LOS ANGELES — CVS Caremark Corp. plans to acquire the stand-alone Medicare Part D business of Health Net Inc.
The managed care company said Monday that under the agreement, its Health Net Life Insurance Co. subsidiary will sell its stand-alone Medicare prescription drug plan (PDP) operation to a CVS Caremark subsidiary for about $160 million in cash.
Pending regulatory approvals and other closing conditions, including approval from the Centers for Medicare & Medicaid Services (CMS), the deal is slated to close in the second quarter, according to Health Net.
Health Net said it has about 400,000 Medicare PDP members in 49 states and the District of Columbia, and the annualized revenue for its Medicare PDP business is approximately $490 million.
Plans call for Health Net to 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," Jay Gellert, president and chief executive officer of Health Net, said in a statement. "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.
For CVS Caremark, the deal marks the second acquisition of a Medicare Part D business in just over a year. On the last day of 2010, the company announced a $1.25 billion deal to purchase the Medicare Part D business of Universal American, a leading Medicare prescription drug plan sponsor. CVS Caremark closed the acquisition in late April 2011.
