UnitedHealth (UNH) To Buy Diplomat, Expand Pharmacy Services
Zacks Investment Research | Dec 10, 2019 04:23AM ET
UnitedHealth Group Inc.’s (NYSE:UNH) health service segment Optum’s pharmacy care services, OptumRx will acquire Diplomat, a provider of specialty pharmacy and infusion services.
The agreement includes buying Diplomat’s outstanding common stock for $4 per share through a cash tender offer and takeover of existing debt.
Diplomat is a perfect fit for OptumRx given the former company’s niche in treating patients with complex diseases, such as oncology and immunology. It also provides specialized infusion therapies in convenient and clinically appropriate settings with a vast presence in all 50 states and Washington, D.C.
The deal will aid the segment’s margin by lowering total cost of care, which will be achieved by improved health outcomes and reduced prescription drug costs.
Through OptumRx, the company aims to provide a full spectrum of pharmacy care services by making drugs more affordable and creating a better experience for consumers.
OptumRx promotes the lowest net cost prescription drugs through negotiated discounts and outcomes-based contracts with drug manufacturers. The company continues to focus on new ways to drive cost savings across the pharmacy supply chain.
Optum Rx’s services include Pharmacy Care, specialty pharmacy, infusion pharmacy, home delivery, community pharmacies, physician and consumer digital tools. It is one of the fastest growing businesses with more than 56 million people served, 1.3 billion of adjusted scripts processed annually and approximately $96 billion in total prescription spend managed annually. Last year, to expand business, it acquired specialty pharmacy company, Avella and Genoa Healthcare, which run pharmacies in behavioral health clinics.
Over the long term, management expects OptumRx revenues to grow at an average annual rate of 5% to 8% with operating margins of 3-5%.
The pharmacy benefit management (PBM) space is witnessing tough competition and health insurers are foraying into this market to control drug cost, which forms a significant part of their medical cost. While some insurers have acquired PBM players, others are developing their in-house PBMs.
For instance, Humana Inc. (NYSE:HUM) and Anthem (NYSE:ANTM) have their in-house PBMs named Humana Pharmacy Solutions and IngenioRx, respectively. Last year, Cigna Corp. (NYSE:CI) merged with Express Scripts (NASDAQ:ESRX), the leading PBM player and Aetna (NYSE:AET) got acquired by CVS Heath Corporation (NYSE:CVS) .
Year to date, the stock of UnitedHealth has gained 11.4%, compared with the industry ’s growth of 12.8%.
Get The News You Want
UnitedHealth carries a Zacks Rank #3 (Hold).
You can see .
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through Q3 2019, while the S&P 500 gained +39.6%, five of our strategies returned +51.8%, +57.5%, +96.9%, +119.0%, and even +158.9%.
This outperformance has not just been a recent phenomenon. From 2000 – Q3 2019, while the S&P averaged +5.6% per year, our top strategies averaged up to +54.1% per year.
Zacks Investment Research
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.