CVS Inks Deal to Acquire Omnicare for $12.7 Billion

CVS Health, the largest US retailer of prescription drugs, announced on May 21, 2015 that it entered into a definitive agreement to acquire Omnicare for $98 per share, or a total enterprise value of approximately $12.7 billion, including $2.3 billion in debt. Omnicare specializes in long-term and specialty care, which will allow CVS to move further into these areas of focus.

"The acquisition of Omnicare significantly expands our business, providing CVS Health access into a new pharmacy dispensing channel. It also creates new opportunities for us to extend our high-quality, innovative pharmacy programs to a broader population of seniors and chronic care patients as they transition across the care continuum. We have been impressed by the Omnicare team and what they have created for the patients they serve,” said Larry Merlo, CVS Health president and CEO, in a press release.

According to a press release from the company, the aging US population will spur a movement toward more long-term facility use in the future. This rise in elderly patrons will increase the need for health care providers in the senior sector. Rising prices of specialty drugs are causing companies to search for ways to manage drug prices to prevent pushing patients away. Forbes writes that as more Americans require expensive biologics, they will also need specialty pharmacies to dispense them. In light of this trend, large pharmacies have been scooping up benefit managers to help them manage rising costs related to specialty pharmaceuticals. Bloomberg Business reports that pharmacy service M&A has been on the rise. In March 2015, UnitedHealth Group announced it would buy Catamaran for $12.8 billion and, earlier in the year, Rite Aid agreed to buy EnvisionRx for $2 billion.

In December of 2014, Express Scripts announced that it had inked a deal with AbbVie to offer its hepatitis C treatment, Viekira Pak, exclusively to its members. The deal came after Express Scripts made it known that it believed competing hepatitis C treatments from Gilead carried prices too high for members to pay. Shortly after Express Scripts vowed loyalty to Abbvie, CVS Health announced that it would exclusively offer Gilead’s Harvoni (ledipasvir and sofosbuvir) and Sovaldi (sofosbuvir) hepatitis C treatments to members of CVS/Caremark, exchange, Medicare Part D, and Medicaid formularies.

Source: CVS Health