CAMP HILL, Pa. — Rite Aid Corp. has broadened and deepened its health care footprint by agreeing to acquire pharmacy benefits manager Envision Pharmaceutical Services (EnvisionRx) for around $2 billion in cash and stock from TPG, a private investment firm.
The transaction, which has been approved by the boards of directors of both companies, is expected to close in September 2015, subject to regulatory approvals and other customary closing conditions.
EnvisionRx, which is a national, full-service PBM, expects to generate about $5 billion in revenue in calendar 2015, with earnings before interest, taxes, depreciation and amortization (EBITDA) between $150 million and $160 million. The company operates two PBM units — EnvisionRx and MedTrak — that offer both transparent and traditional PBM services, as well as pharmacy-related services, to clients nationwide.
EnvisionRx also provides fully integrated mail-order and specialty pharmacy services through Orchard Pharmaceutical services, with access to the country’s largest cash-payment infertility discount drug program through Design Rx, a claims adjudication software platform. It also offers a national Medicare Part D prescription drug plan in the form of Envision Insurance Co.’s EnvisionRx Plus product.
“The acquisition of EnvisionRx meaningfully expands our health and wellness offerings, enhancing our ability to provide a higher level of care to the patients and communities we serve,” says Rite Aid chairman and chief executive officer John Standley. “With the addition of EnvisionRx, we will create a compelling pharmacy offering across retail, specialty and mail-order channels, enabling us to deliver cost-effective solutions to employers and health plans while driving growth and creating long-term value for our shareholders.”
Rite Aid management expects the deal to be accretive to earnings per share in the first full year following closing. After the transaction closes, EnvisionRx will operate as a wholly owned subsidiary of Rite Aid under the leadership of Frank Sheehy, current CEO of EnvisionRx.
“Combining our comprehensive suite of pharmacy benefits management services with Rite Aid’s established retail health care platform is a natural fit that is increasingly preferred by plan sponsors,” says Sheehy. “Together, we see tremendous opportunities to provide new and existing customers with an integrated health care offering that will build upon the company’s strong existing platform.”
Established in 2001, EnvisionRx positions itself as distinct from traditional PBMs, claiming that it is the only PBM that offers “absolute transparency” and guarantees that all earned rebates, fees and discounts are credited to the plan sponsor at the point of sale.
“EnvisionRx’s innovative business model has always set it apart from other PBMs, and as part of a recognized pharmacy leader, it will now be well positioned for further success,” says Sharad Mansukani, chairman of EnvisionRx and senior adviser for TPG.
Under the terms of the acquisition agreement, Rite Aid will pay about $1.8 billion in cash and $200 million, or approximately 27.9 million shares, worth of Rite Aid stock.