UnitedHealth to buy pharmacy benefit manager Catamaran for $12.8B

Deal positions OptumRx to compete with Express Scripts, CVS Health

UnitedHealth Group Inc. will buy Catamaran Corp. for about $12.8 billion and merge it into OptumRx, its pharmacy benefit service, the company announced today. The deal will likely close in the fourth quarter of 2015.

UnitedHealth will pay $61.50 per share of Catamaran, the fourth-largest pharmacy-benefit manager in the country. The price is a 27 percent premium over Cataraman's closing price of $48.32 on Friday, according to the Wall Street Journal.

The combined revenue of the two firms in 2014 exceeded $53 billion, the Journal reported. Catamaran expects to fill roughly 400 million prescriptions in 2015, UnitedHealth said in its statement, while OptumRx will fill close to 600 million scripts.

"This combination is expected to create a dynamic competitor in the [pharmacy benefit management] market by combining the strengths of Catamaran's industry-leading technology platform with the data and analytics capabilities of Optum," the company said in its statement.

The new OptumRx is poised to compete with Express Scripts and CVS Health, respectively the industry's largest and second-largest pharmacy benefit managers. The Journal reported that each of the three firms offers a different value proposition: Express Scripts has volume, CVS has its pharmacy network and OptumRx has data analytics.

Analysts told Bloomberg that the deal will help UnitedHealth grow its drug benefits as enrollment in Affordable Care Act health plans slows. Scale will also give UnitedHealth bargaining power in negotiating drug prices, a costly expense to payers and patients alike.

Catamaran could use a significant chunk of business as a result of the deal, Bloomberg noted. The company gets about one-third of its revenue from Cigna, which signed a 10-year agreement with Catamaran in 2013.

For more:
here's the UnitedHealth statement
read the Wall Street Journal story
here's the Bloomberg story

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