounted for in the PBM segment. Due to the previous contractual relationship between the Company and MedMetrics, there were pre-existing transactions between the two entities which resulted in approximately $10.6 million in accounts receivable due to the Company from MedMetrics for PBM services provided. No gain or loss was generated from the subsequent settlement of these pre-existing balances. Taking into account deal-related closing expenses and related intangible assets amortization, the acquisition is not expected to have a material impact to 2011 fully-diluted earnings per share ("EPS").

The acquisition of MedMetrics is consistent with the Company's strategy to acquire assets that currently utilize the Company's technology platform which facilitates the integration into the Company's business and will allow the Company the opportunity to sell additional services, such as mail and specialty services, to MedMetrics' customers. The acquisition will also help extend the Company's footprint in the northeastern part of the U.S.

The MedMetrics acquisition was accounted for under the acquisition method of accounting, with the Company treated as the acquiring entity. Accordingly, the consideration paid by the Company to complete the acquisition has been allocated to the assets acquired and liabilities assumed based upon their estimated fair values as of the date of acquisition. All of the assets and liabilities recorded for the MedMetrics acquisition are included within the Company's PBM segment.

PTRX, Inc. Acquisition

Subsequent to the end of the Company's current reporting period, on October 3, 2011, the Company completed the acquisition of PTRX, Inc. (“PTRX”), a full-service PBM, and its exclusive mail-order pharmacy provider, SaveDirectRx, Inc. (“SaveDirectRx”), both based in San Antonio, Texas. The purchase price was $77 million in cash, subject to certain customary post-closing adjustments, with an opportunity for the former owners of SaveDirectRx to earn an additional $4.5 million, subject to the achievement of certain performance targets through 2012. The acquisitions of PTRX and SaveDirectRx continue upon the Company's strategy to acquire assets that currently utilize the Company's technology platform in order to ease the integration into the Company's business. Further, these acquisitions will allow the Company to extend its presence in the southwestern part of the U.S. and expand its mail pharmacy business. The initial accounting for these acquisitions was incomplete at the time these financial statements were available for issuance as the Company had not received final valuations from certain independent valuation specialists for intangible assets acquired, and additionally, the Company had not completed its final review of the valuation for the assets and liabilities acquired. The Company expects to finalize its accounting for these acquisitions as soon as practicable, but no later than one-year from the acquisition date.

6. Cash and Cash Equivalents

The components of cash and cash equivalents are as follows (in thousands):

	September 30, 2011			December 31, 2010
Cash on deposit	$	480,020		$	387,687
Payments in transit	(74,928		)	(66,423		)
Canadian dollar deposits (September 30, 2011 — Cdn. $20 at 1.0420; December 31, 2010 — Cdn. $20 at 1.0002)	19			20
	$	405,111		$	321,284

The Company determined the carrying amount reported in the consolidated balance sheets as cash and cash equivalents approximates fair value due to the short maturities of these instruments; accordingly, the valuation of these instruments are considered Level 1 measurements in the fair value hierarchy.

7. Goodwill and Other Intangible Assets

Goodwill and indefinite-lived intangible assets are reviewed for impairment annually or more frequently if impairment indicators arise. The Company allocates goodwill to both the PBM and HCIT segments. There were no impairments of goodwill or indefinite-lived intangible assets during the three or nine months ended September 30, 2011 and 2010.

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Definite-lived intangible assets are amortized over the useful lives of the related assets. The components of intangible assets were as follows (in thousands):

	September 30, 2011						December 31, 2010
	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Customer relationships	$	71,474	$	35,044	$	36,430	$	68,624	$	25,493	$	43,131
Acquired software	3,765		3,460		305		3,765		3,272		493
Trademarks/Trade names	11,920		2,228		9,692		11,370		1,252		10,118
Non-compete agreements	4,010		1,807		2,203		2,910		1,492		1,418
Licenses	1,300		273		1,027		1,300		178		1,122
Total	$	92,469	$	42,812	$	49,657	$	87,969	$	31,687	$	56,282

Total amortization associated with intangible assets at September 30, 2011 is estimated to be $3.9 million for the remainder of 2011, $12.5 million in 2012, $10.2 million in 2013, $8.8 million in 2014, $6.5 million in 2015, and $7.7 million in total for years after 2015. The main driver of the future amortization is related to intangible assets acquired in the acquisitions of National Medical Health Card Systems, Inc. (“NMHC”) in 2008 and MedfusionRx in 2010.

8. Shareholders’ Equity

(a) Stock Incentive Plans:

Effective on March 11, 2009, the Board of Directors of the Company adopted the SXC Health Solutions Corp. Long-Term Incentive Plan (“LTIP”), which was approved by the shareholders of the Company at the Annual and Special Meeting of Shareholders on May 13, 2009. The LTIP provides for the grant of stock option awards, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards and other stock-based awards to eligible persons, including executive officers and directors of the Company. The purpose of the LTIP is to advance the interests of the Company by attracting and retaining high caliber employees and other key individuals who perform services for the Company, a subsidiary or an affiliate; align the interests of the Company’s shareholders and recipients of awards under the LTIP by increasing the proprietary interest of such recipients in the Company’s growth and success; and motivate award recipients to act in the best long-term interest of the Company and its shareholders. The LTIP replaced the previous stock option plan, and no further grants or awards will be issued under the previous stock option plan. The maximum common shares of the Company allowed to be issued under the LTIP was increased by 1,800,000 on May 11, 2011, after the Company’s shareholders approved an amendment to the LTIP at the Annual and Special Meeting of Shareholders of the Company.

There were 2,141,120 stock-based awards available for grant under the LTIP as of September 30, 2011.

(b) Employee Stock Purchase Plan:

The Company maintains an Employee Stock Purchase Plan (“ESPP”) which allows eligible employees to withhold annually up to a maximum of 15% of their base salary, or $25,000, subject to IRS limitations, for the purchase of the Company’s common shares. Common shares will be purchased on the last day of each offering period at a discount of 5% of the fair market value of the common shares on such date. The aggregate number of common shares that may be issued under the ESPP may not exceed 200,000.

The ESPP requires that common shares available for purchase under the ESPP be drawn from reacquired common shares purchased on behalf of the Company in the open market. During the nine months ended September 30, 2011 and 2010, there were 6,772 and 7,072 shares delivered under the ESPP, respectively.

The ESPP is not considered compensatory as its purchase discount is not greater than 5%, the plan is available to substantially all employees, and the plan does not incorporate option features. Accordingly, no portion of the cost related to ESPP purchases is included in the Company’s stock-based compensation expense.

(c) Outstanding shares and stock options:

At September 30, 2011, the Company had outstanding common shares of 62,287,716 and stock options outstanding of 1,344,396. At December 31, 2010, the Company had outstanding common shares of 61,602,997 and stock options outstanding of 1,749,459. As of September 30, 2011, stock options outstanding consisted of 141,526 Canadian dollar stock options at a weighted-average exercise price of Canadian $5.62 and 1,202,870 U.S. dollar stock options at a weighted-average exercise price of U.S. $19.99.

(d) Restricted stock units:

During the nine months ended September 30, 2011, the Company granted 116,046 time-based restricted stock units (“RSUs”) and 104,662 performance-based RSUs to its employees and non-employee directors with a weighted-average grant date fair value of $50.61 per share. At September 30, 2011, there were 288,762 time-based RSUs and 330,222 performance-based RSUs outstanding.

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Time-based RSUs vest on a straight-line basis over a range of two to four years and performance-based RSUs cliff vest based upon reaching agreed upon three-year cumulative performance conditions. The number of outstanding performance-based RSUs as of September 30, 2011 assumes the associated performance targets will be met at the maximum level.

9. Stock-Based Compensation

During the three-month periods ended September 30, 2011 and 2010, the Company recorded stock-based compensation expense of $2.4 million and $1.6 million, respectively. During the nine-month periods ended September 30, 2011 and 2010, the Company recorded stock-based compensation expense of $6.5 million and $4.5 million, respectively.

The Black-Scholes option-pricing model was used to estimate the fair value of the stock options at the grant date based on the following assumptions:

	Nine Months Ended September 30,
	2011		2010
Total stock options granted	219,554		176,280
Volatility	48.6%-49.5%		47.9%-48.5%
Risk-free interest rate	0.9%-2.2%		1.4%-2.4%
Expected life (in years)	4.5		4.5
Dividend yield	—		—
Weighted-average grant date fair value	$	21.62	$	13.67

Fair value is established for RSUs based on the stock market price at the grant date.

As of September 30, 2011, there was $6.2 million and $13.2 million of unrecognized compensation cost related to stock options and RSUs, respectively, which is expected to be recognized over a weighted-average period of 2.9 years and 2.4 years, respectively.

10. Segment Information

The Company reports in two operating segments: PBM and HCIT. The Company evaluates segment performance based upon revenue and gross profit. Financial information by segment is presented below (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
PBM:
Revenue	$	1,256,369	$	463,042	$	3,511,148	$	1,341,839
Cost of revenue	1,188,197		423,773		3,330,886		1,225,620
Gross profit	$	68,172	$	39,269	$	180,262	$	116,219
Total assets at September 30	$	690,445	$	491,117
HCIT:
Revenue	$	30,921	$	26,880	$	85,833	$	79,677
Cost of revenue	16,751		13,285		45,973		39,064
Gross profit	$	14,170	$	13,595	$	39,860	$	40,613
Total assets at September 30	$	306,653	$	263,443
Consolidated:
Revenue	$	1,287,290	$	489,922	$	3,596,981	$	1,421,516
Cost of revenue	1,204,948		437,058		3,376,859		1,264,684
Gross profit	$	82,342	$	52,864	$	220,122	$	156,832
Total assets at September 30	$	997,098	$	754,560

For the three-month period ended September 30, 2011, our largest customer, HealthSpring, Inc. ("HealthSpring"), accounted for 39% of total revenues. For the nine-month period ended September 30, 2011, HealthSpring accounted for 40% of total revenue. For the three and nine-month periods ended September 30, 2010, no one customer accounted for 10% or more of total revenue.

Subsequent to the end of the current reporting period, on October 24, 2011, HealthSpring announced that it had entered into a definitive agreement with Cigna Corporation (“Cigna”) under which Cigna will acquire HealthSpring in an all-cash transaction, subject to regulatory and other conditions.  The Company's contract with HealthSpring (the “HealthSpring contract”) was effective on January 1, 2011 and has

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an initial three-year term (with two additional one-year extensions).  Neither party to the HealthSpring contract has the right to terminate the agreement prior to the end of the initial term, except in the event of a material breach. While the Company does not currently anticipate any adverse impact to its financial results through the initial term of the HealthSpring contract as a result of the anticipates acquisition, we can give no assurances that we will be able to continue to generate a substantial portion of our revenues from HealthSpring for the foreseeable future, or that we will be able to extend or renew the HealthSpring contract past the initial period at the same service levels, or at all.

At September 30, 2011, one customer accounted for 17% of the outstanding accounts receivable balance. At December 31, 2010, no one customer accounted for 10% or more of the outstanding accounts receivable balance.

11. Income Taxes

The Company’s effective tax rate for the three months ended September 30, 2011 and 2010 was 34.2% and 34.3%, respectively. The Company’s effective tax rate for the nine months ended September 30, 2011 and 2010 was 33.7% and 33.2%, respectively.

The Company and its subsidiaries file income tax returns in Canadian and U.S. federal jurisdictions, and various provincial, state and local jurisdictions. With a few exceptions, the Company is no longer subject to tax examinations by tax authorities for years prior to 2007.

12. Commitments and Contingencies

On December 28, 2010, the Company completed its acquisition of MedfusionRx, a leading independent specialty pharmacy services provider. On March 24, 2011, three employees of MedfusionRx and several third parties were indicted for alleged violations of the federal anti-kickback statute that occurred prior to the closing of the acquisition. None of these employees are currently employed by MedfusionRx. MedfusionRx intends to cooperate fully with any requests received from governmental officials. While the Company believes that it is entitled to indemnification with respect to any costs or expenses arising from or relating to this matter pursuant to the terms of the MedfusionRx Purchase Agreement, we can give no assurances that such indemnification will be recoverable or will be sufficient to cover all potential civil or criminal penalties and claims arising therefrom or relating thereto. As of September 30, 2011, the Company has not recorded any contingent liability in its consolidated financial statements relating to this matter.

From time to time in connection with its operations, the Company is named as a defendant in actions for damages and costs allegedly sustained by third party plaintiffs. The Company has considered these proceedings and disputes in determining the necessity of any reserves for losses that are probable and reasonably estimable. In addition, various aspects of the Company’s business may subject it to litigation and liability for damages arising from errors in the processing of prescription drug claims, failure to meet performance measures within certain contracts relating to its services, its ability to obtain certain levels of discounts for rebates on prescription purchases from retail pharmacies and drug manufacturers or other actions or omissions. The Company’s recorded reserves are based on estimates developed with consideration given to the potential merits of claims or quantification of any performance obligations. The Company also takes into account its history of claims, the limitations of any insurance coverage, advice from outside counsel and management’s strategy with regard to the settlement or defense of such claims and obligations. While the ultimate outcome of those claims, lawsuits or performance obligations cannot be predicted with certainty, the Company believes, based on its understanding of the facts of these claims and performance obligations, that adequate provisions have been recorded in the consolidated financial statements where required.

The Company provides routine indemnification to its customers against liability if the Company’s products infringe on a third party’s intellectual property rights. The maximum amount of potential indemnification liability cannot be reasonably estimated due to its uncertain nature. Historically, the Company has not made payments related to these indemnification provisions.

13. Fair Value

Fair value measurement guidance defines a three-level hierarchy to prioritize the inputs to valuation techniques used to measure fair value into three broad levels, with Level 1 considered the most reliable. For assets and liabilities measured at fair value on a recurring basis in the consolidated balance sheets, the table below categorizes fair value measurements across the three levels as of September 30, 2011 and December 31, 2010 (in thousands):

	September 30, 2011
	Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Liabilities:
Contingent purchase price consideration	$	—	$	—	$	5,060	$	5,060

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	December 31, 2010
	Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Liabilities:
Derivatives	$	—	$	274	$	—	$	274
Contingent purchase price consideration	$	—	$	—	$	4,865	$	4,865

When available and appropriate, the Company uses quoted market prices in active markets to determine fair value, and classifies such items within Level 1. Level 1 values only include instruments traded on a public exchange. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability or can be derived principally from or corroborated by observable market data. If the Company were to use one or more significant unobservable inputs for a model-derived valuation, the resulting valuation would be classified in Level 3.

The Company acquired MedfusionRx, a specialty pharmacy services provider on December 28, 2010. The selling members of MedfusionRx have the opportunity to earn an additional $5.5 million in cash, subject to the satisfaction of certain performance targets in the 2012 fiscal year. The fair value of the contingent purchase price consideration was $5.1 million as of September 30, 2011. The change in the value of the contingent purchase price of $0.2 million from December 31, 2010 was recorded to interest expense representing the change in the present value of the amount expected to be paid in the future for the contingent purchase price consideration. The Company utilized a probability weighted discounted cash flow method to arrive at the fair value of the contingent consideration based on the expected results and considering the performance targets of MedfusionRx in 2012. As of September 30, 2011 and December 31, 2010, the contingent purchase price consideration is classified as other liabilities in the consolidated balance sheets.

The Company had certain interest rate derivatives that were classified as accrued liabilities in the consolidated balance sheet as of December 31, 2010. The fair values represent quoted prices from a financial institution which are derived from movements in the underlying interest rate markets. There were no outstanding derivatives in the three-month period ended September 30, 2011. The total fair value changes for the three-month period ended September 30, 2010 and the nine-month periods ended September 30, 2011 and 2010 were insignificant.

During the three and nine-month periods ended September 30, 2011, there were no movements of fair value measurements between Levels 1, 2 and 3.

14. Earnings Per Share

The Company calculates basic EPS using the weighted average number of common shares outstanding during the period. Diluted EPS is calculated using the same method as basic EPS, but the Company adds the number of additional common shares that would have been outstanding for the period if the dilutive potential common shares had been issued. The following is the reconciliation between the number of weighted average shares used in the basic and diluted EPS calculations for the three and nine-month periods ended September 30, 2011 and 2010:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2011	2010	2011	2010
Weighted average number of shares used in computing basic EPS	62,271,267	60,820,197	62,050,573	60,569,027
Add dilutive common stock equivalents:
Outstanding stock options	542,718	1,821,815	626,544	1,739,424
Outstanding restricted stock units	256,534	287,174	229,947	249,751
Weighted average number of shares used in computing diluted EPS	63,070,519	62,929,186	62,907,064	62,558,202

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the Management’s Discussion and Analysis (“MD&A”) section of the Company’s 2010 Annual Report on Form 10-K. Results of the interim periods presented are not necessarily indicative of the results to be expected for the full year ending December 31, 2011.

