CVS Caremark Corporation
) recently completed the $2.1 billion acquisition of drug
infusion services provider Coram LLC. Coram which was owned by
Apria Healthcare Group, a
) portfolio company, offers low-cost infusion services at the
comfort of a patient's home, which are otherwise administered
either at hospitals or at physicians' offices at a much higher
With the integration of Coram into the PBM business, CVS
Caremark seeks to enhance its range of services to include
infusion therapy, which mostly deals with administering
medications and nutrition to patients who suffer from
dehydration, have nutritional deficiencies, infections, diabetes
or cancer, or have undergone renal failure. We note that the
acquisition of Coram remains in line with CVS Caremark's goal of
investing in core and high-growth businesses.
CVS Caremark expects the acquisition to add $1.4 billion to
revenues in the first year and 3 to 5 cents per share to its
adjusted earnings per share in 2015. However, the transaction
will have neutral impact on the company's overall financial
results in 2014.
Additionally, CVS Caremark will gain access to Coram's
extensive network, catering to around 20,000 patients. Coram is
expected to strengthen its position in the specialty
pharmaceutical business, a growth driver within the pharmacy
benefit management (PBM) segment. In the recent reported quarter,
the company disclosed that its PBM business registered growth of
28%, aided by the specialty pharmacy business.
The PBM business of CVS Caremark is part of the Pharmacy
Services segment and offers a wide range of services comprising
mail order pharmacy services, specialty pharmacy services, plan
design and administration, formulary management and claims
processing. Specialty pharmacies support individuals who require
complex and expensive drug therapies. CVS Caremark, as a pharmacy
benefit manager, administers prescription drug benefit programs
for employers and health plans.
The foray into such specialized services by the second-largest
PBM company is of great significance, as major pharma companies
are planning to develop niche drugs for complex disorders. Such
new services should also help manage overall cost of care
Currently, CVS Caremark carries a Zacks Rank #3 (Hold).
Investors interested in the same industry may consider
better-ranked stocks like
Rite Aid Corp.
), both carrying a Zacks Rank #2 (Buy).
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