(Bloomberg) — Rite Aid Corp. (NYSE:RAD) agreed to buy EnvisionRx, a pharmacy-benefits manager (PBM) owned by private-equity firm TPG, for about $2 billion, opening a new front in its competition with CVS Health Corp. (NYSE:CVS)
Rite Aid will pay about $1.8 billion in cash and $200 million in shares, the companies said in a statement Wednesday. EnvisionRx will have revenue this year about $5 billion and earnings before interest, tax, depreciation and amortization of $150 million to $160 million, they said.
EnvisionRx was founded in Ohio in 2001. TPG acquired the company from the founders — James Mindala, Kevin Nagle and Barry Katz — in November 2013. At the time, the sellers said the company was managing pharmacy benefits for about 13 million people.
With the purchase, Camp Hill, Pa.-based Rite Aid is shifting toward offering services that help insurers and large employers provide drug coverage — an industry where CVS is already the second-biggest competitor behind Express Scripts Holding Co. (Nasdaq:ESRX). Rite Aid operates 4,569 pharmacies in the U.S., compared with CVS’s 7,800.
“With the addition of EnvisionRx, we will create a compelling pharmacy offering across retail, specialty and mail-order channels, enabling us to deliver cost-effective solutions to employers and health plans,” said John Standley, Rite Aid’s chairman and chief executive officer.
The acquisition helps Rite Aid expand beyond the slower-growing retail business, where its sales grew 0.5 percent last year to $25.5 billion. CVS’s benefits-managing unit, acquired in 2007, had revenue growth of 16 percent last year to $88.4 billion.