CHICAGO – Walgreen Co plans to sell its pharmacy benefit management business to Catalyst Health Solutions Inc in a $525 million cash deal that would allow Walgreen to focus on its drugstore and healthcare businesses.
Walgreen is the largest U.S. drugstore operator but was a small player in the pharmacy benefit management industry, which manages prescription drug benefits for companies and insurance plans. Rival drugstore operators CVS Caremark Corp made a much bigger play in the sector when CVS bought Caremark in 2007.
For Catalyst, the deal will double the volume of prescriptions it manages to 165 million annually, while membership will jump to 18 million from about 7 million.
Aside from the nearly 7,700 drugstores it operates, Walgreen also has direct relationships with employers, such as Caterpillar Inc, to provide prescription drugs. It also provides specialty at-home medical treatments such as intravenous infusions.
The deal is expected to close by the end of June, Walgreen said Wednesday.
Catalyst Health shares jumped 4.5 percent to $46.55 in premarket trading, while Walgreen shares rose 1.6 percent to $43.05. (Reporting by Brad Dorfman, editing by Gerald E. McCormick, Dave Zimmerman)
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