Caution Concerning Forward-Looking Statements

Certain information in this MD&A, in various filings with regulators, in reports to shareholders and in other communications is forward-looking within the meaning of certain securities laws and is subject to important risks, uncertainties and assumptions. This forward-looking information includes, among other things, information with respect to the Company’s objectives and the strategies to achieve those objectives, as well as information with respect to the Company’s beliefs, plans, expectations, anticipations, estimates and intentions. There are a number of important factors that could cause actual results to differ materially from those indicated by such forward-looking statements. Such factors include, but may not be limited to, the ability of the Company to adequately address: the risks associated with further market acceptance of the Company’s products and services; its ability to manage its growth effectively; its reliance on and ability to retain key customers and key personnel; industry conditions such as consolidation of customers, competitors and acquisition targets; the Company’s ability to acquire a company and manage integration and potential dilution associated therewith; the impact of technology changes on its products/service offerings, including the impact on the intellectual property rights of others; the effects of regulatory and legislative changes in the healthcare industry; and the sufficiency and fluctuations of the Company's liquidity and capital needs.

When relying on forward-looking information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. In making the forward-looking statements contained in this MD&A, the Company does not assume any significant acquisitions, dispositions or one-time items. It does assume, however, the renewal of certain customer contracts. Every year, the Company has major customer contracts that come up for renewal. In addition, the Company also assumes new customer contracts. In this regard, the Company is pursuing large opportunities that present a very long and complex sales cycle which substantially affects its forecasting abilities. The Company has assumed certain timing for the realization of these opportunities which it thinks is reasonable but which may not be achieved. Furthermore, the pursuit of these larger opportunities does not ensure a linear progression of revenue and earnings since they may involve significant up-front costs followed by renewals and cancellations of existing contracts. The Company has assumed certain revenues which may not be realized. The Company has also assumed that the material factors referred to in the previous paragraph will not cause such forward-looking information to differ materially from actual results or events. The foregoing list of factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors. For additional information with respect to certain of these and other factors, refer to the Risk Factors section contained in Item 1A of the Company’s 2010 Annual Report onForm 10-K, and subsequent findings on Forms 10-Q and 8-K.

THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS MD&A REPRESENTS THE COMPANY’S CURRENT EXPECTATIONS AND, ACCORDINGLY, IS SUBJECT TO CHANGE. HOWEVER, THE COMPANY EXPRESSLY DISCLAIMS ANY INTENTION OR OBLIGATION TO UPDATE OR REVISE ANY FORWARD-LOOKING INFORMATION, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE, EXCEPT AS REQUIRED BY APPLICABLE LAW.

Overview

PBM Business

The Company provides comprehensive PBM services to customers, which include managed care organizations, local governments, unions, corporations, HMOs, employers, workers’ compensation plans, third party health care plan administrators and federal and state government programs through its network of licensed pharmacies throughout the United States. The PBM services include electronic point-of-sale pharmacy claims management, retail pharmacy network management, mail service pharmacy, specialty service pharmacy, Medicare Part D services, benefit design consultation, preferred drug management programs, drug review and analysis, consulting services, data access and reporting and information analysis. The Company owns a mail service pharmacy (“Mail Service”) and specialty service pharmacies (“Specialty Service”). In addition, the Company is a national provider of drug benefits to its customers under the federal government’s Medicare Part D program.

Revenue primarily consists of sales of prescription drugs, together with any associated administrative fees, to customers and participants, either through the Company’s nationwide network of retail pharmacies, Mail Service pharmacy or Specialty Service pharmacies. Revenue related to the sale of prescription drugs is recognized when the claims are adjudicated and the prescription drugs are shipped. Claims are adjudicated at the point-of-sale using an on-line processing system. Profitability of the PBM segment is largely dependent on the volume and type of prescription drug claims adjudicated and sold. Growth in revenue and profitability of the PBM segment is dependent upon attracting new customers, retaining the Company’s current customers and providing additional services to the Company’s current customer base by offering a flexible and cost-effective alternative to traditional PBM offerings. The Company’s PBM offerings allow its customers to gain increased control of their pharmacy benefit dollars and maximize cost savings and quality of care through a full range of pharmacy spend management services, including: formulary administration, benefit plan design and management, pharmacy network management, drug utilization review, clinical services and consulting, reporting and information analysis solutions, mail and specialty pharmacy services and consumer web services.

Under the Company’s customer contracts, retail pharmacies are solely obligated to collect the co-payments from the participants. As such, the Company does not include participant co-payments to retail pharmacies in revenue or cost of revenue. If these amounts were included in revenue and cost of revenue, operating income and net income would not have been affected.

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The Company evaluates customer contracts to determine whether it acts as a principal or as an agent in the fulfillment of prescriptions through its retail pharmacy network. The Company acts as a principal in most of its transactions with customers, and revenue is recognized at the prescription price (ingredient cost plus dispensing fee) negotiated with customers, plus an administrative fee, if applicable (“gross reporting”). Gross reporting is appropriate when the Company (i) has separate contractual relationships with customers and with pharmacies, (ii) has responsibility for validating and managing a claim through the claims adjudication process, (iii) commits to set prescription prices for the pharmacy, including instructing the pharmacy as to how that price is to be settled (co-payment requirements), (iv) manages the overall prescription drug relationship with the patients, who are participants of customers’ plans, and (v) has credit risk for the price due from the customer. In instances where the Company merely administers a customer’s network pharmacy contract to which the Company is not a party and under which the Company does not assume pricing risk and credit risk, among other factors, the Company only records an administrative fee as revenue. For these customers, the Company earns an administrative fee for collecting payments from the customer and remitting the corresponding amount to the pharmacies in the customer’s network. In these transactions, the Company acts as an agent for the customer. As the Company is not the principal in these transactions, the drug ingredient cost is not included in revenue or in cost of revenue (“net reporting”). As such, there is no impact to gross profit based upon whether gross or net reporting is used.

HCIT Business

The Company is also a leading provider of HCIT solutions and services to providers, payors, and other participants in the pharmaceutical supply chain in North America. The Company’s product offerings include a wide range of software products for managing prescription drug programs and for drug prescribing and dispensing. The Company’s solutions are available on a license basis with on-going maintenance and support or on a transaction fee basis using an ASP model. The Company’s payor customers include managed care organizations, health plans, government agencies, employers and intermediaries such as pharmacy benefit managers. The solutions offered by the Company’s services assist both payors and providers in managing the complexity and reducing the cost of their prescription drug programs and dispensing activities.

Profitability of the HCIT business depends primarily on revenue derived from transaction processing services, software license sales, hardware sales, maintenance and professional services. Recurring revenue remains a cornerstone of the Company’s business model and consists of transaction processing services and maintenance. Growth in revenue from recurring sources has been driven primarily by growth in the Company’s transaction processing business in the form of claims processing for its payor customers and switching services for its provider customers. Through the Company’s transaction processing business, where the Company is generally paid based on the volume of transactions processed, the Company continues to benefit from the growth in pharmaceutical drug use in the United States. The Company believes that aging demographics and increased use of prescription drugs will continue to generate demand in the transaction processing business. In addition to benefiting from this industry growth, the Company continues to focus on increasing recurring revenue in the transaction processing area by adding new transaction processing customers to its existing customer base. The recognition of revenue in the HCIT business depends on various factors including the type of service provided, contract parameters and any undelivered elements.

Operating Expenses

The Company’s operating expenses primarily consist of cost of revenue, product development costs, selling, general and administrative (“SG&A”) costs, depreciation and amortization. Cost of revenue includes the cost of drugs dispensed and shipped, costs related to the products and services provided to customers in the HCIT segment and costs associated with the operation and maintenance of the transaction processing centers. These costs include salaries and related expenses for professional services personnel, transaction processing centers’ personnel, customer support personnel, any hardware or equipment sold to customers and depreciation expense related to data center operations. Product development costs consist of staffing expenses to produce enhancements and new initiatives. SG&A costs relate to selling expenses, commissions, marketing, network administration and administrative costs, including legal, accounting, investor relations and corporate development costs. Depreciation expense relates to the depreciation of property and equipment used by the Company. Amortization expense relates to definite-lived intangible assets from business acquisitions.

Industry Overview

The PBM industry is intensely competitive, generally resulting in continuous pressure on gross profit as a percentage of total revenue. In recent years, industry consolidation and dramatic growth in managed healthcare have led to increasingly aggressive pricing of PBM services. Given the pressure on all parties to reduce healthcare costs, the Company expects this competitive environment to continue for the foreseeable future. In order to remain competitive, the Company looks to continue to drive purchasing efficiencies of pharmaceuticals to improve operating margins and target the acquisition of other businesses to achieve its strategy of expanding its product offerings and customer base. The Company also looks to retain and expand its customer base by improving the quality of service provided by enhancing its solutions and lowering the total drug spend for customers.

The HCIT industry is increasingly competitive as technologies continue to advance and new products continue to emerge. This rapidly developing industry requires the Company to perpetually improve its offerings to meet customer’s rising product standards. Recent governmental stimulus initiatives to improve the country’s electronic health records should assist the growth of the industry in addition to increased regulatory reporting forecasted by the recent healthcare reform legislation. However, it may also increase competition as more players enter the expanding market.

The complicated environment in which the Company operates presents it with opportunities, challenges, and risks. The Company’s customers are paramount to its success; the retention of existing customers and winning of new customers and members pose the greatest opportunities, and the loss thereof represents an ongoing risk. The preservation of the Company’s relationships with pharmaceutical manufacturers and retail pharmacies is very important to the execution of its business strategies. The Company’s future success will hinge on its ability to drive specialty and mail volume and increase generic dispensing rates in light of the significant brand-name drug patent expirations expected to occur over the next several years. The Company’s ability to continue to provide innovative and competitive clinical and other services to customers and patients,

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including the Company’s active participation in the Medicare Part D benefit, also plays an important part in the Company’s future success.The frequency with which the Company’s customer contracts come up for renewal, and the potential for one of the Company’s larger customers to terminate or elect not to renew its existing contract with the Company, creates the risk that the Company’s results of operations may be volatile. The Company’s customer contracts generally do not have terms longer than three years and, in some cases, are terminable by the customer on relatively short notice. The Company’s larger customers generally seek bids from other PBM providers in advance of the expiration of their contracts. If existing customers elect not to renew their contracts at the same service levels previously provided with the Company at the expiration of the current terms of those contracts, and in particular if one of the Company’s largest customers elects not to renew, the Company’s recurring revenue base will be reduced and results of operations will be adversely affected.

The Company operates in a competitive environment where customers and other payors seek to control the growth in the cost of providing prescription drug benefits. The Company’s business model is designed to reduce the level of drug cost. The Company helps manage drug cost primarily through programs designed to maximize the substitution of expensive brand drugs with equivalent but much lower cost generic drugs, obtaining competitive discounts from suppliers, securing rebates from pharmaceutical manufacturers and third party rebate administrators, securing discounts from retail pharmacies, applying the Company’s sophisticated clinical programs and efficiently administering prescriptions dispensed through the Company’s Mail Service and Specialty Service pharmacies.

Various aspects of the Company’s business are governed by federal and state laws and regulations, and because sanctions may be imposed for violations of these laws, compliance is a significant operational requirement. The Company believes it is in substantial compliance with all existing legal requirements material to the operation of its business. There are, however, significant uncertainties involving the application of many of these legal requirements to its business.

The U.S. healthcare reform legislation enacted in March 2010 could provide drug coverage for millions of people in the form of expanded Medicaid coverage. The Company is active in this market and believes that expansion could create growth opportunities for the Company. In addition, the reform bill provides a pathway for follow-on biologic development, giving more cost effective generic options to customers and the potential opportunity for margin expansion for the Company. As many aspects of the reform bill do not go into effect for several years, the Company cannot predict the overall impact the legislation will have on the Company’s financial results. In addition, there are numerous proposed health care laws and regulations at the federal and state levels, many of which could adversely affect the Company’s business, results of operations and financial condition. The Company is unable to predict what additional federal or state legislation or regulatory initiatives that may be enacted in the future relating to its business or the health care industry in general, or what effect any such legislation or regulations might have on it. The Company also cannot provide any assurance that federal or state governments will not impose additional restrictions or adopt interpretations of existing laws or regulations that could have a material adverse effect on its business or financial performance.

Competitive Strengths

The Company has demonstrated its ability to serve a broad range of customers from large managed care organizations and state governments to employer groups with fewer than a thousand members. The Company believes its principal competitive strengths are:

Flexible, customized and independent services: The Company believes a key differentiator between itself and its competitors is not only the Company’s ability to provide innovative PBM services, but also to deliver these services on an à la carte basis. The informedRx suite offers the flexibility of broad product choice along the entire PBM continuum, enabling enhanced customer control, solutions tailored to the customers’ specific requirements, and flexible pricing. The market for the Company’s products is divided between large customers that have the sophisticated technology infrastructure and staff required to operate a 24-hour data center and other customers that are not able or willing to operate these sophisticated systems.

The Company’s business model allows its large customers to license the Company’s products and operate the Company’s systems themselves (with or without taking advantage of the Company’s significant customization, consulting and systems implementation services) and allows its other customers to utilize the Company’s systems’ capabilities on a fee-per-transaction or subscription basis through ASP processing from the Company’s data center.

Leading technology and platform: The Company’s technology is robust, scaleable and web-enabled. The Company’s payor offerings efficiently supported over 460 million transactions in 2010. The platform is able to instantly cross-check multiple processes, such as reviewing claim eligibility and adverse drug reaction and properly calculating member, pharmacy and payor payments. The Company’s technology is built on flexible, database-driven rule sets and broad functionality applicable for most any type of business. The Company believes it has one of the most comprehensive claims processing platforms in the market.

The Company’s technology platform allows it to provide more comprehensive PBM services through informedRx by offering customers a selection of services to choose from to meet their unique needs versus requiring them to accept a one-size-fits-all solution. The Company believes this à la carte offering is a key differentiator from its competitors.

Measurable cost savings for customers: The Company provides its customers with increased control over prescription drug costs and drug benefit programs. The Company’s pricing model and flexible product offerings are designed to deliver measurable cost savings to the Company’s customers. The Company believes its pricing model is a key differentiator from its competitors for the Company’s customers who want to gain control of their prescription drug costs. For example, the Company’s pharmacy network contracts and rebate agreements are made available by the Company to each customer. For customers who select the Company’s pharmacy network and manufacturer rebate services on a fixed fee per transaction basis, there is clarity to the rebates and other fees payable to the customer. The Company believes that its pricing model, together with the flexibility to select from a broad range of customizable services, helps customers realize measurable results and cost savings.

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Selected Trends and Highlights for the Three and Nine Months Ended September 30, 2011 and 2010

Business trends

Our results for the three and nine months ended September 30, 2011 reflect the successful execution of our business model, which emphasizes the alignment of our financial interests with those of our clients through greater use of generics and low-cost brands, mail pharmacy and specialty pharmacies. The positive trends we saw in 2010, including lower drug purchasing costs and increased generic usage, have continued to offset the negative impact of various marketplace forces affecting pricing and plan structure, among other factors, and thus continue to generate improvements in our results of operations. Additionally, as the regulatory environment evolves, we will continue to make significant investments designed to keep us ahead of the competition.

We successfully implemented our largest customer, HealthSpring Inc. ("HealthSpring"), at the beginning of this year, and have continued to fully integrate our recent acquisitions of MedfusionRx and MedMetrics into our business. These events have helped drive overall growth in our top line revenue as well as overall operating results. We also continue to benefit from better management of ingredient costs through increased competition among generic manufacturers. The average generic dispensing rate (GDR) or the number of generic prescriptions as a percentage of the total number of prescriptions dispensed, for informedRx clients reached 78% in 2011, a 2% trend increase from 2010. This increase was achieved through a broad range of plan design solutions, helped considerably by a continuing wave of major generic releases. This trend is expected to continue throughout 2011 and into 2012, when six of the ten largest branded products are expected to face generic competition.

Financial results for the three months ended September 30, 2011 and 2010

Total revenue for the three months ended September 30, 2011 was $1.3 billion as compared to $489.9 million for the same period in 2010. The increase is largely attributable to an increase in PBM revenue of $793.3 million, primarily due to the implementation of the previously announced HealthSpring contract on January 1, 2011, the acquisition of MedfusionRx on December 28, 2010, and other new customer starts during 2011. As a result, the Company's PBM segment adjusted prescription claim volume increased 95.8% to 23.3 million for the third quarter of 2011, as compared to 11.9 million for the third quarter of 2010. Adjusted prescription claim volume equals the Company's retail and Specialty Service prescriptions, plus Mail Service prescriptions multiplied by three. The Mail Service prescriptions are multiplied by three to adjust for the fact that they typically include approximately three times the amount of product days supplied compared with retail and specialty prescriptions.

Operating income increased $14.7 million, or 59.4%, for the three months ended September 30, 2011, to $39.5 million as compared to $24.8 million for the same period in 2010. This increase was driven by increased gross profit in the PBM segment due to new customer starts as compared to the same period in 2010, offset by an increase in SG&A expense and amortization expense due to the acquisitions of MedfusionRx and MedMetrics.

The Company reported net income of $25.3 million, or $0.40 per share (fully-diluted), for the three months ended September 30, 2011, as compared to $16.2 million, or $0.26 per share (fully-diluted), for the same period in 2010. The increase is driven by higher gross profit attributable to an increase in PBM revenues due to new customer starts offset by an increase in SG&A expense to support the new business growth, as well as increased amortization of intangibles due to acquisitions. Amortization expense included in net income was $3.9 million for the three months ended September 30, 2011 as compared to $1.9 million for the same period in 2010.

