UnitedHealth Group, the nation’s largest insurer, on Monday said it would acquire Catamaran, the country’s fourth-largest pharmacy benefits manager, for $12.8 billion. Under terms of the deal, Schaumburg, Illinois-based Catamaran will merge with OptumRx, the drug management division of UHG’s highly profitable technology and services subsidiary Optum.
In the $12.8 billion deal, expected to close by the end of the year, UHG is paying $61.50 a share, 27 percent more than Catamaran’s closing stock price on March 27.
“Catamaran’s capabilities are impressive and their leadership team has delivered the fastest growth in the industry,” said Larry Renfro, chief executive officer of UGH’s Optum, in a statement. “Optum’s longstanding business relationship with Catamaran as a technology partner means we operate on the same adjudication platform, simplifying integration and giving us confidence our combined organizations will quickly become an innovative force moving the pharmacy care services marketplace forward.”
Mark Thierer, chairman and CEO of Catamaran, said the company’s board considered a range of options for its future and unanimously decided to accept UHG’s offer.
“The creation of a differentiated, channel-agnostic delivery model will provide payers and individuals a broader portfolio of services and a deeper product offering while aggressively focusing on managing costs,” said Thierer, Catamaran’s CEO since 2006.
Catamaran was founded in 1993 as Systems Xcellence in Toronto, gradually growing through the 2000s after relocating to suburban Chicago and a handful of acquisitions. After buying Catalyst Health solutions in 2012 for $4 billion, the company was renamed to Catamaran.
Renfro said Catamaran and Optum already had similar business strategies. OptumRx uses “clinical synchronization” to connect pharmacy and care management systems, as well as specialized teams to pursue “more consistent and compliant patient outcomes and savings for individuals and plan sponsors,” such as large employers. That approach is particularly important, Renfro said, “given the growth in U.S. spending on specialty pharmaceuticals,” which is driving a wave of drug spending that could top $500 billion by 2020.
Catamaran serves about 25 million Americans with retail pharmacy network management, mail-order pharmacy, pharmacy claims management and patient-centric specialty pharmacy services to health plans and employers. This year, the company will fill about 400 million prescriptions, and when combined with OptumRx, the new company will fill more than 1 billion scripts each year.
Currently, specialty pharmaceuticals account for only 1 percent of all U.S. prescriptions but more than 20 percent, or $100 billion, of national drug spending, and that could rise to $400 billion by the end of the decade, according to UHG.