Value Health plans a tax-free spin-off of its $1.5 billion ValueRx unit, one of the largest companies in the growing field of prescription-benefit management.
The transaction is expected to occur in the fourth quarter, provided it receives regulatory approval.
Value Health, Avon, Conn., then will be a smaller, more focused company with three core businesses: disease management programs, mental-health benefit management and workers' compensation services.
Also last week, Value Health said it will buy MedView Services from Beverly Enterprises for $87.5 million in cash. MedView, Farmington Hills, Mich., provides workers' compensation managed-care services. The acquisition is expected to close this year, subject to regulatory approval.
Together, the remaining Value Health businesses and MedView generated $373 million revenues last year. Workers' compensation accounted for roughly $150 million of that amount.
Value Health is the market leader in managing benefits for mental health and workers' compensation. But those businesses have been overshadowed by the larger drug operation, said Robert Patricelli, its chairman and chief executive officer.
Splitting up will allow ValueRx and Value Health to achieve a fuller valuation in public trading, as well as a sharper focus on their markets, Patricelli said.
He will remain Value Health head after the spinoff. Steven Shulman, president of the current Pharmacy and Disease Management Group of Value Health, will become chairman and CEO of ValueRx. Kevin Roberg will continue to oversee its daily operations.
ValueRx, which is based in Plymouth, Minn., also is involved in the management of hospital pharmacies. It recently formed a joint venture with Allegiance Corp., the spinoff of Baxter International, to market medication-management services to hospitals (May 20, p. 28). The joint venture still is unnamed.