Financial results for the nine months ended September 30, 2011 and 2010

Total revenue for the nine months ended September 30, 2011 was $3.6 billion as compared to $1.4 billion for the same period in 2010. The increase is largely attributable to an increase in PBM revenue of $2.2 billion, primarily due to the implementation of the previously announced HealthSpring contract on January 1, 2011, the acquisition of MedfusionRx on December 28, 2010, and other new customer starts during 2011. As a result, the Company's PBM segment adjusted prescription claim volume increased 90.7% to 67.5 million for the nine months ended September 30, 2011 as compared to 35.4 million for the nine months ended September 30, 2010.

Operating income increased $27.3 million, or 37.5%, for the nine months ended September 30, 2011, to $100.2 million as compared to $72.9 million for the same period in 2010. This increase was driven by increased gross profit in the PBM segment due to new customer starts as compared to the same period in 2010, offset by an increase in SG&A expense to support the new business growth, as well as increased amortization of intangibles due to acquisitions.

The Company reported net income of $65.1 million, or $1.03 per share (fully-diluted), for the nine months ended September 30, 2011, as compared to $48.1 million, or $0.77 per share (fully-diluted), for the same period in 2010. The increase is driven by higher gross profit attributable to an increase in PBM revenues due to new customer starts offset by an increase in SG&A expense and amortization expense of intangibles due to acquisitions. Amortization expense included in net income was $11.1 million for the nine months ended September 30, 2011 as compared to $5.9 million for the same period in 2010.

Business combinations

Subsequent to end of the current reporting period, on October 3, 2011, the Company completed its acquisitions of PTRX, a full-service PBM, and its exclusive mail-order pharmacy provider, SaveDirectRx, both based in San Antonio, Texas. The purchase price was $77 million in cash, with an opportunity for the former owners of SaveDirectRx to earn an additional $4.5 million, subject to the achievement of certain performance targets through 2012. The acquisitions of PTRX and SaveDirectRx are in line with the Company's strategy to acquire assets that currently utilize the Company's technology platform in order to ease the integration into the Company's business. Further, these acquisitions will allow the Company to extend its presence in the southwestern part of the U.S. and expand its mail pharmacy business.

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On June 1, 2011, the Company completed its acquisition of substantially all of the assets of MedMetrics, the full-service PBM subsidiary of Public Sector Partners, Inc., which is affiliated with a major medical school. The acquisition of MedMetrics is consistent with the Company's strategy to acquire assets that currently utilize the Company's technology platform, which eases the integration into the Company's business and will allow the Company the opportunity to sell additional services, such as mail and specialty services, to MedMetrics' customers. The acquisition will also help extend the Company's footprint in the northeastern part of the U.S.

On December 28, 2010, the Company completed its acquisition of MedfusionRx, and certain affiliated entities and certain assets of Medtown South, L.L.C. (together "MedfusionRx"), a specialty pharmacy provider with expertise in providing clinical services to patients with complex chronic conditions.The purchase price for MedfusionRx was $101.5 million in cash, subject to a customary post-closing working capital adjustment, and an opportunity for the former owners of MedfusionRx to earn an additional $5.5 million in cash, subject to the satisfaction of certain performance targets in the 2012 fiscal year, in each case based on the terms and subject to the conditions contained in the MedfusionRx Purchase Agreement. The Company expects the acquisition to transform the Company's Specialty Service pharmacy business by expanding its presence and enhancing its capabilities in this rapidly growing segment of the PBM industry.

Recent developments

On May 11, 2011, at the Annual and Special Meeting of Shareholders, the Company’s shareholders approved an amendment to the SXC Health Solutions Corp. LTIP to increase by 1,800,000 the number of common shares available for issuance under the LTIP.

On September 17, 2010, the Company executed a two-for-one stock split effected by a stock dividend on the issued and outstanding common shares of the Company. All share and per share data presented in this report have been adjusted to reflect this stock split.

On March 4, 2010, the Company announced a new agreement with HealthSpring, pursuant to which the Company's informedRx subsidiary will provide HealthSpring with its full suite of PBM services, and therefore manage significant drug spend. The initial term of the agreement is three years with provisions for two additional one year extensions. HealthSpring began to deploy specialty pharmacy services in mid-2010, with implementation of the full PBM services completed on January 1, 2011. Subsequent to the full implementation of HealthSpring, the Company expanded the contractual relationship with HealthSpring on May 4, 2011 to include a customer configuration of PBM services, including the immediate implementation of specialty pharmacy services, to HealthSpring’s newly acquired Bravo Health, Inc. subsidiaries (“Bravo Health”), effective January 1, 2012. The Company expects that gross profit percentage related to these agreements will be significantly lower than historical gross profit percentages due to the significantly high transaction volume.

Subsequent to the end of the current reporting period, on October 24, 2011, HealthSpring announced that it had entered into a definitive agreement with Cigna Corporation (“Cigna”) under which Cigna will acquire HealthSpring in an all-cash transaction, subject to regulatory and other conditions.  HealthSpring accounted for 39% and 40% of the Company's total revenues for the three-month and nine-month periods ended September 30, 2011, respectively.  The Company's contract with HealthSpring (the “HealthSpring contract”) was effective on January 1, 2011 and had an initial three-year term (with two additional one-year extensions). Neither party to the HealthSpring contract has the right to terminate the agreement prior to the end of the initial term, except in the event of a material breach.  While the Company does not currently anticipate any adverse impact to its financial results through the initial term of the HealthSpring contract, we can give no assurances that we will be able to continue to generate a substantial portion of our revenues from HealthSpring for the foreseeable future, or that we will be able to extend or renew the HealthSpring past the initial period at the same service levels, or at all.

Results of Operations

Three months ended September 30, 2011 as compared to the three months ended September 30, 2010

	Three Months Ended September 30,
In thousands, except per share data	2011			2010
Revenue	$	1,287,290		$	489,922
Cost of revenue	1,204,948			437,058
Gross profit	82,342			52,864
Product development costs	3,598			3,075
SG&A	33,773			21,607
Depreciation of property and equipment	1,588			1,463
Amortization of intangible assets	3,899			1,942
Operating income	39,484			24,777
Interest income	(115		)	(199		)
Interest expense and other expense, net	1,221			373
Income before income taxes	38,378			24,603
Income tax expense	13,112			8,427
Net income	$	25,266		$	16,176
Diluted earnings per share	$	0.40		$	0.26

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Revenue

Revenue increased $797.4 million, or 162.8%, to $1.3 billion for the three months ended September 30, 2011, primarily due to the implementation of the HealthSpring PBM agreement on January 1, 2011, the acquisition of MedfusionRx on December 28, 2010, and other new customer starts during 2011. Accordingly, adjusted prescription claim volume for the PBM segment increased 95.8% to 23.3 million for the three months ended September 30, 2011 as compared to 11.9 million for the three months ended September 30, 2010.

Cost of Revenue

Cost of revenue increased $767.9 million, or 175.7%, to $1.2 billion for the three months ended September 30, 2011, primarily due to increased PBM transaction volumes in 2011 as noted in the revenue discussion. During the three months ended September 30, 2011, the cost of prescriptions dispensed from the Company's PBM segment accounted for 99% of the cost of revenue. The cost of prescriptions dispensed is substantially comprised of the actual cost of the prescription drugs sold, plus any applicable shipping costs.

Gross Profit

Gross profit increased $29.5 million, or 55.8%, to $82.3 million for the three months ended September 30, 2011 as compared to the same period in 2010, mostly due to incremental PBM revenues generated from the HealthSpring contract and MedfusionRx acquisition. Gross profit has decreased from 10.8% of revenue to 6.4% of revenueduring the three months ended September 30, 2011 as compared to the same period in 2010 due to HealthSpring transactions carrying a significantly lower gross profit percentage as compared to the rest of the Company's customer base, driven by the significant volume of transactions that HealthSpring generates. Although the gross profit percentage is lower on a per transaction basis, the volume of transactions adds significant gross profit to the Company's results.

Product Development Costs

Product development costs were $3.6 million and $3.1 million for the three months ended September 30, 2011 and 2010, respectively. Driving the change in product development expense between the three months ended September 30, 2011 and the comparable period in 2010 was an increase in resources due to additional development initiatives. Product development continues to be a key focus of the Company as it continues to pursue enhancements of existing products, as well as the development of new offerings, to support its market expansion.

SG&A Costs

SG&A costs for the three months ended September 30, 2011 were $33.8 million as compared to $21.6 million for the three months ended September 30, 2010, an increase of $12.2 million, or 56.3%. SG&A costs consist primarily of employee costs in addition to professional services costs, facilities and costs not related to cost of revenue. SG&A costs have increased due to the addition of operating costs related to MedfusionRx and MedMetrics that were not present during 2010, as well as additional resources added to support the growth of the PBM segment. SG&A costs also include stock-based compensation cost of $2.2 million and $1.4 million for the three months ended September 30, 2011 and 2010, respectively. The increase in stock-based compensation during the three months ended September 30, 2011 as compared to the same period in 2010 is due to additional awards granted during the year, and a higher value per award as compared to those granted in previous years.

Depreciation

Depreciation expense relates to property and equipment used in all areas of the Company except for those depreciable assets directly related to the generation of revenue, which is included in cost of revenue in the consolidated statements of operations. Depreciation expense was $1.6 million and $1.5 million for the three months ended September 30, 2011 and 2010, respectively. Depreciation expense will fluctuate based on the level of new asset purchases, as well as the timing of assets becoming fully depreciated. Depreciation expense remained relatively flat for the three months ended September 30, 2011 as compared to the same period in 2010 since purchases and the amount of assets reaching full depreciation levels did not fluctuate significantly.

Amortization

Total amortization expense for the three months ended September 30, 2011 and 2010 was $3.9 million and $1.9 million, respectively, an increase of $2.0 million, or 100.8%. Amortization expense is driven mainly by amortization of intangible assets acquired in the MedfusionRx and NMHC acquisitions. For the three months ended September 30, 2011, amortization expense increased due to $2.1 million of amortization derived from intangible assets recognized in the MedfusionRx and MedMetrics acquisitions. These intangible assets are amortized in line with their estimated future economic benefits, which for certain assets is greater at the beginning of their life versus the end. Accordingly, over time, amortization will decrease. Amortization expense on all the Company’s intangible assets is expected to be approximately $3.9 million for the remainder of 2011. Refer to Note 7-Goodwill and Other Intangible Assets in the notes to the unaudited interim consolidated financial statements for more information on amortization expected in future years.

Interest Income and Interest Expense and Other Expense, net

Interest income for the three months ended September 30, 2011 was $0.1 million and substantially consistent with the $0.2 million recorded for the same period in 2010, due primarily to cash balances and interest rates remaining at similar levels in each period. Interest expense and other expense, net increased to $1.2 million for the three months ended September 30, 2011 from $0.4 million for the same period in 2010, primarily due to increased banking fees driven by a higher number of transactions as a result of business added from recent acquisitions and growth in the PBM segment.

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Income Taxes

The Company recognized income tax expense of $13.1 million for the three months ended September 30, 2011, representing an effective tax rate of 34.2%, as compared to $8.4 million, representing an effective tax rate of 34.3%, for the same period in 2010.

Segment Analysis

The Company reports in two operating segments: PBM and HCIT. The Company evaluates segment performance based on revenue and gross profit. Below is a reconciliation of the Company’s business segments to the unaudited interim consolidated financial statements.

Three months ended September 30, 2011 as compared to the three months ended September 30, 2010 (in thousands):

	PBM						HCIT						Consolidated
	2011			2010			2011			2010			2011			2010
Revenue	$	1,256,369		$	463,042		$	30,921		$	26,880		$	1,287,290		$	489,922
Cost of revenue	1,188,197			423,773			16,751			13,285			1,204,948			437,058
Gross profit	$	68,172		$	39,269		$	14,170		$	13,595		$	82,342		$	52,864
Gross profit %	5.4		%	8.5		%	45.8		%	50.6		%	6.4		%	10.8		%

PBM

Revenue was $1.3 billion for the three months ended September 30, 2011, an increase of $793.3 million, or 171.3%, as compared to the same period in 2010. The increase in revenue is primarily due to the implementation of the HealthSpring contract and other new customers, as well as revenues generated from the acquisition of MedfusionRx on December, 28, 2010. As a result of these additions, adjusted prescription claim volume for the PBM segment was 23.3 million for the third quarter of 2011 as compared to 11.9 million for the third quarter of 2010.

Cost of revenue was $1.2 billion for the three months ended September 30, 2011 as compared to $423.8 million for the same period in 2010. Cost of revenue has increased in line with the increase in PBM revenues and is driven by the increase in prescriptions processed. Cost of revenue in the PBM segment is predominantly comprised of the cost of prescription drugs from retail network transactions, and the cost of prescriptions dispensed at the Company's Mail Service and Specialty Service pharmacies. Generic drug usage continues to be a focus of the industry and the Company to help drive down health care costs. The Company will continue to seek opportunities for increased generic prescription drug usage to help reduce overall prescription drug costs to its customers and the Company.

Gross profit was $68.2 million for the three months ended September 30, 2011 as compared to $39.3 million for the same period in 2010. Gross profit increased during the three months ended September 30, 2011 as compared to the same period in 2010 due to the incremental PBM revenue generated. Gross profit percentage was 5.4% and 8.5% for the three months ended September 30, 2011 and 2010, respectively. As noted previously, gross profit percentage has decreased for the three months ended September 30, 2011 as compared to the same period in 2010 due to HealthSpring transactions carrying a significantly lower gross profit percentage as compared to the rest of the Company's customer base, driven by the significant volume of transactions that HealthSpring generates. Although the gross profit percentage is lower on a per transaction basis, the volume of transactions adds significant gross profit to the Company's results.

HCIT

HCIT revenue consists of transaction processing, professional services, system sales and maintenance contracts on system sales. Total HCIT revenue increased $4.0 million, or 15.0%, to $30.9 million for the three months ended September 30, 2011, as compared to $26.9 million for the same period in 2010. The increase was primarily due to an increase in revenues earned from professional services due to a higher amount of billable hours worked and an increase in system sales due to software license revenue earned during the quarter ended September 30, 2011.

Transaction processing revenue consists of claims processing and generally fluctuates as a result of the launch of new contracts, as well as changes in volumes of services provided to existing customers. Professional services revenue is derived from providing support projects for both system sales and transaction processing customers, on an as-needed basis. Professional services revenue is dependent on customers initiating new projects and system enhancements which require the Company to assist them on both a fixed bid and time and materials basis. System sales are derived from license upgrades and additional applications for existing and new customers, as well as software and hardware sales to pharmacies that purchase the Company’s pharmacy system. Maintenance revenue is generated from maintenance services provided on related system or license sales.

Cost of revenue was $16.8 million and $13.3 million for the three months ended September 30, 2011 and 2010, respectively. Cost of revenue includes the direct support costs for the HCIT business, as well as depreciation expense of $0.6 million for the three-month periods ended September 30, 2011 and 2010. Cost of revenue increased for the three months ended September 30, 2011 as compared to the same period in 2010 ,primarily due to additional resources added during 2011 to support the increasing demand for professional services of the Company.

Gross profit increased by $0.6 million, or 4.2%, to $14.2 million for the three months ended September 30, 2011 as compared to $13.6 million for the same period in 2010. Gross profit percentage was 45.8% for the three months ended September 30, 2011 as compared to 50.6% for the three months ended September 30, 2010. The increase in gross profit is attributable to the increase in professional services and software license sales during the three months ended September 30, 2011.

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Nine months ended September 30, 2011 as compared to the nine months ended September 30, 2010

	Nine Months Ended September 30,
In thousands, except per share data	2011			2010
Revenue	$	3,596,981		$	1,421,516
Cost of revenue	3,376,859			1,264,684
Gross profit	220,122			156,832
Product development costs	10,624			9,169
SG&A	93,440			64,403
Depreciation of property and equipment	4,764			4,482
Amortization of intangible assets	11,125			5,915
Operating income	100,169			72,863
Interest income	(375		)	(524		)
Interest expense and other expense, net	2,351			1,343
Income before income taxes	98,193			72,044
Income tax expense	33,091			23,931
Net income	$	65,102		$	48,113
Diluted earnings per share	$	1.03		$	0.77

Revenue

Revenue increased $2.2 billion, or 153.0%, to $3.6 billion for the nine months ended September 30, 2011, primarily due to the implementation of the HealthSpring PBM agreement on January 1, 2011, the acquisition of MedfusionRx on December 28, 2010, and other new customer starts during 2011. Accordingly, adjusted prescription claim volume for the PBM segment increased 90.7% to 67.5 million for the nine months ended September 30, 2011 as compared to 35.4 million for the nine months ended September 30, 2010.

Cost of Revenue

Cost of revenue increased $2.1 billion, or 167.0%, to $3.4 billion for the nine months ended September 30, 2011, primarily due to increased PBM transaction volumes in 2011 as noted in the revenue discussion. During the nine months ended September 30, 2011, the cost of prescriptions dispensed from the Company's PBM segment accounted for 99% of the cost of revenue. The cost of prescriptions dispensed is substantially comprised of the actual cost of the prescription drugs sold, plus any applicable shipping costs.

