A pharmacy benefit manager has agreed to pay about $4.7 billion for the PBM operations of a large health insurer.
Express Scripts Inc., St. Louis, will be paying cash and up to $1.4 billion in common stock for the NextRx units of WellPoint Inc., Indianapolis, the companies say.
The companies hope to get the regulatory approvals needed to complete the deal sometime between June 30 and Dec. 31.
Express Scripts says it already has firm commitments in place from a group of lenders that will be providing some of the financing.
Express Scripts has provided a debt commitment lender, dated April 9, signed by representatives of Credit Suisse Securities (USA) L.L.C., New York, a unit of Credit Suisse A.G., Zurich; the J.P. Morgan Securities Inc. and JPMorgan Chase Bank, N.A., units of J.P. Morgan Chase & Company, New York; and the Citigroup Global Markets Inc. and Citibank, N.A., units of Citigroup Inc., New York, according to a copy of the deal purchasing agreement filed with the U.S. Securities and Exchange Commission.
The deal price "includes consideration for the value of a future tax benefit for Express Scripts based on the structure of the transaction," according to Express Scripts and WellPoint.
If Express Scripts and WellPoint meet or waive all deal conditions specified in the purchase agreement, and Express Scripts decides on its own to walk away from the deal, it might have to pay WellPoint a $50 million reverse termination payment, according to the purchase agreement text.
Express Scripts, founded in 1986, generated $776 million in net income on $22 billion in revenue by selling PBM services and related products and services to health insurers, employers, benefit plan members and government agencies. It handles about 41 million home delivery prescriptions and 390 million retail pharmacy prescriptions per year, according to a company fact sheet.
WellPoint's NextRx subsidiaries handle PBM services for about 25 million U.S. residents, and they manage about 265 million adjusted prescriptions per year, WellPoint says.
