Walgreens says farewell to PBM business
DEERFIELD, Ill. — Walgreens on Wednesday sold its pharmacy benefit management business, Walgreens Health Initiatives, to Catalyst Health Solutions in a cash transaction for $525 million, subject to certain adjustments. The transaction is structured as an acquisition of all of the capital stock of WHI.
“With nearly 7,700 drug stores as our center of gravity, we are focused more than ever on delivering convenient, affordable, high-quality pharmacy, health and wellness solutions, and on enhancing our full scope of services to become America’s first choice for health and daily living needs,” stated Greg Wasson, Walgreens president and CEO.
Walgreens will retain and look to continue growing its specialty pharmacy and mail-service businesses, and will be providing those services in support of Walgreens, WHI and Catalyst patients. “Our specialty, infusion and mail-pharmacy services are an important extension of our drug stores, retail clinics, worksite health centers and medical facility pharmacies,” Wasson said. “Together, these services and locations are part of our industry-leading 8,000-plus points of care, and are on the front line of helping millions of patients live well, stay well and get well.”
Completion of the transaction is subject to customary conditions, including receipt of regulatory approvals and clearances. The transaction is expected to close by the end of June 2011.
Under a transition services agreement, Walgreens will provide certain services to Catalyst after closing to facilitate a smooth transition for WHI’s existing customers and patients. Walgreens expects these costs to be approximately $40 million and expects to record a gain on the sale of WHI upon closing, which the company believes will offset any one-time or transition costs associated with the transaction in the current fiscal year. The company anticipated that the transaction will be neutral to earnings per share in fiscal 2012.
By acquiring WHI, Catalyst’s PBM membership will increase to more than 18 million members. Walgreens has selected Catalyst to provide PBM and related services for Walgreens employee and retiree prescription drug plans, as well as other Walgreens programs, including the Walgreens Prescription Savings Club.
“We believe WHI’s clients and members will benefit from our sole focus on excelling in providing PBM services,” said David Blair, Catalyst CEO. “We are gaining WHI’s talented employees, who have been integral to the growth and success of the business, and are pleased to welcome them to the Catalyst team. Together, we will provide continuity for our valued customers and deliver market-leading services that will further improve health outcomes.”
For the Walgreens employees who are expected to join Catalyst as part of the transaction, Catalyst will maintain a significant presence in the Chicago area.