Gross Profit

Gross profit increased $63.3 million, or 40.4%, to $220.1 million for the nine months ended September 30, 2011, mostly due to incremental PBM revenues generated as compared to the same period in 2010. Gross profit percentage has decreased from 11.0% of revenue to 6.1% of revenue during the nine months ended September 30, 2011 as compared to the same period in 2010 due to HealthSpring transactions carrying a significantly lower gross profit percentage as compared to the rest of the Company's customer base, driven by the significant volume of transactions that HealthSpring generates. Although the gross profit percentage is lower on a per transaction basis, the volume of transactions adds significant gross profit to the Company's results.

Product Development Costs

Product development costs were $10.6 million and $9.2 million for the nine months ended September 30, 2011 and 2010, respectively. Driving the change in product development expense between the nine months ended September 30, 2011 and the comparable period in 2010 was an increase in resources due to additional development initiatives. Product development continues to be a key focus of the Company as it continues to pursue enhancements of existing products, as well as the development of new offerings, to support its market expansion.

SG&A Costs

SG&A costs for the nine months ended September 30, 2011 were $93.4 million as compared to $64.4 million for the nine months ended September 30, 2010, an increase of $29.0 million, or 45.1%. SG&A costs consist primarily of employee costs in addition to professional services costs, facilities and costs not related to cost of revenue. SG&A costs have increased during 2011 due to operating costs added related to MedfusionRx and MedMetrics acquisitions that were not present in 2010, as well as due to additional resources added to support the growth of the PBM segment. SG&A costs also include stock-based compensation cost of $6.0 million and $3.7 million for the nine months ended September 30, 2011 and 2010, respectively. The increase in stock-based compensation during the nine months ended September 30, 2011 as compared to the same period in 2010 is due to annual awards granted to the Company’s employees in 2011 and an increase in the expense of those awards. The increase in the award expense is directly attributable to the continued high market value of the Company’s common shares, as well as additional awards granted during the year.

Depreciation

Depreciation expense relates to property and equipment used in all areas of the Company except for those depreciable assets directly related to the generation of revenue, which is included in cost of revenue in the consolidated statements of operations. Depreciation expense was $4.8

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million for the nine months ended September 30, 2011, an increase of $0.3 million as compared to the same period in 2010. Depreciation expense will fluctuate based on the level of new asset purchases, as well as the timing of assets becoming fully depreciated. Depreciation expense remained relatively flat for the nine months ended September 30, 2011 as compared to the same period in 2010 since purchases and the amount of assets reaching full depreciation levels did not fluctuate significantly.

Amortization

Total amortization expense for the nine months ended September 30, 2011 and 2010 was $11.1 million and $5.9 million, respectively, an increase of $5.2 million, or 88.1%. Amortization expense is driven mainly by amortization of intangible assets acquired in the MedfusionRx and NMHC acquisitions. For the nine months ended September 30, 2011, amortization expense increased due to $5.3 million of amortization recorded from intangible assets recognized in the MedfusionRx acquisition. These intangible assets are amortized in line with their estimated future economic benefits, which for certain assets is greater at the beginning of their life versus the end. Accordingly, over time, amortization will decrease. Amortization expense on all the Company’s intangible assets is expected to be approximately $3.9 million for the remainder of 2011. Refer to Note 7-Goodwill and Other Intangible Assets in the notes to the unaudited interim consolidated financial statements for more information on amortization expected in future years.

Interest Income and Interest Expense and Other Expense, net

Interest income was $0.4 million and $0.5 million for the nine-month periods ended September 30, 2011 and 2010. This was substantially consistent in both periods due primarily to cash balances and interest rates remaining at similar levels in each period. Interest expense and other expense, net was $2.4 million for the nine months ended September 30, 2011 as compared to $1.3 million expense for the same period in 2010, representing a 75.1% increase. The increase was primarily driven by increased banking fees due to a higher number of transactions as a result of business added from the MedfusionRx acquisition and growth of the PBM segment.

Income Taxes

The Company recognized income tax expense of $33.1 million for the nine months ended September 30, 2011, representing an effective tax rate of 33.7%, as compared to $23.9 million, representing an effective tax rate of 33.2%, for the same period in 2010. The effective tax rate increased primarily due to an increase in taxable income.

Segment Analysis

The Company reports in two operating segments: PBM and HCIT. The Company evaluates segment performance based on revenue and gross profit. Below is a reconciliation of the Company’s business segments to the unaudited consolidated financial statements.

Nine months ended September 30, 2011 as compared to the nine months ended September 30, 2010 (in thousands):

	PBM						HCIT						Consolidated
	2011			2010			2011			2010			2011			2010
Revenue	$	3,511,148		$	1,341,839		$	85,833		$	79,677		$	3,596,981		$	1,421,516
Cost of revenue	3,330,886			1,225,620			45,973			39,064			3,376,859			1,264,684
Gross profit	$	180,262		$	116,219		$	39,860		$	40,613		$	220,122		$	156,832
Gross profit %	5.1		%	8.7		%	46.4		%	51.0		%	6.1		%	11.0		%

PBM

Revenue was $3.5 billion for the nine months ended September 30, 2011, an increase of $2.2 billion, or 161.7%, as compared to the same period in 2010. The increase in revenue is primarily due to the implementation of the HealthSpring contract and other new customers, as well as revenues generated from the acquisition of MedfusionRx on December 28, 2010. As a result of these additions, adjusted prescription claim volume for the PBM segment was 67.5 million for the first nine months of 2011 as compared to 35.4 million for the first nine months of 2010, which drove the total revenue amounts in 2011 higher as compared to 2010.

Cost of revenue was $3.3 billion for the nine months ended September 30, 2011 as compared to $1.2 billion for the same period in 2010. Cost of revenue has increased in line with the increase in PBM revenues and is driven by the increase in prescriptions processed. Cost of revenue in the PBM segment is predominantly comprised of the cost of prescription drugs from retail network transactions, and the cost of prescriptions dispensed at the Company's Mail Service and Specialty Service pharmacies. Generic drug usage continues to be a focus of the industry and the Company to help drive down health care costs. The Company will continue to seek opportunities for increased generic prescription drug usage to help reduce overall prescription drug costs to its customers and the Company.

Gross profit was $180.3 million for the nine months ended September 30, 2011 as compared to $116.2 million for the same period in 2010. Gross profit increased during the nine months ended September 30, 2011 due to the incremental revenue. Gross profit percentage was 5.1% and 8.7% for the nine months ended September 30, 2011 and 2010, respectively. Gross profit percentage has decreased for the nine months ended September 30, 2011 as compared to the same period in 2010 due to HealthSpring transactions carrying a significantly lower gross profit percentage as compared to the rest of the Company's customer base, driven by the significant volume of transactions that HealthSpring generates. Although the gross profit percentage is lower on a per transaction basis, the volume of transactions adds significant gross profit to the Company's results.

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HCIT

HCIT revenue consists of transaction processing, professional services, system sales and maintenance contracts on system sales. Total HCIT revenue increased $6.2 million, or 7.7%, to $85.8 million for the nine months ended September 30, 2011, as compared to $79.7 million for the same period in 2010. The increase was driven by strong performance across all of the HCIT segments' products, including an increase in revenues earned from professional services due to a higher amount of billable hours worked and an increase in transaction processing revenue due to higher transaction volumes.

Transaction processing revenue consists of claims processing and generally fluctuates as a result of the launch of new contracts, as well as changes in the volume of services provided to existing customers. Professional services revenue is derived from providing support projects for both system sales and transaction processing customers, on an as-needed basis. Professional services revenue is dependent on customers initiating new projects and system enhancements which require the Company to assist them on both a fixed bid and time and materials basis. System sales are derived from license upgrades and additional applications for existing and new customers, as well as software and hardware sales to pharmacies that purchase the Company’s pharmacy system. Maintenance revenue is generated from maintenance services provided on related system or license sales.

Cost of revenue was $46.0 million and $39.1 million for the nine months ended September 30, 2011 and 2010, respectively. Cost of revenue includes the direct support costs for the HCIT business, as well as depreciation expense of $2.1 million and $1.8 million for the nine-month periods ended September 30, 2011 and 2010, respectively. Cost of revenue increased for the nine months ended September 30, 2011 as compared to the same period in 2010, due primarily to additional resources added during 2011 to support the increasing professional services volumes of the Company.

Gross profit decreased by $0.8 million, or 1.9%, to $39.9 million for the nine months ended September 30, 2011 as compared to $40.6 million for the same period in 2010. Gross profit percentage was 46.4% for the nine months ended September 30, 2011 as compared to 51.0% for the nine months ended September 30, 2010. The decrease in gross profit and gross profit percentage is attributable to the change in revenue mix.

Non-GAAP Measures

The Company reports its financial results in accordance with GAAP, but Company management also evaluates and makes operating decisions using adjusted EBITDA and adjusted EPS. The Company's management believes that these measures provide useful supplemental information regarding the performance of business operations and facilitates comparisons to its historical operating results. The Company also uses this information internally for forecasting and budgeting as it believes that the measures are indicative of the Company's core operating results. Note however, that these items are performance measures only, and do not provide any measure of the Company's cash flow or liquidity. Non-GAAP financial measures should not be considered as a substitute for measures of financial performance in accordance with GAAP, and investors and potential investors are encouraged to review the reconciliation of adjusted EBITDA and adjusted EPS.

Adjusted EBITDA Reconciliation

Adjusted EBITDA is a non-GAAP measure that management believes is a useful supplemental measure of operating performance prior to net interest income, interest expense and other expense, net, income taxes, depreciation, amortization and stock-based compensation expenses. Management believes it is useful to exclude depreciation, amortization, interest income and interest expense and other expense, net, as these are essentially fixed amounts that cannot be influenced by management in the short term. In addition, management believes it is useful to exclude stock-based compensation as this is a non-cash expense.

Below is a reconciliation of the Company's reported net income to adjusted EBITDA for the three and nine-month periods ended September 30, 2011 and 2010.

Adjusted EBITDA	Three Months Ended						Nine Months Ended
(in thousands)	September 30,						September 30,
	2011			2010			2011			2010
	(unaudited)						(unaudited)
Net Income (GAAP)	$	25,266		$	16,176		$	65,102		$	48,113
Add:
Amortization of Intangible Assets	3,899			1,942			11,125			5,915
Depreciation of Property & Equipment	2,235			2,077			6,815			6,312
Stock-Based Compensation	2,404			1,646			6,507			4,527
Interest Income	(115		)	(199		)	(375		)	(524		)
Interest Expense and Other Expense, Net	1,221			373			2,351			1,343
Income Tax Expense	13,112			8,427			33,091			23,931
Adjusted EBITDA	$	48,022		$	30,442		$	124,616		$	89,617

25

Adjusted EBITDA for the three months ended September 30, 2011 was $48.0 million, compared to $30.4 million for the same period of 2010. Adjusted EBITDA for the nine months ended September 30, 2011 was $124.6 million, compared to $89.6 million for the same period of 2010. The growth in adjusted EBITDA was due primarily to the implementation of the Healthspring contract on January 1, 2011, other new contract starts, and additional business generated from the acquisitions of MedfusionRx and MedMetrics.

Adjusted EPS Reconciliation

Adjusted EPS adds back the impact of all amortization of intangible assets, net of tax. Amortization of intangible assets arises from the acquisition of intangible assets in connection with the Company's business acquisitions. The Company excludes amortization of intangible assets from non-GAAP adjusted EPS because it believes (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of the Company's business operations and (ii) such expenses can vary significantly between periods as a result of new acquisitions and full amortization of previously acquired intangible assets. Investors should note that the use of these intangible assets contributes to revenue in the period presented as well as future periods and should also note that such expenses will recur in future periods. Below is a reconciliation of the Company's reported net income to adjusted EPS for the three and nine-month periods ended September 30, 2011 and 2010.

Adjusted EPS Reconciliation
(in thousands, except per share data)
	Three Months Ended September 30,												Nine Months Ended September 30,
	2011						2010						2011						2010
	Operational Results			Per Diluted Share			Operational Results			Per Diluted Share			Operational Results			Per Diluted Share			Operational Results			Per Diluted Share
Net Income (GAAP)	$	25,266		$	0.40		$	16,176		$	0.26		$	65,102		$	1.03		$	48,113		$	0.77
Amortization of Intangible Assets	3,899			0.06			1,942			0.03			11,125			0.18			5,915			0.09
Tax Effect of Reconciling Item	(1,333		)	(0.02		)	(666		)	(0.01		)	(3,749		)	(0.06		)	(1,964		)	(0.03		)
Non-GAAP Net-Income	$	27,832		$	0.44		$	17,452		$	0.28		$	72,478		$	1.15		$	52,064		$	0.83

Adjusted EPS for the three months ended September 30, 2011 was $0.44 as compared to $0.28 in the same period of 2010, and adjusted EPS for the nine months ended September 30, 2011 was $1.15 as compared to $0.83 in the same period of 2010. Increased gross profit earned from the expansion of the Company's PBM business, as well as increased business due to the MedfusionRx acquisition, helped improve the Company's adjusted EPS during 2011. This was partially offset by increased costs incurred to support the Company's increased business, as well as the increase in the number of diluted shares during 2011 as compared to 2010.

Liquidity and Capital Resources

The Company’s sources of liquidity have primarily been cash provided by operating activities, proceeds from its public offerings, stock option exercises, and proceeds from credit facilities. The Company’s principal uses of cash have been to fund working capital, finance capital expenditures, satisfy contractual obligations and to meet acquisition and investment needs. The Company anticipates that these uses will continue to be the principal demands on cash in the future.

At September 30, 2011 and December 31, 2010, the Company had cash and cash equivalents totalling $405.1 million and $321.3 million, respectively. As disclosed previously, subsequent to the end of the current reporting period, the Company completed its acquisitions of PTRX and SaveDirectRx. The Company disbursed approximately $77 million from cash on hand in order to complete these acquisitions. The Company believes that its cash on hand, together with cash generated from operating activities, will be sufficient to support planned operations for the foreseeable future. At September 30, 2011, cash and cash equivalents consist of cash on hand, deposits in banks, and bank term deposits with original maturities of 90 days or less. During the first quarter of 2010, the Company repositioned its funds previously placed in money market funds and moved the funds into cash on deposit accounts. The Company assessed that it would earn a greater return from cash on deposit accounts due to the historically low rates paid on the U.S. money market funds. Further, the Company reduced expenses by moving the funds to cash on deposit accounts as the fees charged for those accounts are lower than the U.S. money market fund accounts.

As of September 30, 2011, all of the Company’s cash and cash equivalents were exposed to market risks, primarily changes in U.S. interest rates. Declines in interest rates over time would reduce interest income related to these balances.

Consolidated Balance Sheets

Selected balance sheet highlights at September 30, 2011 are as follows:

• Accounts receivable are made up of trade accounts receivable from both the PBM and HCIT segment customers. Accounts receivable increased $95.6 million to $217.8 million at September 30, 2011, from $122.2 million at December 31, 2010, driven by increases in revenue during 2011, largely attributable to the HealthSpring implementation, as well as new customer starts on January 1, 2011. The accounts receivable balance is impacted by changes in revenues, as well as the timing of collections, and is continually monitored by the Company to ensure timely collections and to assess the need for any changes to the allowance for doubtful accounts. The increase

26

in accounts receivable corresponds to the increase in pharmacy benefit claims payable.

• Rebates receivable of $32.4 million relate to billed and unbilled PBM receivables from pharmaceutical manufacturers and third party administrators in connection with the administration of the rebate program where the Company is the principal contracting party. The receivable and related payables are based on estimates, which are subject to final settlement. Rebates receivable decreased $1.8 million from $34.2 million at December 31, 2010. Although PBM revenue increased by 161.7% during the nine months ended September 30, 2011 as compared to the same period in 2010, the Company does not process rebates for all customers, and accordingly the rebate receivable balance does not always fluctuate proportionately with changes in revenues and prescription claim volumes.

• The accounts payable balance of $15.1 million represents amounts owed to the Company's suppliers for prescription drugs at the Mail Service and Specialty Service pharmacies, as well as amounts due to vendors for general operating expenses. As of September 30, 2011, the accounts payable balance has decreased $15.8 million from the balance at December 31, 2010, due to the timing of payments made for purchases from the Company's suppliers for prescription drugs.

• Pharmacy benefit management rebates payable represents amounts owed to customers for rebates from pharmaceutical manufacturers and third party administrators where the Company administers the rebate program on the customer’s behalf, and the Company is the principal contracting party. The payables are based on estimates, which are subject to final settlement. Pharmacy benefit management rebates payable decreased $2.5 million to $58.9 million from $61.4 million at December 31, 2010, due to the timing of when rebates were paid in 2011 versus 2010, offset by increases in rebate rates and volume. Similar to the change in rebates receivables, the Company does not process rebates for all customers, and accordingly the rebates payable balance does not always fluctuate proportionately with changes in prescription claims processed.

• Pharmacy benefit claims payable predominantly relates to amounts owed to retail pharmacies for prescription drug costs and dispensing fees in connection with prescriptions dispensed by the retail pharmacies to the members of the Company’s customers when the Company is the principal contracting party with the pharmacy. Pharmacy benefit claims payable increased $105.6 million to $190.2 million, from $84.6 million at December 31, 2010, due to increased prescription claim transactions driven by new customer contracts implemented in 2011, as well as the timing of payments to the retail pharmacies.

