CVS plans to spend $12.7 billion to buy pharmacy-service provider Omnicare Inc. in order to gain a larger foothold in the quickly expanding long-term care industry and specialty pharmacy market.
The Wall Street Journal reports that the deal, which includes about $2.3 billion in debt, will boost CVS’s business presence with nursing homes and senior-living facilities across the U.S.
Omnicare, currently the largest provider of pharmaceutical services in nursing homes, operates 160 locations in assisted living and long-term care facilities in 47 states.
The company also helps market, distribute and obtain reimbursements for high-priced drugs generally used by smaller patient populations, the WSJ reports.
“The acquisition of Omnicare significantly expands our business, providing CVS Health access into a new pharmacy dispensing channel,” CVS Health CEO Larry Merlo said in a statement.
The deal has the potential to be fairly lucrative for CVS. In 2014, Omnicare recorded a revenue of $4.75 billion in the long-term care market and $1.67 billion in specialty pharmacy services.
USA Today reports the deal comes at the right time for CVS to capture more business in the long-term care market, as that industry is estimated to grow exponentially in the coming years.
The Congressional Budget Office expects that one-fifth of the total U.S. population will be 65 years of age or older by 2050. Many of those consumers could find themselves residents of nursing homes and residential care centers, nearly all of which offer on-site pharmaceutical facilities.
The transaction, which is expected to close later this year, is just the latest in what appears to be a trend in acquisitions related to how drugs are sold and distributed, indicating that health-related companies are looking to the future of consumer care, according to the WSJ.
UnitedHealth Group purchased Caramaran Corp. for $12.8 billion earlier this year. Shortly before that deal was reached Rite Aid bought pharmacy-benefit manager Envision Pharmaceutical Services for $2 billion.
CVS Buys Drug Provider for $10.4 Billion [The Wall Street Journal]
CVS buys Omnicare for $12.7B to expand senior care business [USA Today]
by Ashlee Kieler via Consumerist
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