Walgreen (NYSE:WAG) unveiled plans on Wednesday to unload its benefits business to Catalyst Health Solutions (NASDAQ:CHSI) for $525 million as the drug store retailer marks an exit from the pharmacy-benefits management business.
The sale comes after the huge merger that joined rival CVS with Caremark, creating a combined drug store and pharmacy-benefits management company CVS Caremark (NYSE:CVS).
Catalyst Health Solutions, which saw its stock soar almost 15% despite being the acquiring company, said it expects the deal for Walgreen Health Initiatives to close during the first half of the year.
Walgreen said it expects the transaction to be neutral to its fiscal 2012 EPS.
“With nearly 7,700 drugstores as our center of gravity, we are focused more than ever on delivering convenient, affordable, high quality pharmacy, health and wellness solutions, and on enhancing our full scope of services to become America’s first choice for health and daily living needs,” Walgreen CEO Greg Wasson said in a statement.
Catalyst said its PBM membership will jump to more than 18 million members through the acquisition.
“We are gaining WHI’s talented employees who have been integral to the growth and success of the business and are pleased to welcome them to the Catalyst team. Together, we will provide continuity for our valued customers and deliver market-leading services that will further improve health outcomes,” Catalyst CEO David Blair said in a statement.
Shares of Walgreen gained 0.64% to $42.66 Wednesday morning, while Catalyst leaped 14.76% to $52.27, cutting its 2011 loss to 4.2%. Rite Aid’s shares slid 1.65% to $1.19.