CVS Caremark Corp. plans to acquire Coram LLC, the specialty infusion services and enteral nutrition business of home health care provider Apria Healthcare Group, for $2.1 billion.

CVS Caremark, Coram LLC, Apria Healthcare Group, specialty infusion services, home health care, specialty pharmacy, Jon Roberts, CVS Caremark Pharmacy Services, John Figueroa, Mark Miller, William Blair & Co.

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CVS Caremark to buy Coram infusion business

November 27th, 2013

WOONSOCKET, R.I. – CVS Caremark Corp. plans to acquire Coram LLC, the specialty infusion services and enteral nutrition business of home health care provider Apria Healthcare Group, for $2.1 billion.

CVS said Wednesday that the agreement will expand its specialty pharmacy services, a key growth area.

Based in Denver, Coram is one of the nation's largest providers of infusion services, providing infusion therapies and nutrition services to over 20,000 patients each month. Coram cares for patients mainly via home infusion as well as a national network of more than 85 locations, including over 65 ambulatory infusion suites.

In addition, Coram LLC's CoramRx division provides specialty pharmaceuticals, drug delivery and clinical management services to patients with chronic or rare conditions. CoramRx provides injectable, infused and oral medications to patients and physician offices nationwide, supporting major medical and pharmacy benefit programs.

Under the agreement, CVS Caremark will acquire all the outstanding shares of Coram. Pending governmental and regulatory approvals and other standard closing conditions, the acquisition deal is expected to close by the end of the 2014 first quarter.

"Bringing together CVS Caremark's unique range of specialty pharmacy services with Coram's infusion capabilities will expand our competitive offerings in the specialty arena," Jon Roberts, president of CVS Caremark Pharmacy Services, said in a statement. "Infusion will be a valuable component of our broad specialty pharmacy offering going forward. Our comprehensive services will enable us to streamline care management for patients as well as their physicians, leading to better health outcomes while avoiding unnecessary costs."

CVS noted that, as part of its specialty pharmacy offering, it aims to offer new approaches to management of costs. The company said that costs for infusion of specialty medications may be covered by the medical or the pharmacy benefit, depending on the site of care.

In addition, CVS said, costs related to where the drug is administered can vary. A CVS Caremark analysis shows that providing infusion services in the home or an ambulatory setting are by far the most cost-effective sites of service. Infused therapies for the treatment of acute and chronic conditions — such as immune deficiencies, rheumatoid arthritis, multiple sclerosis and nutritional deficiencies — can be administered in such settings as hospitals, physician's offices, infusion centers and patients' homes.

"CVS Caremark and Coram share a mutual commitment to provide patients with quality care," stated John Figueroa, chief executive officer of Coram and chairman of Apria Healthcare Group. "Coram has a demonstrated track record of providing access to infusion services delivered by experienced and knowledgeable clinical staff."

Coram is expected to generate about $1.4 billion in revenue during the first 12 months after the closing of the transaction, according to CVS. The acquisition is expected to have an immaterial impact on CVS Caremark's overall financial results in 2014 but is projected add 3 cents to 5 cents in adjusted earnings per share in 2015, the company said.

"We view the acquisition as a good strategic fit with CVS Caremark's specialty pharmacy business, which is the fastest-growing part of the enterprise. Coram's approach to streamlined care management for injectable, infused and oral medications in home or ambulatory settings provides cost-effective outcomes for payers, covered both in the medical benefit and pharmacy benefit," William Blair & Co. analyst Mark Miller said Wednesday in a research note on the deal.

"The acquisition dovetails with CVS Caremark's approach to improve prescription drug adherence, which also lowers medical care costs. CVS Caremark has been expanding beyond prescription drugs with MinuteClinic as well," Miller noted. "With this deal, we expect management will highlight the multitude of ways CVS Caremark is positioned to reduce overall medical cost at its annual investor meeting on Dec. 18."