CVS to buy nursing home pharmacy Omnicare for $12.7 billion
- Bloomberg reports that CVS Health Corp. has agreed to buy Omnicare, a major nursing home pharmacy, in a deal worth $12.7 billion.
- Under the preliminary terms of the deal, CVS will pay $98 per share in cash and about $2.3 billion of the deal will be debt-financed.
- The offer is more than a 38% premium over Omnicare's current market cap of about $9.2 billion. Express Scripts, the largest pharmacy benefits manager in the country (CVS is #2) was reportedly also interested in striking an Omnicare deal.
As Bloomberg notes, this deal is particularly lucrative for CVS as the Baby Boomer generation continues to age. Government data projects that the number of elderly Americans above age 65 (and therefore Medicare-eligible) will swell to a staggering 72.1 million people by 2030—an 80% increase from six years ago.
Omnicare and CVS are both already major players in the Medicare Part D prescription drug program, and CVS' power in this market will only grow with the acquisition.
This is the latest example of the M&A craze in biopharma and healthcare. In March, UnitedHealth struck a $12.8 billion deal to acquire Catamaran, creating the third-largest benefits manager behind Express Scripts and CVS. As BioPharma Dive has previously noted, this trend towards "mega-payers" (in addition to already-mammoth government payers) is likely to set biopharma's pricing war on fire as various insurers, health plans, and drug dispensers leverage their market share to negotiate lower prices for therapies.