New York, NY – OptumRx and Catamaran Corporation [NASDAQ: CTRX, TSX: CCT], a provider of pharmacy benefit management (“PBM”) services and technology solutions, recently announced they have agreed to combine. OptumRx is UnitedHealth Group’s [NYSE: UNH] free-standing pharmacy care services business.
The agreement calls for the acquisition of Catamaran’s outstanding common stock for $61.50 per share in cash. The transaction is expected to close during the fourth quarter of 2015, subject to Catamaran shareholders’ approval, regulatory approvals and other customary closing conditions. The combination diversifies OptumRx’s customer and business mix, while accelerating its technology leadership and flexible service offerings.
The acquisition is expected to be accretive to UnitedHealth Group’s net earnings in the area of $0.30 per share in 2016. UnitedHealth Group plans to finance the acquisition from existing cash resources and new debt. The company affirmed its $6.00 to $6.25 per share earnings outlook assuming the absorption of all merger costs, the ongoing commitment to advance its dividend policy as planned, and a continued but moderated level of share repurchase.
Upon closing, Mark Thierer, Catamaran’s chairman and chief executive officer, will serve as chief executive officer of OptumRx and Timothy Wicks, the current chief executive officer of OptumRx, will become president. Jeff Park, who currently serves Catamaran as executive vice president, Operations, will become the chief operating officer for OptumRx. Jeffrey Grosklags, currently the chief financial officer of OptumRx, will continue in that role.
OptumRx and Catamaran will create significant value for their combined customer base beyond the scale and enhanced service resulting from integration of their businesses. This combination 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 combined company is expected to deliver an innovative and compelling consumer and payer services offering 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.
OptumRx’s advanced Clinical Synchronization approach connects pharmacy and care management systems, processes and teams to create deeper insights for higher quality, more consistent and compliant patient outcomes and savings for individuals and plan sponsors. Synchronization presents the entire patient health profile, rather than discrete pieces of an individual’s profile – a distinctive and critically important capability given the growth in U.S. spending on specialty pharmaceuticals.
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. In 2015 Catamaran expects to fulfill more than 400 million prescriptions which, combined with OptumRx’s roughly 600 million annual scripts, will enable the combined entity to be a competitive force in the PBM industry. Enhanced purchasing and administrative improvements from the combination are expected to drive substantial value, with the majority of savings expected to directly benefit clients and individuals through reduced costs for prescriptions and enhanced pharmaceutical services.
Both companies have distinctive, rapidly growing specialty pharmacy services businesses. The combined organization will help customers manage the 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.
Larry Renfro, chief executive officer of Optum said, “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.”
Mark Thierer, chairman and chief executive officer of Catamaran, said, “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 a 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.”