MedcoHealth Solutions (NYSE:MHS) said Monday that its prescription benefits management agreement with Universal American (NYSE:UAM) will be terminated at the end of this year due to the insurer's recent acquisition with CVS Caremark (NYSE:CVS).
The Franklin Lakes, NJ, pharmacy, which employs 20,000, said it received notice of termination of its Medicare Part D prescription plan from MemberHealth, a subsidiary of Universal American.
Medco provides pharmacy benefit management services to beneficiaries of various Medicare plans that are under contract with the Center for Medicare and Medicaid Services.
The notice follows CVS's $1.25 billion acquisition announced on Friday of Universal Americanâ€™s Medicare Part D business. Under the terms of the deal, CVS will pay about $12.80 to $13 a share in cash, forming a new business called NewCo charged with operating all other Universal American operations.
Due to the contractâ€™s Dec. 31 expiration date, MedcoHealth said its termination will not have an impact on its 2011 financial results. Its fiscal 2012 results arenâ€™t expected to experience a material impact either since the business already has low margins, the company said.