Nov 27 CVS Caremark Corp will buy drug
infusion services provider Coram LLC for $2.1 billion, allowing
the company to bolster its pharmacy benefits management business
by offering cost-effective delivery of specialty drugs.
Most pharma companies are increasingly focused on developing
niche drugs for complex disorders as several mass market drugs
lose patent protection.
Pharmacy benefit managers (PBMs) such as CVS, which
administer prescription drug benefits for employers and health
plans, can offer greater value to clients by diversifying their
CVS, which operates the No. 2 U.S. drugstore chain and the
second-largest PBM business, said the acquisition would expand
its services to include infusion therapy, which involves
administering medication through a needle or catheter to
patients too severe to be treated orally.
"The addition of Coram further increases the company's
attractiveness to PBM customers seeking to control rising
specialty (prescription) costs," Jefferies analysts wrote in a
Coram, owned by Blackstone Group -controlled Apria
Healthcare Group Inc, provides infusion services
primarily at patients' homes at a far lesser cost than if these
were to be done at hospitals or physicians' offices, CVS said.
Such services will become increasingly important as
providers look to manage the overall cost of care delivery, J.P.
Morgan analyst Lisa Gill wrote in a note.
CVS, whose Caremark PBM unit competes with Express Scripts
Holding Co, said Coram would add $1.4 billion to
revenues in the first year after the deal closes and 3 to 5
cents per share to CVS's adjusted earnings per share in 2015.
CVS expects the deal to close in the first quarter of 2014.
Barclays served as CVS's financial adviser on the deal,
while Sullivan and Cromwell LLP and Dechert LLP served as legal
Apria was advised by Goldman, Sachs & Co and Blackstone
Advisory Partners, while Simpson Thacher & Bartlett LLP served
as the legal adviser.
CVS shares were up 1 percent at $66.88 on the New York Stock
Exchange on Wednesday.