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PBMs OptumRx, Catamaran to merge in $12.8 billion deal

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NEW YORK and SCHAUMBURG, Ill. — Reflecting the ongoing consolidation in the pharmacy benefit management (PBM) sector, UnitedHealth Group plans to acquire Catamaran Corp. in a deal valued at $12.8 billion.

The companies said Monday that Catamaran would integrated into OptumRx, UnitedHealth’s freestanding pharmacy care services business and part of its Optum health services unit. Under the agreement, UnitedHealth will buy Catamaran’s outstanding common stock for $61.50 per share in cash.

Plans call for Mark Thierer, Catamaran’s chairman and chief executive officer, to serve as CEO of OptumRx and Timothy Wicks, the current CEO of OptumRx, to become president. Jeff Park, currently executive vice president of operations for Catamaran, will become chief operating officer for OptumRx. Jeffrey Grosklags, currently the chief financial officer of OptumRx, will continue in that role.

This year, Catamaran is projected to fill more than 400 million prescriptions which, combined with OptumRx’s approximately 600 million annual scripts, will enable the combined entity to be a competitive force in the PBM industry, UnitedHealth and Catamaran said. Enhanced purchasing and administrative improvements also are expected to drive value, with most of savings expected to directly benefit clients and individuals via reduced costs for prescriptions and enhanced pharmaceutical services, the companies added.

The PBM sector is led by No. 1 Express Scripts Inc., which merged with rival Medco Health Solutions in 2012, and No. 2 CVS Health, which created an integrated PBM-retail pharmacy business model with the acquisition of Caremark Rx in 2007. OptumRx already was the No. 3 player. Earlier this year, drug chain Rite Aid Corp. entered the PBM business with a $2 billion deal to acquire Envision Pharmaceutical Services (EnvisionRx).

UnitedHealth and Catamaran noted that the value created for the combined customer base of OptumRx and Catamaran goes beyond scale. The merger brings together the strengths of Catamaran’s industry-leading technology platform with the data and analytics capabilities of Optum, they said, explained that the combined entity will deliver compelling consumer and payer services that link demographic, lab, pharmaceutical, behavioral and medical treatment data and foster more informed health care decisions and improved health outcomes. Both companies also have rapidly growing specialty pharmacy businesses.

“Catamaran’s capabilities are impressive, and their leadership team has delivered the fastest growth in the industry. We believe the combination of the two companies will create a unique offering in the industry unparalleled by current participants,” Optum CEO Larry Renfro said in a statement. “Optum’s longstanding business relationship with Catamaran as a technology partner means we operate on the same adjudication platform, simplifying integration and giving us confidence our combined organizations will quickly become an innovative force moving the pharmacy care services marketplace forward.

“We believe this combination will create significant value for health plan, government, third-party administrator and employer customers and, most importantly, the individual consumers who depend on us for accurate, affordable and convenient pharmacy benefit products and services.”

The transaction is slated to close in the fourth quarter, pending approval by Catamaran shareholders as well as regulatory approvals and other customary closing conditions.

“Our board of directors carefully considered a variety of strategic options and unanimously concluded that this combination is clearly in the best interests of our shareholders,” Catamaran’s Thierer stated. “The creation of a differentiated, channel-agnostic delivery model will provide payers and individuals a broader portfolio of services and a deeper product offering while aggressively focusing on managing costs. Together, we believe we will have the talent, scale, technology resources and innovative spirit to build the most modern, effective and consumer-focused PBM in the history of the industry.”


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