Cash flows from operating activities

For the nine months ended September 30, 2011, the Company generated $84.7 million of cash through its operations, an increase of $21.8 million as compared to the amount of cash provided from operations for the same period in 2010. Cash from operating activities has increased during the nine months ended September 30, 2011 as compared to the same period in 2010 mainly due to an increase in net income of $17.0 million to $65.1 million. This increase is attributed to the increased transaction volume, and associated increase in gross profit, in the PBM segment propelled by new customer starts during 2011 as well as the additional business generated as a result of the Company's recent acquisitions. Additionally, cash from operations increased due to an increase in pharmacy benefit claims payable of $105.6 million as a result of the increased volume of pharmacy transactions during 2011 and the timing of when payments are made for these transactions. These increases in cash from operations were offset by an increase in accounts receivable of $93.8 million due to the increase in pharmacy transactions in the PBM segment resulting from new customer starts during 2011 and the timing of when the Company received payments on its accounts receivable balances.

Changes in the Company’s cash from operations result primarily from increased gross profits and the timing of payments on accounts receivable, rebates receivable, and the payment or processing of its various accounts payable and accrued liabilities. The Company continually monitors its balance of trade accounts receivable and devotes ample resources to collection efforts on those balances. Rebates receivable and the related payable are primarily estimates based on claims submitted. Rebates are typically paid to customers on a quarterly basis upon receipt of the billed funds from the third-party rebate administrators and pharmaceutical manufacturers. The timing of the rebate payments to customers and collections of rebates from third-party rebate administrators and pharmaceutical manufacturers causes fluctuations on the balance sheet, as well as in the Company’s cash from operating activities.

Changes in non-cash items such as depreciation and amortization are caused by the purchase and acquisition of capital and intangible assets. In addition, as assets become fully depreciated or amortized, the related expenses will decrease.

Changes in operating assets and liabilities, as well as non-cash items related to income taxes, will fluctuate based on working capital requirements and the tax provision, which is determined by examining taxes actually paid or owed, as well as amounts expected to be paid or owed in the future.

For the nine months ended September 30, 2010, the Company generated $62.9 million of cash through its operations, which consisted primarily of net income of $48.1 million plus the impact of non-cash expenses related to stock-based compensation, depreciation, and amortization. Additionally, cash from operations was generated by an increase in rebates payable of $17.2 million and an increase in pharmacy benefit claims payable of $19.2 million. These were partially offset by an increase in rebates receivable of $20.5 million, an increase of accounts receivable of $13.2 million, a reduction in accrued liabilities of $6.7 million and a decrease due to the $6.1 million tax benefit from option exercises.

Cash flows from investing activities

For the nine months ended September 30, 2011, the Company used $15.5 million of cash from investing activities. This included $12.4 million used for acquisitions during the year. Additionally, the Company utilized $3.1 million for purchases of property and equipment to support growth in the PBM segment. As the Company grows, it continues to purchase capital assets to support increases in network capacity and personnel. The Company monitors and budgets these costs to ensure that the expenditures aid in its strategic growth plan.

27

For the nine months ended September 30, 2010, the Company generated $0.6 million of cash from investing activities, which consisted primarily of $6.8 million from the sale of short-term investments, offset by $2.2 million in purchases of short-term investments. The Company sold all the short-term investments it held during the first quarter of 2010 and moved those funds into cash on deposit accounts. The Company also used $4.0 million for purchases of property and equipment to support the increase in business.

Cash flows from financing activities

For the nine months ended September 30, 2011, the Company generated $14.6 million of cash from financing activities, which consisted of proceeds from the exercise of stock options of $5.3 million and a $9.3 million tax benefit from stock-based compensation plans. This was an increase of $3.5 million over cash provided by financing operations for the nine months ended September 30, 2010. The increase in the Company's stock price, and increase in options exercised as a result of the increased stock price, were the main drivers of the change in cash provided by financing operations.

Cash flows from financing activities generally fluctuate based on the timing of option exercises by the Company’s employees, which are affected by market prices, vesting dates and expiration dates.

For the nine months ended September 30, 2010, the Company generated $11.1 million of cash from financing activities, which mainly consisted of proceeds from the exercise of stock options of $5.0 million and a $6.1 million tax benefit from stock-based compensation plans.

Future Capital Requirements

The Company’s future capital requirements depend on many factors, including its product development programs and data center operations. The Company expects to fund its operating and working capital needs and business growth requirements through cash flow from operations and its cash and cash equivalents on hand. The Company expects that purchases of property and equipment will remain consistent with prior years. The Company cannot provide assurance that its actual cash requirements will not be greater than expected as of the date of this report. In order to meet business growth goals, the Company will, from time to time, consider the acquisition of, or investment in, complementary businesses, products, services and technologies, which might impact liquidity requirements or cause the issuance of additional equity or debt securities. Any issuance of additional equity securities or convertible debt securities may result in dilution to shareholders, and the Company cannot be certain that additional public or private financing will be available in amounts or on terms acceptable to the Company, or at all.

If sources of liquidity are not available or if it cannot generate sufficient cash flow from operations during the next twelve months, the Company might be required to obtain additional funds through operating improvements, capital markets transactions, asset sales or financing from third parties or a combination thereof. The Company cannot provide assurance that these additional sources of funds will be available or, if available, will be available on terms acceptable to the Company.

If adequate funds are not available to finance the Company's business growth goals, the Company may have to substantially reduce or eliminate expenditures for marketing, research and development, and testing of proposed products, or obtain funds through arrangements with partners that require the Company to relinquish rights to certain of its technologies or products. There can be no assurance that the Company will be able to raise additional capital if its capital resources are exhausted. A lack of liquidity and an inability to raise capital when needed may have a material adverse impact on the Company’s ability to continue its operations or expand its business.

Contingencies

For information on legal proceedings and contingencies, see Note 12 — Commitments and Contingencies in the notes to the unaudited consolidated financial statements.

Contractual Obligations

For the nine months ended September 30, 2011, there have been no significant changes to the Company’s contractual obligations as disclosed in its 2010 Annual Report on Form 10-K.

Outstanding Securities

As of October 31, 2011, the Company had 62,343,552 common shares outstanding, 1,288,560 options outstanding and 618,984 restricted stock units outstanding. The options are exercisable on a one-for-one basis into common shares. The outstanding RSUs are subject to time-based and performance-based vesting restrictions. The number of outstanding RSUs as of October 31, 2011 assumes the maximum associated performance targets will be met for the performance-based RSUs. Upon vesting, the restricted stock units convert into common shares on a one-for-one basis.

Critical Accounting Policies and Estimates

See Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates in the 2010 Annual Report on Form 10-K for a discussion of the Company’s critical accounting policies and estimates.

Recent Accounting Standards

See Note 3 — Recent Accounting Pronouncements in the notes to the unaudited interim consolidated financial statements for information on recent updates to accounting guidance that the Company has assessed for any impact to the Company's financial statements.

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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to market risk in the normal course of its business operations, primarily the risk of loss arising from adverse changes in interest rates. The Company generates some revenue in Canadian dollars, and is therefore also subject to foreign exchange rate risk when those results are translated into U.S. dollars for financial reporting purposes.

There has been no material change in the Company’s exposure to market risk during the nine months ended September 30, 2011.

ITEM 4. Controls and Procedures

The Company carried out an evaluation under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation”).

In designing and evaluating the disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. Based on the evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures, as of the end of the period covered by this Quarterly Report on Form 10-Q, were effective at the reasonable assurance level to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in United States Securities and Exchange Commission rules and forms, and were effective to ensure that the information required to be disclosed in the reports filed or submitted by the Company under the Exchange Act, was accumulated and communicated to management, including to the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosure.

There has been no change in the Company’s internal controls over financial reporting (as such term is defined in Exchange Act Rules 13a-15(f)) during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

29

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings

For information on legal proceedings, see Note 12 —Commitments and Contingencies in the notes to the unaudited interim consolidated financial statements.

ITEM 1A. Risk Factors

In the nine months ended September 30, 2011, there have been no material changes from the risk factors previously disclosed in Item 1A of our 2010 Annual Report on Form 10-K and in Item 1A of Part II of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2011.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Reserved

None.

ITEM 5. Other Information

None.

ITEM 6. Exhibits

Exhibit Number	Description of Document	Reference
31.1	Rule 13a-14(a)/15d-14(a) Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act	Filed herewith
31.2	Rule 13a-14(a)/15d-14(a) Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act	Filed herewith
32.1	Section 1350 Certification of CEO as adopted by Section 906 of the Sarbanes-Oxley Act	Filed herewith
32.2	Section 1350 Certification of CFO as adopted by Section 906 of the Sarbanes-Oxley Act	Filed herewith
101	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets as of September 30, 2011 and December 31, 2010, (ii) the Consolidated Statements of Operations for the three and nine months ended September 30, 2011 and 2010, (iii) the Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2011 and 2010, (iv) the Consolidated Statements of Cash Flows for the nine months ended September 30, 2011 and 2010, (v) the Consolidated Statements of Shareholder's Equity for the nine months ended September 30, 2011 and 2010, and (vi) the notes to the Consolidated Financial Statements.	Filed herewith

30

SIGNATURE

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SXC Health Solutions Corp.
November 4, 2011	By:	/s/ Jeff Park
		Jeffrey Park
		Chief Financial Officer (on behalf of the registrant and as Chief Accounting Officer)

31

EXHIBIT INDEX

Exhibit Number	Description of Document	Reference
31.1	Rule 13a-14(a)/15d-14(a) Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act	Filed herewith
31.2	Rule 13a-14(a)/15d-14(a) Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act	Filed herewith
32.1	Section 1350 Certification of CEO as adopted by Section 906 of the Sarbanes-Oxley Act	Filed herewith
32.2	Section 1350 Certification of CFO as adopted by Section 906 of the Sarbanes-Oxley Act	Filed herewith
101	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets as of September 30, 2011 and December 31, 2010, (ii) the Consolidated Statements of Operations for the three and nine months ended September 30, 2011 and 2010, (iii) the Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2011 and 2010, (iv) the Consolidated Statements of Cash Flows for the nine months ended September 30, 2011 and 2010, (v) the Consolidated Statements of Shareholder's Equity for the nine months ended September 30, 2011 and 2010, and (vi) the notes to the Consolidated Financial Statements.	Filed herewith

32

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Mark Thierer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of SXC Health Solutions Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	November 4, 2011
By:	/s/ Mark Thierer
	Mark Thierer
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Jeffrey Park, certify that:

1. I have reviewed this quarterly report on Form 10-Q of SXC Health Solutions Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	November 4, 2011
By:	/s/ Jeffrey Park
	Jeffrey Park
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Mark Thierer, the chief executive officer of SXC Health Solutions Corp., certify that (i) the Quarterly Report on Form 10-Q of SXC Health Solutions Corp. for the quarter ended September 30, 2011 (the “Form 10-Q”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of SXC Health Solutions Corp.

/s/ Mark Thierer  

Mark Thierer 

Chief Executive Officer 

November 4, 2011

EX-32.2

Exhibit 32.2

CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Jeffrey Park, the chief financial officer of SXC Health Solutions Corp., certify that (i) the Quarterly Report on Form 10-Q of SXC Health Solutions Corp. for the quarter ended September 30, 2011 (the “Form 10-Q”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of SXC Health Solutions Corp.

/s/ Jeffrey Park  

Jeffrey Park 

Chief Financial Officer 

November 4, 2011

XML

Consolidated Balance Sheets (Parentheticals) (USD $) In Thousands, except Share data	Sep. 30, 2011	Dec. 31, 2010
Assets
Accounts receivable, allowance for doubtful accounts	$ 3,215	$ 3,553
Property and equipment, accumulated depreciation	40,628	35,861
Other intangible assets, accumulated amortization	$ 42,812	$ 31,687
Shareholders’ equity
Common stock, par value
Common stock, shares issued	62,287,716	61,602,997
Common stock, shares outstanding	62,287,716	61,602,997

XML

Consolidated Statements of Operations (USD $) In Thousands, except Share data	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Revenue:
Total revenue	$ 1,287,290	$ 489,922	$ 3,596,981	$ 1,421,516
Cost of revenue:
Total cost of revenue	1,204,948	437,058	3,376,859	1,264,684
Gross profit	82,342	52,864	220,122	156,832
Expenses:
Product development costs	3,598	3,075	10,624	9,169
Selling, general and administrative	33,773	21,607	93,440	64,403
Depreciation of property and equipment	1,588	1,463	4,764	4,482
Amortization of intangible assets	3,899	1,942	11,125	5,915
Total operating expenses	42,858	28,087	119,953	83,969
Operating income	39,484	24,777	100,169	72,863
Interest income	(115)	(199)	(375)	(524)
Interest expense and other expense,net	1,221	373	2,351	1,343
Income before income taxes	38,378	24,603	98,193	72,044
Income tax expense (benefit):
Current	14,289	8,837	34,587	21,575
Deferred	(1,177)	(410)	(1,496)	2,356
Total income tax expense (benefit)	13,112	8,427	33,091	23,931
Net income	25,266	16,176	65,102	48,113
Earnings per share:
Basic (in dollars per share)	$ 0.41	$ 0.27	$ 1.05	$ 0.79
Diluted (in dollars per share)	$ 0.4	$ 0.26	$ 1.03	$ 0.77
Weighted average number of shares used in computing earnings per share:
Basic	62,271,267	60,820,197	62,050,573	60,569,027
Diluted	63,070,519	62,929,186	62,907,064	62,558,202
P B M [Member]
Revenue:
Total revenue	1,256,369	463,042	3,511,148	1,341,839
Cost of revenue:
Total cost of revenue	1,188,197	423,773	3,330,886	1,225,620
Gross profit	68,172	39,269	180,262	116,219
H C I T [Member]
Revenue:
Total revenue	30,921	26,880	85,833	79,677
Cost of revenue:
Total cost of revenue	16,751	13,285	45,973	39,064
Gross profit	$ 14,170	$ 13,595	$ 39,860	$ 40,613

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Basis of Presentation (Policies)

9 Months Ended

Sep. 30, 2011

Basis of Presentation [Abstract]

Consolidation [Policy Text Block]

The unaudited interim consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), pursuant to the Securities and Exchange Commission’s (“SEC”) rules and regulations for reporting on Form 10-Q, and following accounting policies consistent with the Company’s audited annual consolidated financial statements for the year ended December 31, 2010. The unaudited interim consolidated financial statements of the Company include its majority-owned subsidiaries and all significant intercompany transactions and balances have been eliminated in consolidation. Amounts in the unaudited interim consolidated financial statements and notes thereto are expressed in U.S. dollars, except where indicated. The financial information included herein reflects all adjustments (consisting only of normal recurring adjustments), which, in the opinion of management, are necessary for a fair presentation of the results for the interim periods presented.

Use of Estimates [Policy Text Block]

Use of estimates:

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the period. Significant items subject to such estimates and assumptions include revenue recognition, rebates, purchase price allocation in connection with acquisitions, valuation of property and equipment, valuation of intangible assets acquired and related amortization periods, impairment of goodwill, income tax uncertainties, contingencies and valuation allowances for receivables and income taxes. Actual results could differ from those estimates.

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Document and Entity Information	9 Months Ended
	Sep. 30, 2011	Oct. 31, 2011
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q3
Trading Symbol	SXCI
Entity Registrant Name	SXC Health Solutions Corp.
Entity Central Index Key	0001363851
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		62,343,552

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Goodwill and Other Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2011

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets by Major Class [Table Text Block]

Definite-lived intangible assets are amortized over the useful lives of the related assets. The components of intangible assets were as follows (in thousands):

	September 30, 2011						December 31, 2010
	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Customer relationships	$	71,474	$	35,044	$	36,430	$	68,624	$	25,493	$	43,131
Acquired software	3,765		3,460		305		3,765		3,272		493
Trademarks/Trade names	11,920		2,228		9,692		11,370		1,252		10,118
Non-compete agreements	4,010		1,807		2,203		2,910		1,492		1,418
Licenses	1,300		273		1,027		1,300		178		1,122
Total	$	92,469	$	42,812	$	49,657	$	87,969	$	31,687	$	56,282

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Stock Split (Notes)

9 Months Ended

Sep. 30, 2011

Stock Split [Abstract]

Stock Split Disclosure [Text Block]

Stock Split

On September 2, 2010, the Company announced a two-for-one stock split effected by a dividend on the issued and outstanding common shares of the Company. On September 17, 2010, shareholders of record at the close of business on September 14, 2010 were issued one additional common share for each share owned as of that date. All share and per share data presented in this report have been adjusted to reflect this stock split.

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Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2011

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Payment Award Stock Options Valuation Assumptions [Table Text Block]

The Black-Scholes option-pricing model was used to estimate the fair value of the stock options at the grant date based on the following assumptions:

	Nine Months Ended September 30,
	2011		2010
Total stock options granted	219,554		176,280
Volatility	48.6%-49.5%		47.9%-48.5%
Risk-free interest rate	0.9%-2.2%		1.4%-2.4%
Expected life (in years)	4.5		4.5
Dividend yield	—		—
Weighted-average grant date fair value	$	21.62	$	13.67

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Income Taxes (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Income Tax Disclosure [Abstract]
Effective Income Tax Rate, Continuing Operations	34.20%	34.30%	33.70%	33.20%

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Cash and Cash Equivalents (Tables)

9 Months Ended

Sep. 30, 2011

Cash and Cash Equivalents [Abstract]

Schedule of Cash and Cash Equivalents [Table Text Block]

The components of cash and cash equivalents are as follows (in thousands):

	September 30, 2011			December 31, 2010
Cash on deposit	$	480,020		$	387,687
Payments in transit	(74,928		)	(66,423		)
Canadian dollar deposits (September 30, 2011 — Cdn. $20 at 1.0420; December 31, 2010 — Cdn. $20 at 1.0002)	19			20
	$	405,111		$	321,284

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Stock-Based Compensation (Notes)

9 Months Ended

Sep. 30, 2011

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Stock-Based Compensation

During the three-month periods ended September 30, 2011 and 2010, the Company recorded stock-based compensation expense of $2.4 million and $1.6 million, respectively. During the nine-month periods ended September 30, 2011 and 2010, the Company recorded stock-based compensation expense of $6.5 million and $4.5 million, respectively.

