UnitedHealth to Acquire Pharmacy Benefit Manager Catamaran for $12.8 Billion

Today, health insurer UnitedHealth Group Inc. agreed to acquire pharmacy benefit manager (PBM) Catamaran Corp. for about $12.8 billion.

Catamaran, the fourth-largest PBM in the US by volume of prescriptions processed, will be merged into OptumRx, UnitedHealth Group’s free-standing pharmacy care services business. UnitedHealth will pay $61.50 per share in cash for Catamaran’s outstanding common stock.

PBMs help negotiate the prices that customers pay for prescription drugs, and are key in obtaining favorable prices with pharmaceutical companies and pharmacies. Additionally, PBMs often oversee patients’ drug uses, maintaining lists of covered drugs and handling mail orders or complex treatments. The companies are expected to create significant value for their combined customer base beyond the scale and enhanced service resulting from integration of their businesses. The merger is expected to create a dynamic competitor in the PBM market by combining the strengths of Catamaran’s industry-leading technology platform with the data and analytics capabilities of Optum. The company said that the combination is expected to deliver an innovative compelling consumer and payer services offerings that will link demographic, lab, pharmaceutical, behavioral and medical treatment data to engage individuals to make better decisions as they seek the best, most effective care and improve compliance with pharmaceutical use and care protocols.

“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’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,” said Larry Renfro, chief executive officer of Optum.

Catamaran offers retail pharmacy network management, mail service pharmacy, pharmacy claims management and patient-centric specialty pharmacy services to a broad client portfolio, including health plans and employers, as well as health care information technology solutions to the industry. With a combined 1 billion scripts annually, UnitedHealth will be close to the same size as CVS Health Corp, which is currently the second largest PBM in the US, following Express Scripts.

UnitedHealth said that both companies have rapidly growing specialty pharmacy services businesses, and the combined entity will help customers manage complex costs and outcomes as this portion of the pharmaceutical market expands from an estimated $100 billion in revenues in 2014 to potentially $400 billion annually by 2020.

The transaction is expected to close during the fourth quarter of 2015. Upon closing, Mark Thierer, Catamaran’s chairman and CEO, will serve as CEO of OptumRx and Timothy Wicks, OptumRx’s current CEO, will become president.

“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. The creation of 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,” said Mark Thierer, chairman and chief executive officer of Catamaran.

Source: UnitedHealth Group

Last updated: 3/30/15; 2:30pm EST


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