McKesson acquires RxCrossroads from CVS Health
SAN FRANCISCO — McKesson on Monday announced that it has signed a definitive agreement to purchase RxCrossroads from CVS Health in a deal valued at $735 million. The acquisition is expected to close in the fourth quarter of fiscal 2018, subject to customary closing conditions, including necessary regulatory clearances.
“McKesson’s acquisition of RxCrossroads is another example of our continued focus on expanding and enhancing solutions for our biopharma manufacturer partners to deliver better patient support and better health outcomes,” stated John Hammergren, chairman and CEO, McKesson. “This investment will strengthen our existing best-in-class solutions, including hub services and patient assistance programs, while establishing new logistics services to plasma manufacturers, which allows us to serve biopharma companies of all sizes and throughout the product life cycle.”
According to the wholesaler, this acquisition will enhance McKesson’s existing commercialization solutions for manufacturers of branded, specialty, generic and biosimilar drugs, including comprehensive patient support (“hub”) services, custom pharmacy solutions and third-party logistics, allowing McKesson to grow its end-to-end offerings for manufacturers. In addition, the acquisition will add plasma logistics to McKesson’s manufacturer services, complementing the company’s established customer-facing plasma offerings.
Following the close of the transaction, RxCrossroads will become part of the company’s McKesson Specialty Health business.
Cardinal Health names new CEO
DUBLIN, Ohio — Alongside its first-quarter earnings report, Cardinal Health announced two high-level leadership changes. The company named current CFO Mike Kaufmann its new CEO, effective Jan. 1, 2018, and named Jorge Gomez to succeed Kaufmann as CEO.
Kaufmann takes the helm of the company from George Barrett, who has served in the position since 2009. Barrett will continue as executive chairman of the company’s board through November 2018, with the board’s lead independent director then assuming the non-executive chairmanship. Kaufmann has been with Cardinal Health for 27 years, with experience that includes his recent financial responsibilities and stints overseeing the company’s global sourcing for both the pharmaceutical and medical segments. He also has played key roles in the company’s joint venture with CVS Health, Red Oak Sourcing, and the creation of Cardinal Health’s innovation lab Fuse.
“I am honored to be selected as Cardinal Health's next chief executive,” Kaufmann said. “George and I have worked side by side for years, and I look forward to continuing our partnership over the next year in ensuring a successful transition. George has built a powerful legacy and strategy that I am proud to have helped craft. I look forward to working with him and our incredibly talented and dedicated team to build on the strong foundation we have in place and further enhance the value we provide to all of our stakeholders, while never losing sight of our ultimate goal of supporting our partners in the critical work they do serving patients and their families.”
With Kaufmann set to take the reins, Cardinal Health has named current executive vice president and medical segment CFO Gomez as his successor. He has been with the company for 12 years, having previously served as pharmaceutical segment CFO, as well as in roles that include company treasurer and controller.
“I have worked with Jorge closely for many years and trust and respect him deeply,” Kaufmann said. “I'm thrilled that the board has endorsed this important promotion, and I look forward to continuing to work with him to achieve Cardinal Health's strategic and business objectives in the years ahead. He has proven himself in the most senior finance roles in our two core businesses, and his extensive financial experience and familiarity with our business will make him an invaluable partner for me as Cardinal Health's next CFO.”
These changes were announced alongside Cardinal Health’s first-quarter earnings. The company’s revenue rose 2% for the quarter, with its pharmaceutical segment sales growing 1% to $28.9 billion, and its medical segment seeing 14% growth to $3.7 billion. Pharmaceutical segment profit hit $129 million, while medical segment profit grew to $129 million, compared with 127 billion in growth it saw last year.
"Fiscal year 2018 started largely as we expected and included strong performance from many of our business lines across the segments,” Barret said. “With one quarter behind us, we remain comfortable with our full-year guidance. We're excited to have closed the Patient Recovery transaction during Q1 and are pleased to report the integration is going well.”
CVS Health promises nationwide next-day Rx delivery alongside earnings
WOONSOCKET, R.I. — CVS Pharmacy is making a big convenience push for its patients. Starting early next year, the retail division of CVS Health will be offering nationwide next-day prescription delivery, and it will be bringing same-day delivery to patients in select cities, with Manhattan’s same-day service kicking off on Dec. 4.
“Our goal is to meet the needs of our all of our customers wherever, however and whenever they want,” CVS Health executive vice president and CVS Pharmacy president Helena Foulkes said. “Providing same- and next-day options for delivery of medications is just another way we can help our patients get and stay healthy.”
The same-day delivery offering will include prescriptions and curated over-the-counter products that will be taken directly to patients, the company said. Following the Manhattan rollout, Miami, Boston, Philadelphia, San Francisco and Washington, D.C., will see the service unveiled in early 2018.
The announcement of the planned delivery services was by CVS Health president and CEO Larry Merlo alongside the company’s Q3 earnings. The quarter, ended Sept. 30, saw its retail and long-term care segment’s revenues decrease 2.7% to roughly $19.6 billion, with an overall decline in same-store sales of 3.2%. Broken down, same-store sales declined 3.4% in the pharmacy and 2.8% in the front end. The company pointed to recent generic introductions, as well as an increase in generic dispensing rate, as part of the 435-basis point hit the pharmacy took in Q3.
CVS Health also saw a $55 million impact from the summer’s hurricanes. The costs were primarily focused on covering insurance deductibles, the company noted, adding that over the course of the quarter, it closed 925 of its stores for some period of time, with 11 stores still closed. As part of its philanthropy efforts, the company raised or donated $10 million in cash, products and supplies for impacted communities.
Despite the slight decline in retail and LTC for the quarter, CVS Health’s pharmacy services division saw revenues increase 8.1% to $32.9 billion, which it said was driven by an increase in pharmacy network claim volume, inflation in branded generics and more specialty pharmacy volume — all of which was slightly offset by generic dispensing increases. The company said it processed 374.1 million claims in Q3, marking an 8.3% increase over the previous year’s Q3.
These pharmacy services segment results seem poised to continue, as the company during the quarter inked a deal with Anthem to support the insurer’s new pharmacy benefits manager IngenioRx and launched a new 30,000-store performance-based pharmacy network that will be anchored by CVS Pharmacy and Walgreens, alongside 10,000 independent pharmacies. The aim of the pharmacy network is to drive cost savings through formulary compliance, CVS Health’s Q3 presentation slides noted. As it moves forward, CVS Health said its goal would be to partner with all payers to increase its volume and share.
“The solid third quarter results we posted today keep us well on track to achieve our full-year targets,” Merlo said. “While operating profit in the retail/LTC segment was impacted by the devastating hurricanes, operating profit in the pharmacy services segment was in line with expectations. At the same time, we continued to deliver substantial free cash flow and return significant value to our shareholders through dividends and share repurchases.”
The company closed the quarter with more than 9,200 pharmacy locations, 1,100 walk-in clinics.