UnitedHealth Group's pharmacy benefit manager OptumRx announced Monday that it will acquire Diplomat, a struggling specialty pharmacy and PBM headquartered in Flint, Mich.
Diplomat provides specialty pharmacy and infusion services nationwide, specializing in managing medications that treat patients with complex chronic diseases. It entered the PBM business at the end of 2017 but has had trouble holding on to clients. In August, Diplomat said it was considering a sale or merger of the company.
OptumRx said the combination would help improve health outcomes and reduce prescription drug costs. Evercore ISI analyst Michael Newshel noted in a research report that the deal would help Optum expand its specialty business while building out a national network of lower cost infusion centers.
"With its focus in specialty and infusion services, Diplomat has a proven track record of solving the unique challenges facing patients with complex health care needs," OptumRx CEO John Prince said in the announcement. "This combination will expand the innovative specialty pharmacy and infusion solutions OptumRx can offer to the consumers and clients we serve, helping ensure people get the right medications and services at the right time, in the right setting."
OptumRx said it agreed to pay $4 per share for Diplomat's outstanding common stock and will assume its debt, a purchase price that amounts to roughly $865 million. Diplomat's share price was $5.81 as of Friday's close. The company reported a net loss of $302.3 million on net sales of $5.5 billion in 2018.
UnitedHealth Group, meanwhile, reported that OptumRx brought in $69.5 billion in revenue in 2018; its earnings from operations totaled $3.6 billion. OptumRx, is the largest business segment within Optum, UnitedHealth's fast-growing health services company. Optum has been growing through multiple acquisitions of physician groups, including DaVita Medical Group.
"Our board of directors carefully considered a variety of strategic options and concluded that joining OptumRx is in the best interests of our shareholders, employees and the clients and patients we serve," Diplomat chairman and CEO Brian Griffin said.