The Black-Scholes option-pricing model was used to estimate the fair value of the stock options at the grant date based on the following assumptions:

	Nine Months Ended September 30,
	2011		2010
Total stock options granted	219,554		176,280
Volatility	48.6%-49.5%		47.9%-48.5%
Risk-free interest rate	0.9%-2.2%		1.4%-2.4%
Expected life (in years)	4.5		4.5
Dividend yield	—		—
Weighted-average grant date fair value	$	21.62	$	13.67

Fair value is established for RSUs based on the stock market price at the grant date.

As of September 30, 2011, there was $6.2 million and $13.2 million of unrecognized compensation cost related to stock options and RSUs, respectively, which is expected to be recognized over a weighted-average period of 2.9 years and 2.4 years, respectively.

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Consolidated Statements of Shareholders' Equity (USD $) In Thousands, except Share data	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income [Member]
Total shareholders’ equity, beginning at Dec. 31, 2009	$ 458,494	$ 361,530	$ 15,153	$ 81,812	$ (1)
Common stock, shares, beginning at Dec. 31, 2009		60,114,562
Activities during the period (unaudited) [Roll Forward]
Net income	48,113	0	0	48,113	0
Exercise of stock options, shares		677,886
Exercise of stock options, amount	5,040	7,169	(2,129)	0	0
Vesting of restricted stock units, shares		61,458
Vesting of restricted stock units, amount	0	2,248	(2,248)	0	0
Tax benefit on options exercised	6,071	0	6,071	0	0
Stock-based compensation	4,527	0	4,527	0	0
Other comprehensive income, net of tax	1	0	0	0	1
Total shareholders’ equity, ending at Sep. 30, 2010	522,246	370,947	21,374	129,925	0
Common stock, shares, ending at Sep. 30, 2010		60,853,906
Total shareholders’ equity, beginning at Dec. 31, 2010	553,256	381,736	24,973	146,547	0
Common stock, shares, beginning at Dec. 31, 2010	61,602,997	61,602,997
Activities during the period (unaudited) [Roll Forward]
Net income	65,102	0	0	65,102	0
Exercise of stock options, shares		605,567
Exercise of stock options, amount	5,291	7,530	(2,239)	0	0
Vesting of restricted stock units, shares		79,152
Vesting of restricted stock units, amount	0	4,350	(4,350)	0	0
Tax benefit on options exercised	9,322	0	9,322	0	0
Stock-based compensation	6,507	0	6,507	0	0
Total shareholders’ equity, ending at Sep. 30, 2011	$ 639,478	$ 393,616	$ 34,213	$ 211,649	$ 0
Common stock, shares, ending at Sep. 30, 2011	62,287,716	62,287,716

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Shareholders' Equity (Details)	0 Months Ended	9 Months Ended				9 Months Ended			9 Months Ended
	May 11, 2011	Sep. 30, 2011 USD ($)	Sep. 30, 2010	Dec. 31, 2010	Sep. 30, 2011 LTIP [Member]	Sep. 30, 2011 Employee Stock Purchase Plan [Member]	Sep. 30, 2011 Canadian Plan [Member] CAD	Sep. 30, 2011 United States Plan [Member] USD ($)	Sep. 30, 2011 Restricted Stock Units R S U [Member] USD ($)	Sep. 30, 2011 Restricted Stock Units Time Based [Member]	Sep. 30, 2011 Restricted Stock Units Performance Based [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Incremental Number of Shares Authorized	1,800,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant					2,141,120
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Employee Subscription Rate		15.00%
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Employee Subscription Amount		$ 25,000
Share-based Compensation Arrangement by Share-based Payment Award, Discount from Market Price, Purchase Date						5.00%
Aggregate Shares Issuable Under ESPP, Maximum						200,000
Stock Issued During Period, Shares, Employee Stock Purchase Plans		6,772	7,072
Common Stock, Shares		62,287,716		61,602,997
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number		1,344,396		1,749,459			141,526	1,202,870
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price							5.62	$ 19.99
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period										116,046	104,662
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value									$ 50.61
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number										288,762	330,222

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Cash and Cash Equivalents (Notes)

9 Months Ended

Sep. 30, 2011

Cash and Cash Equivalents [Abstract]

Cash and Cash Equivalents Disclosure [Text Block]

Cash and Cash Equivalents

The components of cash and cash equivalents are as follows (in thousands):

	September 30, 2011			December 31, 2010
Cash on deposit	$	480,020		$	387,687
Payments in transit	(74,928		)	(66,423		)
Canadian dollar deposits (September 30, 2011 — Cdn. $20 at 1.0420; December 31, 2010 — Cdn. $20 at 1.0002)	19			20
	$	405,111		$	321,284

The Company determined the carrying amount reported in the consolidated balance sheets as cash and cash equivalents approximates fair value due to the short maturities of these instruments; accordingly, the valuation of these instruments are considered Level 1 measurements in the fair value hierarchy.

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Income Taxes (Notes)

9 Months Ended

Sep. 30, 2011

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

Income Taxes

The Company’s effective tax rate for the three months ended September 30, 2011 and 2010 was 34.2% and 34.3%, respectively. The Company’s effective tax rate for the nine months ended September 30, 2011 and 2010 was 33.7% and 33.2%, respectively.

The Company and its subsidiaries file income tax returns in Canadian and U.S. federal jurisdictions, and various provincial, state and local jurisdictions. With a few exceptions, the Company is no longer subject to tax examinations by tax authorities for years prior to 2007.

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Goodwill and Other Intangible Assets (Notes)

9 Months Ended

Sep. 30, 2011

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

Goodwill and Other Intangible Assets

Goodwill and indefinite-lived intangible assets are reviewed for impairment annually or more frequently if impairment indicators arise. The Company allocates goodwill to both the PBM and HCIT segments. There were no impairments of goodwill or indefinite-lived intangible assets during the three or nine months ended September 30, 2011 and 2010.

Definite-lived intangible assets are amortized over the useful lives of the related assets. The components of intangible assets were as follows (in thousands):

	September 30, 2011						December 31, 2010
	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Customer relationships	$	71,474	$	35,044	$	36,430	$	68,624	$	25,493	$	43,131
Acquired software	3,765		3,460		305		3,765		3,272		493
Trademarks/Trade names	11,920		2,228		9,692		11,370		1,252		10,118
Non-compete agreements	4,010		1,807		2,203		2,910		1,492		1,418
Licenses	1,300		273		1,027		1,300		178		1,122
Total	$	92,469	$	42,812	$	49,657	$	87,969	$	31,687	$	56,282

Total amortization associated with intangible assets at September 30, 2011 is estimated to be $3.9 million for the remainder of 2011, $12.5 million in 2012, $10.2 million in 2013, $8.8 million in 2014, $6.5 million in 2015, and $7.7 million in total for years after 2015. The main driver of the future amortization is related to intangible assets acquired in the acquisitions of National Medical Health Card Systems, Inc. (“NMHC”) in 2008 and MedfusionRx in 2010.

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Business Combinations (Details) (USD $)	3 Months Ended			9 Months Ended					3 Months Ended		9 Months Ended			9 Months Ended		9 Months Ended		9 Months Ended		9 Months Ended			9 Months Ended
	Sep. 30, 2011	Dec. 31, 2010	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011 Acquisition [Member] PTRxSaveDirectRx [Member]	Oct. 03, 2011 Acquisition [Member] PTRxSaveDirectRx [Member]	Oct. 03, 2011 Acquisition [Member] SaveDirectRx [Member]	Sep. 30, 2011 Medfusion Rx [Member]	Sep. 30, 2010 Medfusion Rx [Member]	Sep. 30, 2011 Medfusion Rx [Member]	Sep. 30, 2010 Medfusion Rx [Member]	Dec. 28, 2010 Medfusion Rx [Member]	Sep. 30, 2011 Medfusion Rx [Member] Trade Mark Trade Name [Member] years	Dec. 28, 2010 Medfusion Rx [Member] Trade Mark Trade Name [Member]	Sep. 30, 2011 Medfusion Rx [Member] Customer Relationships [Member] years	Dec. 28, 2010 Medfusion Rx [Member] Customer Relationships [Member]	Sep. 30, 2011 Medfusion Rx [Member] Noncompete Agreements [Member] years	Dec. 28, 2010 Medfusion Rx [Member] Noncompete Agreements [Member]	Sep. 30, 2011 Medfusion Rx [Member] Licensing Agreements [Member] years	Dec. 28, 2010 Medfusion Rx [Member] Licensing Agreements [Member]	Dec. 28, 2010 Medfusion Rx [Member] In Process Research and Development [Member]	Sep. 30, 2011 MedMetrics [Member]	Jun. 01, 2011 MedMetrics [Member]
Business Acquisition, Cost of Acquired Entity, Purchase Price [Abstract]
Cash payment to acquiree shareholders							$ 77,000,000						$ 101,514,000
Fair value of contingent purchase price													4,865,000
Total purchase price													106,379,000
Business acquisition, contingent consideration, potential cash payment								4,500,000					5,500,000
Acquisition costs included in selling, general and administrative expenses		2,400,000							0		0
Business Acquisition, Purchase Price Allocation [Abstract]
Current assets													20,781,000
Property and equipment													360,000
Goodwill													78,646,000
Intangible assets													26,262,000
Total assets acquired													126,049,000
Current liabilities													19,670,000
Total liabilities assumed													19,670,000
Net assets acquired													106,379,000
Amortization of acquired intangible assets									1,800,000		5,300,000
Finite-Lived Intangible Assets, Future Amortization Expense [Abstract]
Amortization for the remainder of fiscal year											1,800,000
Expected amortization for 2012				12,500,000							4,900,000
Expected amortization for 2013				10,200,000							3,800,000
Acquired finite-lived intangible asset, amount													26,262,000		10,000,000		14,562,000		1,400,000		300,000
Acquired finite-lived intangible assets, useful life (in years)														10		5		5		3
Acquired finite-lived intangible asset, residual value									0		0
Acquired indefinite-lived intangible asset, amount																						0
Business Acquisition, Pro Forma Information [Abstract]
Revenue										552,933,000		1,605,575,000
Gross profit										57,393,000		176,643,000
Net income										16,430,000		52,570,000
Earnings per share:
Basic (in dollars per share)										$ 0.27		$ 0.87
Diluted (in dollars per shae)										$ 0.26		$ 0.84
Weighted average number of shares used in computing earnings per share:
Basic	62,271,267		60,820,197	62,050,573	60,569,027					60,820,197		60,569,027
Diluted	63,070,519		62,929,186	62,907,064	62,558,202					62,929,186		62,558,202
Business Acquisition, Preexisting Relationship [Abstract]
Date of acquisition completion						10/3/2011																	6/1/2011
Accounts receivables due to Company from MedMetrics due to pre-existing relationship																								10,600,000
Gain or loss from subsequent settlement of pre-existing balances																								$ 0

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Business Combinations (Notes)

9 Months Ended

Sep. 30, 2011

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

Business Combinations

MedfusionRx Acquisition

On December 28, 2010, the Company, through its direct wholly owned subsidiary SXC Health Solutions, Inc. (“SXC Inc.”), completed the acquisition of MedfusionRx, L.L.C. and certain affiliated entities and certain assets of Medtown South, L.L.C. (collectively, "MedfusionRx"), a specialty pharmacy services provider with significant expertise in providing clinical services to patients with complex chronic conditions. The purchase price for MedfusionRx was $101.5 million in cash, with an opportunity for the former owners of MedfusionRx to earn an additional $5.5 million in cash, subject to the satisfaction of certain performance targets in the 2012 fiscal year, in each case based upon the terms and subject to the conditions contained in the MedfusionRx Purchase Agreement. MedfusionRx's results of operations are included in the consolidated statements of operations commencing January 1, 2011. MedfusionRx's results of operations from the date of acquisition through December 31, 2010 were not material to the Company's results of operations for 2010.

The acquisition of MedfusionRx will help transform the Company's Specialty Service pharmacy business by expanding its presence and enhancing its capabilities in this rapidly growing segment of the PBM industry. The acquisition will also provide an opportunity to create new revenues and generate cost savings through purchasing synergies.

The purchase price of the acquired MedfusionRx operations was comprised of the following (in thousands):

Cash payment to MedfusionRx shareholders	$	101,514
Fair value of contingent purchase price	4,865
Total purchase price	$	106,379

The MedfusionRx Purchase Agreement includes contingent purchase price consideration in the form of an earn-out payment of up to $5.5 million contingent upon the MedfusionRx book of business meeting or exceeding certain gross profit targets for the 2012 fiscal year. The $4.9 million fair value of the contingent purchase price was accrued at the date of acquisition as part of the total consideration transferred. The Company utilized a probability weighted discounted cash flow method, with expected future performance of MedfusionRx and its ability to meet the target performance objectives as the main driver of the valuation, to arrive at the fair value of the contingent consideration. The Company will continue to reassess the fair value of the contingent purchase price until the applicable earn-out period has lapsed. Any future changes to the fair value of the contingent purchase price will be recognized in earnings of the Company. As the valuation for the contingent consideration is based on inputs not observable in the market, the measurement is classified as Level 3 in the fair value hierarchy.

Costs related to the MedfusionRx acquisition of $2.4 million were included in selling, general and administrative expenses for the year ended December 31, 2010. No additional acquisition costs were incurred during the three and nine months ended September 30, 2011. The costs incurred were comprised of legal, accounting, valuation, and professional services fees associated with the MedfusionRx acquisition.

Purchase Price Allocation

The MedfusionRx acquisition was accounted for under the acquisition method of accounting with the Company treated as the acquiring entity. Accordingly, the consideration paid by the Company to complete the acquisition has been allocated to the assets acquired and liabilities assumed based upon their estimated fair values as of the date of acquisition. The carrying values for current assets and liabilities were deemed to approximate their fair values due to the short-term nature of their maturities. Fair values for acquired amortized intangible assets were determined as follows: customer lists are valued using an excess earnings model based on expected future revenues derived from the customers acquired, non-compete agreements were valued using discounted cash flow models based on expected future results of MedfusionRx, trademarks/tradenames and software were valued using a royalty savings model based on future projected revenues of MedfusionRx and applicable market royalty rates and licenses utilized a replacement cost approach. The excess of the purchase price over the estimated fair values of the net assets acquired was recorded as goodwill. All of the assets and liabilities recorded for the MedfusionRx acquisition are included within the Company's PBM segment. Goodwill is non-amortizing for financial statement purposes and the entire goodwill balance generated from the MedfusionRx acquisition is tax deductible. The goodwill recognized by the Company represents many of the synergies and business growth opportunities that may be realized from this acquisition. The synergies include the opportunity to realize more specialty sales from the Company's existing customer base, the expansion of the Company's product offerings and improved pricing from the Company's suppliers due to the increased volume of prescription drug purchases.

The following summarizes the preliminary fair values assigned to the assets acquired and liabilities assumed at the acquisition date and are subject to change. The purchase price allocation and related valuation process are not complete; however, the Company has completed its valuation of intangible assets, inventory, property and equipment, and accounts payable acquired. The Company is continuing to analyze the completeness of accrued liabilities acquired and the fair value of accounts receivables obtained in the acquisition. Final determination of the fair values may result in further adjustments to the amounts presented below (in thousands):

Current assets	$	20,781
Property and equipment	360
Goodwill	78,646
Intangible assets	26,262
Total assets acquired	126,049
Current liabilities	19,670
Total liabilities assumed	19,670
Net assets acquired	$	106,379

During the three and nine months ended September 30, 2011, the Company recognized $1.8 million and $5.3 million, respectively, of amortization expense from intangible assets acquired. Amortization for the remainder of 2011 is expected to be $1.8 million. Amortization for 2012 and 2013 is expected to be $4.9 million and $3.8 million, respectively.

The estimated fair values and useful lives of intangible assets acquired are as follows (dollars in thousands):

	Fair Value		Useful Life
Trademarks/Trade names	$	10,000	10 years
Customer relationships	14,562		5 years
Non-compete agreements	1,400		5 years
License	300		3 years
Total	$	26,262

None of the acquired intangible assets will have any residual value at the end of the amortization periods. There were no in-process research and development assets acquired.

Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information presents the combined historical results of operations of the Company and MedfusionRx as if the acquisition had occurred on the first day of the comparable period presented. The unaudited pro forma financial information includes certain adjustments related to the acquisition, such as increased amortization from the fair value of intangible assets acquired recorded as part of the purchase accounting, and consequential income tax effects from the acquisition. Unaudited pro forma results of operations are as follows (in thousands, except share and per share amounts):

	Three Months Ended September 30,		Nine Months Ended September 30,
	2010		2010
Revenue	$	552,933	$	1,605,575
Gross profit	$	57,393	$	176,643
Net income	$	16,430	$	52,570
Earnings per share:
Basic	$	0.27	$	0.87
Diluted	$	0.26	$	0.84
Weighted average shares outstanding:
Basic	60,820,197		60,569,027
Diluted	62,929,186		62,558,202

This unaudited pro forma financial information is not intended to represent or be indicative of what would have occurred if the transaction had taken place on the date presented and is not indicative of what the Company's actual results of operations would have been had the acquisition been completed at the beginning of the periods indicated above. Further, the pro forma combined results do not reflect one-time costs to fully merge and operate the combined organization more efficiently, or anticipated synergies expected to result from the combination and should not be relied upon as being indicative of the future results that the Company will experience.

MedMetrics Health Partners Acquisition

On June 1, 2011, the Company completed the acquisition of substantially all of the assets of MedMetrics Health Partners, Inc. (“MedMetrics”), the full-service PBM subsidiary of Public Sector Partners, Inc., which is affiliated with a major medical school. MedMetrics' results of operations are included in the 2011 consolidated statements of operations commencing June 1, 2011. Prior to the acquisition, MedMetrics was a customer of the Company and its associated revenue was accounted for in the PBM segment. Due to the previous contractual relationship between the Company and MedMetrics, there were pre-existing transactions between the two entities which resulted in approximately $10.6 million in accounts receivable due to the Company from MedMetrics for PBM services provided. No gain or loss was generated from the subsequent settlement of these pre-existing balances. Taking into account deal-related closing expenses and related intangible assets amortization, the acquisition is not expected to have a material impact to 2011 fully-diluted earnings per share ("EPS").

The acquisition of MedMetrics is consistent with the Company's strategy to acquire assets that currently utilize the Company's technology platform which facilitates the integration into the Company's business and will allow the Company the opportunity to sell additional services, such as mail and specialty services, to MedMetrics' customers. The acquisition will also help extend the Company's footprint in the northeastern part of the U.S.

The MedMetrics acquisition was accounted for under the acquisition method of accounting, with the Company treated as the acquiring entity. Accordingly, the consideration paid by the Company to complete the acquisition has been allocated to the assets acquired and liabilities assumed based upon their estimated fair values as of the date of acquisition. All of the assets and liabilities recorded for the MedMetrics acquisition are included within the Company's PBM segment.

PTRX, Inc. Acquisition

Subsequent to the end of the Company's current reporting period, on October 3, 2011, the Company completed the acquisition of PTRX, Inc. (“PTRX”), a full-service PBM, and its exclusive mail-order pharmacy provider, SaveDirectRx, Inc. (“SaveDirectRx”), both based in San Antonio, Texas. The purchase price was $77 million in cash, subject to certain customary post-closing adjustments, with an opportunity for the former owners of SaveDirectRx to earn an additional $4.5 million, subject to the achievement of certain performance targets through 2012. The acquisitions of PTRX and SaveDirectRx continue upon the Company's strategy to acquire assets that currently utilize the Company's technology platform in order to ease the integration into the Company's business. Further, these acquisitions will allow the Company to extend its presence in the southwestern part of the U.S. and expand its mail pharmacy business. The initial accounting for these acquisitions was incomplete at the time these financial statements were available for issuance as the Company had not received final valuations from certain independent valuation specialists for intangible assets acquired, and additionally, the Company had not completed its final review of the valuation for the assets and liabilities acquired. The Company expects to finalize its accounting for these acquisitions as soon as practicable, but no later than one-year from the acquisition date.

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Consolidated Statement of Comprehensive Income (Parentheticals) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Income Tax Expense Benefit on Unrealized Gain on short term investments	$ 0	$ 0	$ 0	$ 1

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Description of Business (Notes)

9 Months Ended

Sep. 30, 2011

Description of Business [Abstract]

Nature of Operations [Text Block]

Description of Business

SXC Health Solutions Corp. (the “Company”) is a leading provider of pharmacy benefits management (“PBM”) services and healthcare information technology (“HCIT”) solutions to the healthcare benefits management industry. The Company’s product offerings and solutions combine a wide range of PBM services, software applications, application service provider (“ASP”) processing services and professional services designed for many of the largest organizations in the pharmaceutical supply chain, such as federal, provincial, state and local governments, pharmacy benefit managers, managed care organizations, retail pharmacy chains and other healthcare intermediaries. The Company is headquartered in Lisle, Illinois with several locations in the U.S. and Canada. The Company trades on the Toronto Stock Exchange under ticker symbol “SXC” and on the Nasdaq Global Market under ticker symbol “SXCI.” For more information please visit www.sxc.com.

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Fair Value (Details) (USD $)	9 Months Ended
	Sep. 30, 2011 Medfusion Rx [Member]	Dec. 28, 2010 Medfusion Rx [Member]	Sep. 30, 2011 Medfusion Rx [Member] Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 3 [Member]	Sep. 30, 2011 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 1 [Member]	Dec. 31, 2010 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 1 [Member]	Sep. 30, 2011 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 2 [Member]	Dec. 31, 2010 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 2 [Member]	Dec. 31, 2010 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 3 [Member]	Sep. 30, 2011 Fair Value, Measurements, Recurring [Member] Estimate of Fair Value, Fair Value Disclosure [Member]	Dec. 31, 2010 Fair Value, Measurements, Recurring [Member] Estimate of Fair Value, Fair Value Disclosure [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Derivatives					$ 0		$ 274,000	$ 0	$ 0	$ 274,000
Contingent purchase price consideration		4,865,000	5,060,000	0	0	0	0	4,865,000	5,060,000	4,865,000
Contingent consideration, cash, based on 2012 performance target		5,500,000
Contingent consideration, change in value of contingent purchase price	$ 195,000

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Stock Split (Details)	0 Months Ended
	Sep. 02, 2010
Stock Split [Abstract]
Stockholders' Equity Note, Stock Split, Conversion Ratio	2

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Basis of Presentation (Notes)

9 Months Ended

Sep. 30, 2011

Basis of Presentation [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

Basis of Presentation

Basis of presentation:

The unaudited interim consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), pursuant to the Securities and Exchange Commission’s (“SEC”) rules and regulations for reporting on Form 10-Q, and following accounting policies consistent with the Company’s audited annual consolidated financial statements for the year ended December 31, 2010. The unaudited interim consolidated financial statements of the Company include its majority-owned subsidiaries and all significant intercompany transactions and balances have been eliminated in consolidation. Amounts in the unaudited interim consolidated financial statements and notes thereto are expressed in U.S. dollars, except where indicated. The financial information included herein reflects all adjustments (consisting only of normal recurring adjustments), which, in the opinion of management, are necessary for a fair presentation of the results for the interim periods presented. Certain reclassifications have been made to conform the prior year's consolidated financial statements to the current year's presentation.The results of operations for the three and nine month periods ended September 30, 2011 are not necessarily indicative of the results to be expected for the full year ending December 31, 2011. As of the issuance date of the Company’s financial statements, the Company has assessed whether subsequent events have occurred that require adjustment to or disclosure in these unaudited interim consolidated financial statements in accordance with Financial Accounting Standards Board’s (“FASB”) guidance.

Pursuant to the SEC rules and regulations for reporting on Form 10-Q, certain information and note disclosures normally included in the annual consolidated financial statements prepared in accordance with GAAP have been condensed or excluded. As a result, these unaudited interim consolidated financial statements do not contain all the disclosures required to be included in the annual consolidated financial statements and should be read in conjunction with the most recent audited annual consolidated financial statements and notes thereto for the year ended December 31, 2010.

Use of estimates:

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the period. Significant items subject to such estimates and assumptions include revenue recognition, rebates, purchase price allocation in connection with acquisitions, valuation of property and equipment, valuation of intangible assets acquired and related amortization periods, impairment of goodwill, income tax uncertainties, contingencies and valuation allowances for receivables and income taxes. Actual results could differ from those estimates.

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2011

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment [Table Text Block]

The Company reports in two operating segments: PBM and HCIT. The Company evaluates segment performance based upon revenue and gross profit. Financial information by segment is presented below (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
PBM:
Revenue	$	1,256,369	$	463,042	$	3,511,148	$	1,341,839
Cost of revenue	1,188,197		423,773		3,330,886		1,225,620
Gross profit	$	68,172	$	39,269	$	180,262	$	116,219
Total assets at September 30	$	690,445	$	491,117
HCIT:
Revenue	$	30,921	$	26,880	$	85,833	$	79,677
Cost of revenue	16,751		13,285		45,973		39,064
Gross profit	$	14,170	$	13,595	$	39,860	$	40,613
Total assets at September 30	$	306,653	$	263,443
Consolidated:
Revenue	$	1,287,290	$	489,922	$	3,596,981	$	1,421,516
Cost of revenue	1,204,948		437,058		3,376,859		1,264,684
Gross profit	$	82,342	$	52,864	$	220,122	$	156,832
Total assets at September 30	$	997,098	$	754,560

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Cash and Cash Equivalents (Details) In Thousands	Sep. 30, 2011 USD ($)	Sep. 30, 2011 CAD	Dec. 31, 2010 USD ($)	Sep. 30, 2010 USD ($)	Dec. 31, 2009 USD ($)
Cash on deposit	$ 480,020		$ 387,687
Payments in transit	(74,928)		(66,423)
Canadian dollar deposits (September 30, 2011 — Cdn. $20 at 1.0420; December 31, 2010 — Cdn. $20 at 1.0002)	19	20	20
Cash and cash equivalents	$ 405,111		$ 321,284	$ 379,061	$ 304,370
Foreign Currency Exchange Rate Remeasurement	1.0420	1.0420	1.0002

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Earnings Per Share (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Weighted average number of shares used in computing basic EPS	62,271,267	60,820,197	62,050,573	60,569,027
Add dilutive common stock equivalents:
Weighted average number of shares used in computing diluted EPS	63,070,519	62,929,186	62,907,064	62,558,202
Stock Options [Member]
Add dilutive common stock equivalents:
Outstanding stock options	542,718	1,821,815	626,544	1,739,424
Restricted Stock Units (RSUs) [Member]
Add dilutive common stock equivalents:
Outstanding stock options	256,534	287,174	229,947	249,751

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2011

Earnings Per Share [Abstract]

Schedule of Weighted Average Number of Shares [Table Text Block]

The following is the reconciliation between the number of weighted average shares used in the basic and diluted EPS calculations for the three and nine-month periods ended September 30, 2011 and 2010:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2011	2010	2011	2010
Weighted average number of shares used in computing basic EPS	62,271,267	60,820,197	62,050,573	60,569,027
Add dilutive common stock equivalents:
Outstanding stock options	542,718	1,821,815	626,544	1,739,424
Outstanding restricted stock units	256,534	287,174	229,947	249,751
Weighted average number of shares used in computing diluted EPS	63,070,519	62,929,186	62,907,064	62,558,202

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Segment Information (Notes)

9 Months Ended

Sep. 30, 2011

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

Segment Information

The Company reports in two operating segments: PBM and HCIT. The Company evaluates segment performance based upon revenue and gross profit. Financial information by segment is presented below (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
PBM:
Revenue	$	1,256,369	$	463,042	$	3,511,148	$	1,341,839
Cost of revenue	1,188,197		423,773		3,330,886		1,225,620
Gross profit	$	68,172	$	39,269	$	180,262	$	116,219
Total assets at September 30	$	690,445	$	491,117
HCIT:
Revenue	$	30,921	$	26,880	$	85,833	$	79,677
Cost of revenue	16,751		13,285		45,973		39,064
Gross profit	$	14,170	$	13,595	$	39,860	$	40,613
Total assets at September 30	$	306,653	$	263,443
Consolidated:
Revenue	$	1,287,290	$	489,922	$	3,596,981	$	1,421,516
Cost of revenue	1,204,948		437,058		3,376,859		1,264,684
Gross profit	$	82,342	$	52,864	$	220,122	$	156,832
Total assets at September 30	$	997,098	$	754,560

For the three-month period ended September 30, 2011, our largest customer, HealthSpring, Inc. ("HealthSpring"), accounted for 39% of total revenues. For the nine-month period ended September 30, 2011, HealthSpring accounted for 40% of total revenue. For the three and nine-month periods ended September 30, 2010, no one customer accounted for 10% or more of total revenue.

Subsequent to the end of the current reporting period, on October 24, 2011, HealthSpring announced that it had entered into a definitive agreement with Cigna Corporation (“Cigna”) under which Cigna will acquire HealthSpring in an all-cash transaction, subject to regulatory and other conditions.  The Company's contract with HealthSpring (the “HealthSpring contract”) was effective on January 1, 2011 and has an initial three-year term (with two additional one-year extensions).  Neither party to the HealthSpring contract has the right to terminate the agreement prior to the end of the initial term, except in the event of a material breach. While the Company does not currently anticipate any adverse impact to its financial results through the initial term of the HealthSpring contract as a result of the anticipates acquisition, we can give no assurances that we will be able to continue to generate a substantial portion of our revenues from HealthSpring for the foreseeable future, or that we will be able to extend or renew the HealthSpring contract past the initial period at the same service levels, or at all.

At September 30, 2011, one customer accounted for 17% of the outstanding accounts receivable balance. At December 31, 2010, no one customer accounted for 10% or more of the outstanding accounts receivable balance.

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Recent Accounting Pronouncements (Notes)

9 Months Ended

Sep. 30, 2011

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements [Text Block]

Recent Accounting Pronouncements

a) Recent accounting standards implemented

No new standards have been implemented by the Company during the three and nine month periods ended September 30, 2011.

b) Recent accounting standards issued

On September 15, 2011, the FASB issued an update to the goodwill impairment testing standard. The revised standard is intended to reduce the cost and complexity of the annual goodwill impairment test by providing entities an option to perform a "qualitative" assessment to determine whether further impairment testing is necessary. The revised standard is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011; however, an entity can choose to early adopt provided that the entity has not yet performed its 2011 annual impairment test or issued its financial statements. The Company will adopt this standard in the fourth quarter of 2011.

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Fair Value (Notes)

9 Months Ended

Sep. 30, 2011

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

Fair Value

Fair value measurement guidance defines a three-level hierarchy to prioritize the inputs to valuation techniques used to measure fair value into three broad levels, with Level 1 considered the most reliable. For assets and liabilities measured at fair value on a recurring basis in the consolidated balance sheets, the table below categorizes fair value measurements across the three levels as of September 30, 2011 and December 31, 2010 (in thousands):

	September 30, 2011
	Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Liabilities:
Contingent purchase price consideration	$	—	$	—	$	5,060	$	5,060

	December 31, 2010
	Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Liabilities:
Derivatives	$	—	$	274	$	—	$	274
Contingent purchase price consideration	$	—	$	—	$	4,865	$	4,865

When available and appropriate, the Company uses quoted market prices in active markets to determine fair value, and classifies such items within Level 1. Level 1 values only include instruments traded on a public exchange. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability or can be derived principally from or corroborated by observable market data. If the Company were to use one or more significant unobservable inputs for a model-derived valuation, the resulting valuation would be classified in Level 3.

The Company acquired MedfusionRx, a specialty pharmacy services provider on December 28, 2010. The selling members of MedfusionRx have the opportunity to earn an additional $5.5 million in cash, subject to the satisfaction of certain performance targets in the 2012 fiscal year. The fair value of the contingent purchase price consideration was $5.1 million as of September 30, 2011. The change in the value of the contingent purchase price of $0.2 million from December 31, 2010 was recorded to interest expense representing the change in the present value of the amount expected to be paid in the future for the contingent purchase price consideration. The Company utilized a probability weighted discounted cash flow method to arrive at the fair value of the contingent consideration based on the expected results and considering the performance targets of MedfusionRx in 2012. As of September 30, 2011 and December 31, 2010, the contingent purchase price consideration is classified as other liabilities in the consolidated balance sheets.

The Company had certain interest rate derivatives that were classified as accrued liabilities in the consolidated balance sheet as of December 31, 2010. The fair values represent quoted prices from a financial institution which are derived from movements in the underlying interest rate markets. There were no outstanding derivatives in the three-month period ended September 30, 2011. The total fair value changes for the three-month period ended September 30, 2010 and the nine-month periods ended September 30, 2011 and 2010 were insignificant.

During the three and nine-month periods ended September 30, 2011, there were no movements of fair value measurements between Levels 1, 2 and 3.

