Walgreen Co. to Acquire Specialty Pharmacy and Home Infusion Provider Option Care, Inc.
Walgreen Co. (NYSE, NASDAQ: WAG) and Option Care, Inc. (NASDAQ: OPTN) today announced a definitive agreement in which Walgreens will acquire Option Care in a cash transaction for $19.50 per share. With the assumption of some debt, the transaction has a total enterprise value of approximately $850 million. The acquisition will create national access to Walgreens specialty pharmacy and home infusion services for patients and payors.
Option Care, based in Buffalo Grove, Ill., provides a full spectrum of specialty pharmacy and home infusion services from a national network of more than 100 pharmacies (including 61 that are company owned) in 34 states. Its services are used by more than 40,000 patients with acute or chronic conditions that can be treated at home, in a physician’s office or at one of Option Care’s ambulatory infusion suites. Option Care’s services also include respiratory therapy and home medical equipment at some locations.
Walgreens Home Care currently operates 45 facilities (including 20 home infusion pharmacies) in 18 states, and Walgreens Specialty Pharmacy operates six locations, including Medmark, a Walgreens Specialty Pharmacy; and Schraft’s, a Walgreens Specialty Pharmacy, which focuses on fertility medications and services.
“This acquisition clearly establishes us as a national player in specialty pharmacy and home infusion services,” said Jeffrey A. Rein, CEO of Walgreens. “Option Care offered the best opportunity for strengthening our position as a full-service specialty pharmacy provider, especially in areas such as hemophilia, immune deficiency and oncology. By blending its capabilities with our current operations, we’ll be able to provide patient care on a nationwide basis in the patient’s home, at their physician’s office or at one of our infusion suites.”
Walgreens President Greg Wasson said, “For health care payors, the acquisition will improve our ability to manage their significant spending on specialty pharmacy and related services. Our combination of national and local capabilities provides a lower-cost alternative to providing these services in a hospital setting. Our broad distribution channel, as well as the compliance and outcomes information we can provide, will allow us to strengthen our relationships with manufacturers and will provide more access to limited distribution therapies.”
Walgreens is positioning itself to provide a variety of patient-focused health care services with a series of recent acquisitions, including among others:
* Take Care Health Systems, a leading operator of convenient care clinics
* Medmark Specialty Pharmacy Solutions, a full-service, national specialty pharmacy company
* SeniorMed Pharmacy, which provides prescription services to residents in assisted-living, specialty care and independent communities across the country
* and Schraft’s A Specialty Pharmacy, one of the nation’s leading providers of advanced fertility medications and services
“With these acquisitions at the core of a variety of patient-focused health care services, we’re better able to serve high utilization patients,” said Wasson. “That also will help health care payors better manage their overall medical and pharmacy spending.”
With more than 25 years of experience in providing home care, Option Care brings operational expertise and relationships with payors, health care providers and specialty manufacturers. Option Care also has the largest geographic coverage in the specialty pharmacy and home infusion industry and has contracts with more than 400 managed care organizations, significantly adding to Walgreens contracted specialty pharmacy business.
The specialty pharmacy and home infusion markets are estimated at $60 billion a year, with a projected annual growth rate of 20 percent. These high-cost therapies require customized clinical and distribution services that will make the combined Walgreens-Option Care offering unmatched.
“This acquisition is a good strategic and cultural fit for both organizations, and we are excited to become a part of Walgreens,” said Option Care President and CEO Raj Rai. “The combination of Walgreens name and Option Care’s 25 years of clinical management and expertise in specialty pharmacy and home infusion provides tremendous potential for growth and will benefit our shareholders, employees, customers and patients.”
An affiliate of Walgreens promptly intends to commence a tender offer for the shares of Option Care stock. Completion of the transaction is subject to acceptance of the tender offer by a majority of Option Care’s outstanding shares, regulatory approval (including under the Hart-Scott-Rodino Act) and other customary conditions. The definitive agreement was unanimously approved by Option Care’s board of directors, and Option Care’s board recommends the company’s shareholders tender their shares in the tender offer. John N. Kapoor, Option Care’s founder, and trusts established by him, which together own approximately 22 percent of the outstanding Option Care shares, have committed to tender such shares into the tender offer.
Peter J. Solomon Co. acted as financial advisor to Walgreens in the transaction, and the law firm of Wachtell, Lipton, Rosen & Katz served as legal counsel for Walgreens. UBS
Investment Bank acted as financial advisor to Option Care, and the law firm of Bryan Cave LLP served as legal counsel to Option Care.
Walgreens will host a public conference call/webcast today at noon eastern time, during which Walgreens executive management will discuss the acquisition. Speaking on behalf of Walgreens will be CEO Jeffrey A. Rein, President Greg Wasson and CFO Bill Rudolphsen. A question-and-answer period with analysts and investors will follow. To access the call, dial 866-558-6869 or, outside the U.S., 913-643-4199. No access code is needed. A live audio webcast will be available at http://investor.walgreens.com.
A rebroadcast will be available from 2:30 p.m. eastern time today through midnight, July 8th, at 888-203-1112, or outside the U.S., 719-457-0820. The replay access code is: 5417338. The webcast will be available for seven days following the call.
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