Walgreens sells Pharmacy Benefits Manager to Catalyst Health Solutions

The drug store company had been considered a "bit player" in the PBM industry.

Reuters: Catalyst picks up Walgreen's benefits business
Catalyst Health Solutions Inc said it will buy Walgreen Co's pharmacy benefits management unit for about $525 million in cash, a deal that might spur more consolidation before big generic drug launches that could boost the business. Catalyst shares rose 16 percent to $51.86 on Wednesday on Nasdaq. Walgreen shares were almost flat at $42.49 on the New York Stock Exchange. Walgreen is the largest U.S. drugstore operator, but is a small player in the pharmacy benefit management business. Rival drugstore operator CVS Caremark Corp struck a much bigger deal when CVS bought Caremark in 2007 (Sengupta, 2/9).

Bloomberg: Walgreen To Sell Pharmacy Benefit Manager For $525 Million
Walgreen, led by Chief Executive Officer Greg Wasson, plans to expand health services like flu shots at more than 7,700 stores. The chain began looking to sell its PBM unit last year, people with knowledge of the matter said then. At the time, the people said the sale might fetch $500 million to $1 billion, depending on the assets sold. "Walgreen had become a bit player in the PBM industry," Kemp Dolliver, a managing director for Avondale Partners LLC, said in a telephone interview from Boston. "Success is heavily dependent on scale." The PBM business Walgreen did in a year was about what rival CVS Caremark Corp. does in a month, Kemp said. Walgreen will shed its entire PBM unit in the sale to Catalyst, Tiffani Washington, a Walgreen spokeswoman, said today (Stanford, 3/9).