Retail pharmacy chain Rite Aid announced on Wednesday, February 11th that it was planning to acquire pharmacy benefits manager Envision Pharmaceutical Services for just over $2 billion. Investment group TPG bought EnvisionRx in the fourth quarter of 2013, so they are cashing in on their investment just 15 months later.
Rite Aid will pay about $1.8 billion in cash and $200 million in stock for Envision. Of note, the transaction also includes a $275 million expected future tax benefit.
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The deal is expected to close by September of this year.
Rite Aid shares opened up 74 cents at $8.32 in Thursday trading and are up 32% over the last year as of the close on Tuesday.
Details on the Rite Aid – EnvisionRx deal
Analysts note that the acquisition helps Rite Aid to compete with other retail pharmacy giants like CVS Health, which bought pharmacy benefit manager Caremark Rx Inc. in 2006.
Pharmacy-benefit managers manage the medical prescriptions for insurance companies or corporations, and negotiate drug prices with drug makers and pharmacies. PBMs have recently been have pressuring drugstores for lower prices both for walk-in customers and mail order clients.
The merger is anticipated to add Rite Aid’s per-share earnings in the first full year following the closing. EnvisionRx will operate as a unit of Rite Aid, run by current management. EnvisionRx’s headquarters will stay in Twinsburg, Ohio.
Rite Aid operates 4,569 stores across the U.S. The firm has worked hard over the last year or two to expand its offerings and its business model as the pharmacy and drugstore industry moves into the more profitable health and wellness sector.
Statement from EnvisionRx CEO
“Combining our comprehensive suite of pharmacy benefit management services with Rite Aid’s established retail health-care platform is a natural fit that is increasingly preferred by plan sponsors,” EnvisionRx CEO Frank Sheehy noted in a statement Wednesday.
More on Envision
Envision Pharmaceutical services (EnvisionR) provides pharmacy and mail-order services through its EnvisionRx and MedTrak networks. Consensus analyst estimates call for the firm to bring in revenue of about $5 billion this year.