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Commitments and Contingencies (Details) (USD $)	Sep. 30, 2011 employee	Mar. 24, 2011 employee
Unfavorable Regulatory Action [Member]
Loss Contingencies [Line Items]
Loss Contingency Accrual, at Carrying Value	$ 0
MedfusionRX Indictment [Member]
Loss Contingencies [Line Items]
Number of Current or Former Employees Indicted (in number of employees)		3
Number of Indicted Employee Currently Employed (in number of employees)	0
Loss Contingency Accrual, at Carrying Value	$ 0

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Fair Value (Tables)

9 Months Ended

Sep. 30, 2011

Fair Value Disclosures [Abstract]

Fair Value, Measurement Inputs, Disclosure [Table Text Block]

For assets and liabilities measured at fair value on a recurring basis in the consolidated balance sheets, the table below categorizes fair value measurements across the three levels as of September 30, 2011 and December 31, 2010 (in thousands):

	September 30, 2011
	Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Liabilities:
Contingent purchase price consideration	$	—	$	—	$	5,060	$	5,060

	December 31, 2010
	Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Liabilities:
Derivatives	$	—	$	274	$	—	$	274
Contingent purchase price consideration	$	—	$	—	$	4,865	$	4,865

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Consolidated Statements of Comprehensive Income (USD $) In Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Net income	$ 25,266	$ 16,176	$ 65,102	$ 48,113
Unrealized gain on short-term investments (net of income tax expense of $1 for the nine months ended September 30, 2010)	0	0	0	1
Comprehensive income	$ 25,266	$ 16,176	$ 65,102	$ 48,114

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Earnings Per Share (Notes)

9 Months Ended

Sep. 30, 2011

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

Earnings Per Share

The Company calculates basic EPS using the weighted average number of common shares outstanding during the period. Diluted EPS is calculated using the same method as basic EPS, but the Company adds the number of additional common shares that would have been outstanding for the period if the dilutive potential common shares had been issued. The following is the reconciliation between the number of weighted average shares used in the basic and diluted EPS calculations for the three and nine-month periods ended September 30, 2011 and 2010:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2011	2010	2011	2010
Weighted average number of shares used in computing basic EPS	62,271,267	60,820,197	62,050,573	60,569,027
Add dilutive common stock equivalents:
Outstanding stock options	542,718	1,821,815	626,544	1,739,424
Outstanding restricted stock units	256,534	287,174	229,947	249,751
Weighted average number of shares used in computing diluted EPS	63,070,519	62,929,186	62,907,064	62,558,202

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Business Combinations (Tables) (Medfusion Rx [Member])

9 Months Ended

Sep. 30, 2011

Medfusion Rx [Member]

Business Acquisition [Line Items]

Schedule of Purchase Price Allocation [Table Text Block]

The purchase price of the acquired MedfusionRx operations was comprised of the following (in thousands):

Cash payment to MedfusionRx shareholders	$	101,514
Fair value of contingent purchase price	4,865
Total purchase price	$	106,379

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Tabel Text Block]

Final determination of the fair values may result in further adjustments to the amounts presented below (in thousands):

Current assets	$	20,781
Property and equipment	360
Goodwill	78,646
Intangible assets	26,262
Total assets acquired	126,049
Current liabilities	19,670
Total liabilities assumed	19,670
Net assets acquired	$	106,379

Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block]

The estimated fair values and useful lives of intangible assets acquired are as follows (dollars in thousands):

	Fair Value		Useful Life
Trademarks/Trade names	$	10,000	10 years
Customer relationships	14,562		5 years
Non-compete agreements	1,400		5 years
License	300		3 years
Total	$	26,262

Business Acquisition, Pro Forma Information [Table Text Block]

Unaudited pro forma results of operations are as follows (in thousands, except share and per share amounts):

	Three Months Ended September 30,		Nine Months Ended September 30,
	2010		2010
Revenue	$	552,933	$	1,605,575
Gross profit	$	57,393	$	176,643
Net income	$	16,430	$	52,570
Earnings per share:
Basic	$	0.27	$	0.87
Diluted	$	0.26	$	0.84
Weighted average shares outstanding:
Basic	60,820,197		60,569,027
Diluted	62,929,186		62,558,202

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Consolidated Statements of Cash Flows (USD $) In Thousands	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
Cash flows from operating activities:
Net income	$ 65,102	$ 48,113
Items not involving cash:
Stock-based compensation	6,507	4,527
Depreciation of property and equipment	6,815	6,312
Amortization of intangible assets	11,125	5,915
Deferred lease inducements and rent	(397)	(365)
Deferred income taxes	(1,496)	2,356
Tax benefit on stock-based compensation plans	(9,322)	(6,071)
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable	(93,838)	(13,185)
Rebates receivable	4,616	(20,459)
Restricted cash	(1,181)	(162)
Prepaid expenses and other current assets	(1,742)	(1,350)
Inventory	(6,486)	(825)
Income tax	24,586	7,692
Accounts payable	(17,107)	(288)
Accrued expenses and other current liabilities	(1,308)	(6,693)
Pharmacy benefit claims payable	105,611	19,160
Pharmacy benefit management rebates payable	(5,304)	17,177
Other	(1,469)	1,020
Net cash provided by operating activities	84,712	62,874
Cash flows from investing activities:
Acquisitions	(12,421)	0
Purchases of property and equipment	(3,073)	(4,033)
Proceeds from sales of short term investments	0	6,828
Purchases of short term investments	0	(2,208)
Net cash (used) provided by investing activities	(15,494)	587
Cash flows from financing activities:
Tax benefit on stock-based compensation plans	9,322	6,071
Proceeds from exercise of options	5,291	5,040
Net cash provided by financing activities	14,613	11,111
Effect of foreign exchange on cash balances	(4)	119
Increase in cash and cash equivalents	83,827	74,691
Cash and cash equivalents, beginning of period	321,284	304,370
Cash and cash equivalents, end of period	$ 405,111	$ 379,061

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Shareholders' Equity (Notes)

9 Months Ended

Sep. 30, 2011

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

Shareholders’ Equity

(a) Stock Incentive Plans:

Effective on March 11, 2009, the Board of Directors of the Company adopted the SXC Health Solutions Corp. Long-Term Incentive Plan (“LTIP”), which was approved by the shareholders of the Company at the Annual and Special Meeting of Shareholders on May 13, 2009. The LTIP provides for the grant of stock option awards, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards and other stock-based awards to eligible persons, including executive officers and directors of the Company. The purpose of the LTIP is to advance the interests of the Company by attracting and retaining high caliber employees and other key individuals who perform services for the Company, a subsidiary or an affiliate; align the interests of the Company’s shareholders and recipients of awards under the LTIP by increasing the proprietary interest of such recipients in the Company’s growth and success; and motivate award recipients to act in the best long-term interest of the Company and its shareholders. The LTIP replaced the previous stock option plan, and no further grants or awards will be issued under the previous stock option plan. The maximum common shares of the Company allowed to be issued under the LTIP was increased by 1,800,000 on May 11, 2011, after the Company’s shareholders approved an amendment to the LTIP at the Annual and Special Meeting of Shareholders of the Company.

There were 2,141,120 stock-based awards available for grant under the LTIP as of September 30, 2011.

(b) Employee Stock Purchase Plan:

The Company maintains an Employee Stock Purchase Plan (“ESPP”) which allows eligible employees to withhold annually up to a maximum of 15% of their base salary, or $25,000, subject to IRS limitations, for the purchase of the Company’s common shares. Common shares will be purchased on the last day of each offering period at a discount of 5% of the fair market value of the common shares on such date. The aggregate number of common shares that may be issued under the ESPP may not exceed 200,000.

The ESPP requires that common shares available for purchase under the ESPP be drawn from reacquired common shares purchased on behalf of the Company in the open market. During the nine months ended September 30, 2011 and 2010, there were 6,772 and 7,072 shares delivered under the ESPP, respectively.

The ESPP is not considered compensatory as its purchase discount is not greater than 5%, the plan is available to substantially all employees, and the plan does not incorporate option features. Accordingly, no portion of the cost related to ESPP purchases is included in the Company’s stock-based compensation expense.

(c) Outstanding shares and stock options:

At September 30, 2011, the Company had outstanding common shares of 62,287,716 and stock options outstanding of 1,344,396. At December 31, 2010, the Company had outstanding common shares of 61,602,997 and stock options outstanding of 1,749,459. As of September 30, 2011, stock options outstanding consisted of 141,526 Canadian dollar stock options at a weighted-average exercise price of Canadian $5.62 and 1,202,870 U.S. dollar stock options at a weighted-average exercise price of U.S. $19.99.

(d) Restricted stock units:

During the nine months ended September 30, 2011, the Company granted 116,046 time-based restricted stock units (“RSUs”) and 104,662 performance-based RSUs to its employees and non-employee directors with a weighted-average grant date fair value of $50.61 per share. At September 30, 2011, there were 288,762 time-based RSUs and 330,222 performance-based RSUs outstanding.

Time-based RSUs vest on a straight-line basis over a range of two to four years and performance-based RSUs cliff vest based upon reaching agreed upon three-year cumulative performance conditions. The number of outstanding performance-based RSUs as of September 30, 2011 assumes the associated performance targets will be met at the maximum level.

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Goodwill and Other Intangible Assets (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010	Dec. 31, 2010
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	$ 92,469,000		$ 92,469,000		$ 87,969,000
Finite-Lived Intangible Assets, Accumulated Amortization	42,812,000		42,812,000		31,687,000
Finite-Lived Intangible Assets, Net	49,657,000		49,657,000		56,282,000
Finite-Lived Intangible Assets, Future Amortization Expense [Abstract]
Future amortization expense, remainder of 2011			3,900,000
Future amortization expense, 2012			12,500,000
Future amortization expense, 2013			10,200,000
Future amortization expense, 2014			8,800,000
Future amortization expense, 2015			6,500,000
Future amortization expense, after 2015			7,700,000
Goodwill, Impairment Loss	0	0	0	0
Impairment of Intangible Assets, Indefinite-lived (Excluding Goodwill)	0	0	0	0
Medfusion Rx [Member]
Finite-Lived Intangible Assets, Future Amortization Expense [Abstract]
Future amortization expense, 2012			4,900,000
Future amortization expense, 2013			3,800,000
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	71,474,000		71,474,000		68,624,000
Finite-Lived Intangible Assets, Accumulated Amortization	35,044,000		35,044,000		25,493,000
Finite-Lived Intangible Assets, Net	36,430,000		36,430,000		43,131,000
Acquired Software [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	3,765,000		3,765,000		3,765,000
Finite-Lived Intangible Assets, Accumulated Amortization	3,460,000		3,460,000		3,272,000
Finite-Lived Intangible Assets, Net	305,000		305,000		493,000
Trademarks/Trade names [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	11,920,000		11,920,000		11,370,000
Finite-Lived Intangible Assets, Accumulated Amortization	2,228,000		2,228,000		1,252,000
Finite-Lived Intangible Assets, Net	9,692,000		9,692,000		10,118,000
Noncompete Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	4,010,000		4,010,000		2,910,000
Finite-Lived Intangible Assets, Accumulated Amortization	1,807,000		1,807,000		1,492,000
Finite-Lived Intangible Assets, Net	2,203,000		2,203,000		1,418,000
Licenses [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	1,300,000		1,300,000		1,300,000
Finite-Lived Intangible Assets, Accumulated Amortization	273,000		273,000		178,000
Finite-Lived Intangible Assets, Net	$ 1,027,000		$ 1,027,000		$ 1,122,000

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Commitments and Contingencies (Notes)

9 Months Ended

Sep. 30, 2011

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

Commitments and Contingencies

On December 28, 2010, the Company completed its acquisition of MedfusionRx, a leading independent specialty pharmacy services provider. On March 24, 2011, three employees of MedfusionRx and several third parties were indicted for alleged violations of the federal anti-kickback statute that occurred prior to the closing of the acquisition. None of these employees are currently employed by MedfusionRx. MedfusionRx intends to cooperate fully with any requests received from governmental officials. While the Company believes that it is entitled to indemnification with respect to any costs or expenses arising from or relating to this matter pursuant to the terms of the MedfusionRx Purchase Agreement, we can give no assurances that such indemnification will be recoverable or will be sufficient to cover all potential civil or criminal penalties and claims arising therefrom or relating thereto. As of September 30, 2011, the Company has not recorded any contingent liability in its consolidated financial statements relating to this matter.

From time to time in connection with its operations, the Company is named as a defendant in actions for damages and costs allegedly sustained by third party plaintiffs. The Company has considered these proceedings and disputes in determining the necessity of any reserves for losses that are probable and reasonably estimable. In addition, various aspects of the Company’s business may subject it to litigation and liability for damages arising from errors in the processing of prescription drug claims, failure to meet performance measures within certain contracts relating to its services, its ability to obtain certain levels of discounts for rebates on prescription purchases from retail pharmacies and drug manufacturers or other actions or omissions. The Company’s recorded reserves are based on estimates developed with consideration given to the potential merits of claims or quantification of any performance obligations. The Company also takes into account its history of claims, the limitations of any insurance coverage, advice from outside counsel and management’s strategy with regard to the settlement or defense of such claims and obligations. While the ultimate outcome of those claims, lawsuits or performance obligations cannot be predicted with certainty, the Company believes, based on its understanding of the facts of these claims and performance obligations, that adequate provisions have been recorded in the consolidated financial statements where required.

The Company provides routine indemnification to its customers against liability if the Company’s products infringe on a third party’s intellectual property rights. The maximum amount of potential indemnification liability cannot be reasonably estimated due to its uncertain nature. Historically, the Company has not made payments related to these indemnification provisions.

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Consolidated Balance Sheets (USD $) In Thousands	Sep. 30, 2011	Dec. 31, 2010
Current assets
Cash and cash equivalents	$ 405,111	$ 321,284
Restricted cash	14,971	13,790
Accounts receivable, net of allowance for doubtful accounts of $3,215 (2010 — $3,553)	217,791	122,175
Rebates receivable	32,439	34,249
Prepaid expenses and other current assets	6,676	10,173
Inventory	15,222	8,736
Deferred income taxes	5,583	6,647
Total current assets	697,793	517,054
Property and equipment, net of accumulated depreciation of $40,628 (2010 — $35,861)	17,146	20,896
Goodwill	229,193	220,597
Other intangible assets, net of accumulated amortization of $42,812 (2010 — $31,687)	49,657	56,282
Other assets	3,309	1,961
Total assets	997,098	816,790
Current liabilities
Accounts payable	15,092	30,930
Accrued expenses and other current liabilities	69,471	61,038
Pharmacy benefit management rebates payable	58,866	61,364
Pharmacy benefit claims payable	190,210	84,599
Total current liabilities	333,639	237,931
Deferred income taxes	13,890	15,111
Other liabilities	10,091	10,492
Total liabilities	357,620	263,534
Commitments and contingencies (Note 12)
Shareholders’ equity
Common shares: no par value, unlimited shares authorized; 62,287,716 shares issued and outstanding at September 30, 2011 (December 31, 2010 — 61,602,997 shares)	393,616	381,736
Additional paid-in capital	34,213	24,973
Retained earnings	211,649	146,547
Total shareholders’ equity	639,478	553,256
Total liabilities and shareholders’ equity	$ 997,098	$ 816,790

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Stock-Based Compensation (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011 years	Sep. 30, 2010 years
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 2.4	$ 1.6	$ 6.5	$ 4.5
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
Total stock options granted			219,554	176,280
Volatility rate, minimum			48.60%	47.90%
Volatility rate, maximum			49.50%	48.50%
Risk free interest rate, minimum			0.90%	1.40%
Risk free interest rate, maximum			2.20%	2.40%
Expected life (in years)			4.5	4.5
Dividend yield			0.00%	0.00%
Weighted-average grant date fair value (in dollars per share)			$ 21.62	$ 13.67
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
Unrecognized compensation costs on nonvested awards	6.2		6.2
Unrecognized compensation costs on nonvested awards, weighted average period of recognition (in years)			2.9
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
Unrecognized compensation costs on nonvested awards	$ 13.2		$ 13.2
Unrecognized compensation costs on nonvested awards, weighted average period of recognition (in years)			2.4

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Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended			3 Months Ended		9 Months Ended			12 Months Ended	3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010	Dec. 31, 2010	Sep. 30, 2011 Customer Concentration Risk [Member] Sales [Member] customers	Sep. 30, 2010 Customer Concentration Risk [Member] Sales [Member] customers	Sep. 30, 2011 Customer Concentration Risk [Member] Sales [Member] customers	Sep. 30, 2010 Customer Concentration Risk [Member] Sales [Member] customers	Sep. 30, 2011 Customer Concentration Risk [Member] Accounts Receivable [Member] customers	Dec. 31, 2010 Customer Concentration Risk [Member] Accounts Receivable [Member] customers	Sep. 30, 2011 P B M [Member]	Sep. 30, 2010 P B M [Member]	Sep. 30, 2011 P B M [Member]	Sep. 30, 2010 P B M [Member]	Sep. 30, 2011 H C I T [Member]	Sep. 30, 2010 H C I T [Member]	Sep. 30, 2011 H C I T [Member]	Sep. 30, 2010 H C I T [Member]
Segment Reporting Information [Line Items]
Revenues	$ 1,287,290	$ 489,922	$ 3,596,981	$ 1,421,516								$ 1,256,369	$ 463,042	$ 3,511,148	$ 1,341,839	$ 30,921	$ 26,880	$ 85,833	$ 79,677
Cost of revenue	1,204,948	437,058	3,376,859	1,264,684								1,188,197	423,773	3,330,886	1,225,620	16,751	13,285	45,973	39,064
Gross profit	82,342	52,864	220,122	156,832								68,172	39,269	180,262	116,219	14,170	13,595	39,860	40,613
Total assets	$ 997,098	$ 754,560	$ 997,098	$ 754,560	$ 816,790							$ 690,445	$ 491,117	$ 690,445	$ 491,117	$ 306,653	$ 263,443	$ 306,653	$ 263,443
Concentration Risk Percentage During Period						39.00%		40.00%
Concentration Risk, Percentage										17.00%
Number of Customers Accounting for Greater Than Ten Percent (in number of customers)						1	0	1	0	1	0