SAN FRANCISCO — McKesson Corp. is bolstering its pharmacy technology services with its $1.1 billion deal to acquire CoverMyMeds LLC from private equity firm Francisco Partners.
Columbus, Ohio-based CoverMyMeds provides the nation’s largest electronic prior authorization (ePA) platform for medications. The company said its software suite automates the drug prior authorization process for more than 500 electronic health record (EHR) systems, 47,000 pharmacies, 700,000 health providers and most health plans and pharmacy benefit managers (PBMs).
McKesson expects to close the transaction in its fiscal 2018 first half, pending regulatory approval and other customary closing conditions. The pharmaceutical distributor disclosed the deal in reporting its third quarter results last week.
“Our announced acquisition of CoverMyMeds supports McKesson’s commitment to provide a comprehensive set of services and solutions that drive value across the health care continuum and secure patients’ access to their prescribed drugs,” chairman and chief executive officer John Hammergren said in a statement. “McKesson continues to further enhance its diverse suite of pharmaceutical technology solutions to support the very best in patient care.”
Plans call for CoverMyMeds to operate as an independent business unit in its Columbus and Cleveland offices under its current leadership. Matt Scantland, co-founder and CEO, would continue to serve as CoverMyMeds’ chief executive and co-founder Sam Rajan would continue in his role leading the company’s vertical strategy and sales.
Francisco Partners said its 2014 investment in CoverMyMeds helped support the company’s growth across the pharmacy, health provider, manufacturer and payer arenas. CoverMyMeds recently reported that it has now helped more than 50 million patients access medication.
“CoverMyMeds solves a real pain point for doctors, pharmacies, manufacturers and payers,” stated Chris Adams, partner at Francisco Partners. “We are thrilled to have helped the CoverMyMeds team build their business. The company is in a tremendous position, and we wish them continued success as part of McKesson.”
CoverMyMeds noted that its ePA platform, by facilitating access to medications, helps customers avoid administrative waste and unnecessary medical spending caused by prescription abandonment. The company has been a pharmacy solution partner of McKesson since 2010.
“Francisco Partners has been an invaluable partner to us,” Scantland commented. “Their team offered support, thought leadership and capital to help us grow rapidly and strategically into a business that will continue to have a huge impact and achieve lasting success with McKesson. We’re very proud of what we were able to accomplish together.”
The acquisition agreement with McKesson also includes a maximum $300 million consideration based on CoverMyMeds’ financial performance through the fiscal year ending in 2019, which could raise the total deal value to up to $1.4 billion.