LOS ANGELES and WOONSOCKET, R.I. — CVS Caremark has entered into a definitive agreement to purchase the stand-alone Medicare Part D prescription drug plan business from Health Net for approximately $160 million in cash.
The transaction is anticipated to close in the second quarter of 2012, subject to customary closing conditions and applicable regulatory approvals, including approval from the Centers for Medicare and Medicaid Services.
According to CVS Caremark, the acquisition will add approximately 400,000 members to CVS Caremark's Medicare Part D program, which served more than 3.4 million members in 2011.
“This acquisition furthers CVS Caremark's position as a leader in Medicare Part D, one of the fastest growing segments of the PBM industry,” CVS Caremark stated in a statement sent to Drug Store News.
Health Net stated that it expects to realize approximately $140 million in net cash proceeds from the transaction, after the effect of freed-up capital, taxes and transaction- and transition-related costs.
Health Net will continue to provide prescription drug plans as part of its Medicare Advantage plan offerings.
“We believe this proposed transaction is in the best interests of our Medicare PDP members and our stockholders,” stated Jay Gellert, president and CEO of Health Net. “Our Medicare PDP members, who have received certain services from CVS Caremark for five years, will now be affiliated with one of the nation’s largest Medicare PDP sponsors.
“Given our ongoing relationship with CVS Caremark, we are confident that the transition of members will proceed smoothly with no disruption in services,” Gellert added.