WellDyneRx in Talks With Private Equity on Possible Sale
June 29 2016 - 6:40PM
Dow Jones News
WellDyneRx Inc. has hired an investment bank to explore a sale
of itself to private equity, said people familiar with the
situation.
The Lakeland, Fla.-based pharmacy-benefit manager hired J.P.
Morgan Chase & Co. to run a limited process, the people said.
They added that WellDyneRx is only talking to a small number of
private-equity firms.
WellDyneRx's sale process provides an opportunity for private
equity to back a sizable pharmacy benefit manager, which negotiates
for medicines on behalf of employers and health plans.
Pharmacy-benefit managers typically garner a price multiple of
about 12 to 13 times their earnings before interest, taxes,
depreciation and amortization. Based on the company's $75 million
in annual ebitda, WellDyneRx could be valued at about $1 billion,
the people said.
They said the pricing for WellDyneRx could be higher given the
intense interest in assets in an industry that is consolidating as
companies seek to build scale to better negotiate against rising
prescription-drug costs.
The nation's largest insurers and pharmacies have in recent
years purchased a number of assets, sometimes from private-equity
owners, in an effort to contain spending on drugs.
Insurer UnitedHealth Group, for example, last year acquired
pharmacy-benefits manager Catamaran Corp. for $12.8 billion to add
to its OptumRx unit, while Aetna Inc. agreed to buy Humana Inc. for
$34 billion. Also in 2015, CVS Health Corp. paid $10.4 billion for
Omnicare Inc., while Rite Aid Corp. acquired Envision
Pharmaceutical Services Inc. for about $2 billion from TPG.
WellDyneRx serves health-plan members through a retail network
of more than 65,000 pharmacies, and uses robotics to fill more than
1 million mail-order prescriptions each year, according to the
company's website.
Interest in WellDyneRx likely will be buoyed by the increasingly
scarce availability of sizable companies in the space. Data
provider IBISWorld said pharmacy benefit management is an area with
a "high level of concentration," with the top four providers
estimated to account for more than 72% of industry revenue for
2015.
Although private equity has backed pharmacy-benefit managers
over the years, a number of them have been absorbed by corporate
buyers.
Between 2010 and 2012, private-equity firm Abry Partners LLC
held a minority ownership interest in HealthTrans LLC, a Greenwood
Village, Colo., provider of midmarket pharmacy benefit management
services and health-care information technology. Abry in early 2012
sold its stake in HealthTrans to larger peer SXC Health Solutions
Corp. for $250 million.
Another private-equity firm, SilverStream Capital LLC, sold Apex
Affinity, a provider of consumer prescription-savings programs, to
MedImpact Healthcare Systems Inc. in 2013.
Consonance Capital Partners continues to be invested in Enclara
Health LLC, a hospital-specialty pharmacy services provider it has
backed since 2014. The New York firm helped the company acquire
excelleRx Inc. and PBM Holding Co. later that year.
Write to Amy Or at amy.or@wsj.com
(END) Dow Jones Newswires
June 29, 2016 18:25 ET (22:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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