Express Scripts (ESRX) Dips On $3.6 Billion Deal To Buy EviCore Healthcare
Zacks Investment Research | Oct 10, 2017 01:42AM ET
On Tuesday, shares of Express Scripts Holding Co. (NASDAQ:ESRX) are falling, down about 1.7% in late-morning trading after the company announced plans to purchase privately-held medical benefit management company eviCore Healthcare for $3.6 billion.
Express Scripts, which is the largest stand-alone pharmacy-benefits manager, hopes the deal will help grow its adjusted diluted earnings per share in the first full year of operation. The company also explained how the deal is “an attractive entry point into a growing market.”
EviCore works with health plans in order to decrease the number of medically unnecessary and expensive tests—think imaging scans— and manages medical benefits for 100 million people and has 4,000 employees.
"The rising cost of healthcare is one of the most important issues facing Americans today," Tim Wentworth, CEO of Express Scripts said in a statement. "Together with eviCore, Express Scripts will be an even more powerful partner in managing costs for patients and payers, bringing us closer to our goal of becoming the nation's leading patient benefit manager."
EviCore CEO John Arlotta thinks the two companies will be “uniquely positioned” to help improve healthcare issues. The company will operate as a standalone business unit within Express Scripts.
The deal also comes at an interesting time in the healthcare and pharmacy space, as leaders like Express Scripts await a possible decision from e-commerce player Amazon.com (NASDAQ:AMZN) , who may or may not move into pharmacy benefits (also read: Could Amazon Be the Next Big Pharmacy Giant? )
Express Scripts is buying eviCore from current investors that include General Atlantic, TA Associates, and Ridgemont Equity Partners. The deal is expected to close in the fourth quarter of 2017, but must be approved by regulators.
ESRX is currently a #3 (Hold) on the Zacks Rank, and shares of the company have fallen over 14% so far in 2017.
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