UnitedHealth Snapping Up Benefits Manager Catamaran

reminiscences of a stock operator pdf

M&A activity continues apace in the U.S. and abroad, and the merger mania has now spread to the health insurance sector. The two firms announced on Monday that a division of UnitedHealth Group was purchasing the pharmacy benefits manager Catamaran Corporation in a deal valued at close to $13 billion.

The firms’ statement noted that UnitedHealth’s Optum was paying $61.50 a share in cash for Catamaran, which is a solid 27% premium from the closing price of $48.32 a share at the end of trading Friday.

Statement from CEO

“We believe this combination will create significant value for health plan, government, third-party administrator and employer customers and, most importantly, the individual consumers who depend on us for accurate, affordable and convenient pharmacy benefit products and services,” Larry Renfro, chief executive of Optum, explained in the statement on Monday.

Top value fund managers are ready for the small cap bear market to be done

InvestorsDuring the bull market, small caps haven't been performing well, but some believe that could be about to change. Breach Inlet Founder and Portfolio Manager Chris Colvin and Gradient Investments President Michael Binger both expect small caps to take off. Q1 2020 hedge fund letters, conferences and more However, not everyone is convinced. BTIG strategist Read More

Details on the UnitedHealth – Catamaran deal

The plan involves the merger of Illinois-based benefits manager Catamaran with insurance giant UnitedHealth’s pharmacy services business, OptumRx. Of note, Catamaran manages more than 400 million prescriptions each year on behalf of 35 million people — or about one in every five prescription claims in the United States.

The new, expanded company will be competing against other major pharmacy benefits managers, including industry giants such as Express Scripts and CVS Caremark.

UnitedHealth is anticipating that the deal will add to close to 30 cents a share to its net earnings by 2016 due to positive synergies. Of note, this is an all cash deal and UnitedHealth has said it plans to finance the acquisition from current cash resources and new debt issuance as required.

In a bit of executive musical chairs, Mark Thierer, Catamaran’s chairman and CEO, has been tapped to become the chief executive at the expanded OptumRx, and Timothy Wicks, the standing CEO of OptumRx, will be the president of the new firm.