OptumRx To Acquire Catamaran In $12.8 Bln Cash Deal

(RTTNews) - OptumRx, the free-standing pharmacy care services business of health insurer UnitedHealth Group, Inc. (UNH), agreed Monday to acquire pharmacy benefits manager Catamaran Corp. (CTRX, CCT.TO) for $61.50 per share in an all-cash deal valued at about 12.8 billion. The deal is expected to be accretive to UnitedHealth Group's net earnings in the area of $0.30 per share in 2016.

"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 CEO Larry Renfro said.

The offer price of $61.50 per share represents a 27.3 percent premium over Catamaran's closing price of $48.32 on Friday. UnitedHealth said it intends to fund the deal from existing cash resources and new debt. The deal, primarily subject to Catamaran shareholders' approval, is expected to close during the fourth quarter of 2015.

Following the closure of the deal, Catamaran Chairman and CEO Mark Thierer will serve as CEO of OptumRx, while current OptumRx CEO Timothy Wicks will become president. Jeff Park, current Catamaran executive vice president of operations, will become the chief operating officer of OptumRx, while current OptumRx CFO Jeffrey Grosklags will continue in the role.

"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," Thierer stated.

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.

Further, UnitedHealth also affirmed its $6.00 to $6.25 per share earnings outlook for fiscal 2015. On average, 24 analysts polled by Thomson Reuters expects the company to report earnings of $6.20 per share for the year. Analysts' estimates typically exclude special items.

Catamaran said in 2015 it expects to fulfill more than 400 million prescriptions which, combined with OptumRx's about 600 million annual scripts, will enable the combined entity to be a competitive force in the PBM industry.

The combined entity 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.

UNH closed Friday's regular trading session at $118.01, up $1.76 or 1.51% on a volume of 2.56 million shares. In the past 52-week period, the stock has been trading in a range of $73.61 to $121.53.