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WOONSOCKET, R.I. — CVS Caremark is more than doubling the size of its Medicare Part D program by acquiring the Medicare Part D business of Universal American for roughly $1.25 billion.
Universal American’s Part D business currently serves about 1.9 million Medicare PDP members, while CVS Caremark serves roughly 1.2 million Medicare PDP members. This reflects current levels of membership and does not include 2011 auto assignment or the results of the annual enrollment period, which ended Dec. 31, 2010.
“[Today’s] transaction furthers CVS Caremark’s position as a significant player in one of the nation’s fastest-growing segments of the pharmacy benefit management industry. A growing portion of the country’s population will receive their prescription drug coverage under Medicare plans, driven both by age demographics and the anticipated shift of retirees from employer-based coverage to Medicare that will likely result from healthcare reform,” stated Per Lofberg, president of Caremark Pharmacy Services.
“The Medicare Part D program is integral to CVS Caremark’s long-term growth strategy," Lofberg added. "We believe that bringing together these two businesses will strengthen our competitive offerings, enabling us to provide Medicare beneficiaries with expanded products and services and lower the cost of pharmacy care.”
CVS Caremark expected the deal to be accretive to earnings per share in its first full year, and it is not expected to impact the previously announced dividend growth and share buyback initiatives.
The deal is expected to close by the end of the second quarter. Universal American also operates a Medicare Advantage business, which will be spun off to Universal American shareholders as a separate company at the time of closing.