MedcoHealth to purchase diabetes care provider PolyMedica for $53 per share in cash

Pharmacy benefits management company Medco Health Solutions Inc. said Tuesday it will pay $1.5 billion in cash for diabetes treatment supplier PolyMedica Corp.

The $53-per-share purchase price represents a 17 percent premium to PolyMedica's closing stock price Monday of $45.29. The stock has ranged between $35.82 and $47.46 over the past year.

Wakefield, Mass.-based PolyMedica distributes blood glucose test kits, insulin, syringes, and other supplies directly to the homes of nearly 1 million diabetes patients through its Liberty Healthcare division. The company, which mostly services seniors on Medicare, also operates a mail order pharmacy. PolyMedica reported profit of $33.7 million and sales of $675.5 million for its fiscal 2007 year.

MedcoHealth dispenses more than 500 million prescriptions each year, and assists drug plans with negotiating discounts with pharmaceutical companies and processing claims. The company reported 2006 net income of $630.2 million on sales of $42.54 billion.

MedcoHealth expects the transaction to add slightly to earnings in 2008.

The transaction was unanimously approved by the boards of both companies, and is expected to close late this year, subject to the approval of PolyMedica shareholders and other customary closing conditions.

MedcoHealth said an estimated 17 million Americans are currently treated for diabetes, with more than 1 million patients diagnosed each year. With diabetes care spending increasing by 14.5 percent annually, diabetes treatments by 2009 are expected to overtake cholesterol medicines as the fastest-growing drug category.

MedcoHealth currently manages more than $6.5 billion in drug spending related to its 2.8 million patients under treatment for diabetes. The PolyMedica acquisition brings 1 million members under care and creates a large-scale practice focused on diabetes-related pharmacy care.

MedcoHealth currently fulfills more than 50,000 prescriptions per week for PolyMedica's patients. Earlier this year, PolyMedica began providing Medicare Part B administration services and supplies to certain Medco clients.