UnitedHealth buys Catamaran for $12.8B for drug benefits

UNITEDHEALTH GROUP Inc. agreed to buy Catamaran Corp. for about $12.8 billion, bulking up its drug- benefits business to get better negotiating power in talks with pharmaceutical companies over prices.
UNITEDHEALTH GROUP Inc. agreed to buy Catamaran Corp. for about $12.8 billion, bulking up its drug- benefits business to get better negotiating power in talks with pharmaceutical companies over prices.

NEW YORK – UnitedHealth Group Inc. agreed to buy Catamaran Corp. for about $12.8 billion, bulking up its drug- benefits business to get better negotiating power in talks with pharmaceutical companies over prices.

UnitedHealth will pay $61.50 a share, financing the acquisition with cash and debt, the companies said in a statement. The offer, UnitedHealth’s largest purchase ever, is 27 percent more than Catamaran’s closing share price of $48.32 on Friday.

Companies that provide health insurance to their employees are becoming more reliant on drug-benefit managers to help rein in the rising cost of drugs. Express Scripts Holding Co., the biggest in the industry, successfully led a campaign last year to push for discounts on $1,000-a-day treatments for hepatitis C by drugmakers Gilead Sciences Inc. and AbbVie Inc.

The deal lets UnitedHealth bet more on growth in drug benefits as the initial surge of new health-insurance customers from Obamacare begins to slow. The biggest U.S. health insurer will combine Catamaran with its drug-benefit unit, called OptumRX.

- Advertisement -

“The combination diversifies OptumRx’s customer and business mix, while accelerating its technology leadership and flexible service offerings,” the companies said. Schaumburg, Ill.-based Catamaran adds an “industry-leading technology platform” to OptumRx’s capabilities in data and analytics, they said.

UnitedHealth rose 4.2 percent to $122.94 in early trading. Catamaran gained 24 percent to $60.03.

The drug-benefits industry gets about $100 billion in annual revenue that may quadruple by 2020, the companies said. Even with the acquisition, Minnetonka, Minn.-based UnitedHealth will remain third in the industry behind Express Scripts and CVS Health Corp. in revenue and people covered, according to data compiled by Bloomberg.

Management changes

Mark Thierer, Catamaran’s chairman and CEO, will become CEO of OptumRx, and Timothy Wicks, the current CEO, will become president, according to the statement. The purchase is expected to be completed in the fourth quarter of 2015, and will add about 30 cents to UnitedHealth’s earnings per share in 2016, the companies said.

The acquisition is the second announced for a drug-benefit manager this year. Rite Aid Corp. agreed to buy EnvisionRX last month for $2 billion.

No posts to display