Rite Aid To Buy Lilly Unit
Rite Aid Corp. said Tuesday it will acquire the pharmacy-benefits operation of Eli Lilly & Co.'s PCS Health Systems for $1.5 billion in cash in a deal that would end Lilly's failing effort in the benefits-management business and thrust Rite Aid into the health-care services industry as a potent competitor.
Shares of the drugstore chain retailer (RAD) were up 1 15/16 Tuesday to 44 7/16. Lilly's (LLY) shares rose slightly 3/16 to 83 13/16.The sale of PCS represents a one-time gain for Lilly of between $165 million and $185 million over the current carrying value of PCS, including certain costs of the transaction, the companies said in a prepared release.
The purchase price, however, is nearly one-third the value Lilly paid for the business a few years ago. The Indianapolis-based drug company bought PCS Health Systems Inc. from McKesson Corp. (MCK) for $4.4 billion in 1994, according to The Wall Street Journal.
Rite Aid owns 3,900 pharmacies in 30 eastern, southern and western U.S. states and the District of Columbia, filling over 225 million prescriptions each year and taking in over $6 billion in prescription drug sales. PCS manages nearly 300 million prescriptions a year, serves more than 1,200 health plan sponsors, assists more than 50 million plan members with pharmaceutical needs and accounts for about $10 billion in drug expenditures.
Written By Lisa J. Ulmer