Provides a Full Suite of Pharmacy Benefit
Management Capabilities to Enhance Rite Aid’s Healthcare Offering
and Drive Growth Across its Retail Healthcare Platform
Rite Aid (NYSE:RAD) and Envision Pharmaceutical Services
(“EnvisionRx”) today announced that they have entered into a
definitive agreement under which Rite Aid will acquire EnvisionRx,
a portfolio company of leading global private investment firm TPG,
in a transaction valued at approximately $2 billion, which includes
the value of an expected future tax benefit of $275 million. Under
the terms of the agreement, which has been unanimously approved by
the Boards of Directors of both companies, Rite Aid will pay
approximately $1.8 billion in cash and $200 million in Rite Aid
stock, or approximately 27.9 million shares.
EnvisionRx is a national, full-service pharmacy benefit
management (PBM) company with projected 2015 calendar year revenues
of approximately $5 billion and projected 2015 calendar year EBITDA
in a range of $150 to $160 million. The company provides both
transparent and traditional PBM options through its EnvisionRx and
MedTrak PBMs, respectively, as well as pharmacy-related services to
clients across the nation. EnvisionRx also offers fully integrated
mail-order and specialty pharmacy services through Orchard
Pharmaceutical Services; access to the nation’s largest cash pay
infertility discount drug program via Design Rx; an innovative
claims adjudication software platform in Laker Software; and a
national Medicare Part D prescription drug plan through Envision
Insurance Company’s EnvisionRx Plus product offering.
“The acquisition of EnvisionRx meaningfully expands our health
and wellness offerings, enhancing our ability to provide a higher
level of care to the patients and communities we serve,” said Rite
Aid Chairman and CEO John Standley. “With the addition of
EnvisionRx, we will create a compelling pharmacy offering across
retail, specialty and mail-order channels, enabling us to deliver
cost-effective solutions to employers and health plans while
driving growth and creating long-term value for our shareholders.
We also look forward to welcoming EnvisionRx’s proven management
team and talented associates to Rite Aid.”
“Combining our comprehensive suite of pharmacy benefit
management services with Rite Aid’s established retail healthcare
platform is a natural fit that is increasingly preferred by plan
sponsors,” said EnvisionRx CEO Frank Sheehy. “Together, we see
tremendous opportunities to provide new and existing customers with
an integrated healthcare offering that will build upon the
company’s strong existing platform.”
“EnvisionRx’s innovative business model has always set it apart
from other PBMs, and as part of a recognized pharmacy leader, will
now be well positioned for further success,” said Sharad Mansukani,
chairman of EnvisionRx and senior advisor for TPG. “TPG believes
EnvisionRx has built a best-in-class company with tremendous
potential, and as a ground-breaking PBM, it has a great future as
part of Rite Aid.”
The transaction is expected to be accretive to Rite Aid’s
earnings per share in the first full year following the closing of
the transaction. The transaction is expected to close by September,
2015, subject to regulatory approvals and other customary closing
conditions.
Following the closing, EnvisionRx will operate as a wholly owned
subsidiary of Rite Aid led by Frank Sheehy and current management.
EnvisionRx’s headquarters will remain in Twinsburg, Ohio.
In connection with the pending transaction, Rite Aid has
obtained committed financing from Citigroup Global Markets Inc.,
and BofA Merrill Lynch, Wells Fargo Securities, LLC and Credit
Suisse AG. Subject to market conditions, Rite Aid expects to
finance the $1.8 billion cash portion of the consideration through
proceeds from the issuance of unsecured notes prior to the closing
of the acquisition.
Citigroup Global Markets Inc. served as financial advisor to
Rite Aid and Skadden, Arps, Slate, Meagher & Flom LLP was the
company’s legal advisor. J.P. Morgan served as exclusive financial
advisor to EnvisionRx, and Cleary Gottlieb Steen & Hamilton LLP
acted as its legal counsel.
Conference Call Broadcast
Rite Aid will hold an analyst call at 8:30 a.m. Eastern Time
today. The call will be simulcast via the internet and can be
accessed through the websites https://www.riteaid.com in the
conference call section of investor information and
www.StreetEvents.com. Slides related to materials discussed on the
call will be available on both sites. A playback of the call will
be available on both sites starting at 12 p.m. Eastern Time today.
A playback of the call will also be available by telephone
beginning at 12 p.m. Eastern Time today until 11:59 p.m. Eastern
Time on Feb. 14, 2015. The playback number is 1-855-859-2056 from
within the U.S. and Canada or 1-404-537-3406 from outside the U.S.
and Canada with the eight-digit reservation number 84894888.
About Rite Aid
Rite Aid is one of the nation's leading drugstore chains with
4,569 stores in 31 states and the District of Columbia. Information
about Rite Aid, including corporate background and press releases,
is available through Rite Aid's website at www.riteaid.com.
About EnvisionRx
Established in 2001, EnvisionRx is a national, full-service
pharmacy benefit management (PBM) company. EnvisionRx is part of a
group of healthcare management companies owned and operated by
Envision Pharmaceutical Holdings, LLC (EPH). EPH is a portfolio
company of TPG. In addition to EnvisionRx, EPH subsidiaries also
include Envision Insurance Company, a fully insured provider of
Medicare Part D Plans nationally, Envision Medical Solutions, LLC,
an administrator of prescription savings plans and prescription
savings cards, Orchard Pharmaceutical Services, LLC, a full-service
mail-order and specialty drug pharmacy, Design Rx, LLC, the market
leader in cash-pay pharmacy services for infertility and fertility
products, MedTrak, a traditional spread-based PBM managing pharmacy
benefits for small to mid-sized self-insured employers and Laker
Software, LLC, an innovative, market-leading provider of claims
processing systems and support services for prescription drug
benefit programs. EnvisionRx, which was founded on a commitment to
provide full disclosure in the PBM marketplace, promotes a
transparent, pass-through business model in which 100% of earned
rebates, discounts, and incentives are instantly credited at the
point of sale to customers, and for which EnvisionRx charges a low,
flat monthly management fee for most services. This translates into
significant savings for the company’s covered individuals. The
Company has been awarded the Utilization Review Accreditation
Commission (URAC) accreditations for PBM and Drug Therapy
Management annually since 2007. EnvisionRx is headquartered in
Twinsburg, OH, with offices in Fort Lauderdale, FL; Tampa, FL;
Canton, OH; Ogden, UT; Minneapolis, MN and El Dorado Hills, CA. For
more information about EnvisionRx visit www.envisionrx.com.
EnvisionRx is a registered trademark of Envision Pharmaceutical
Services, LLC.
About TPG
TPG is a leading global private investment firm founded in 1992
with $65 billion of assets under management and offices in San
Francisco, Fort Worth, Austin, Dallas, Houston, New York, Beijing,
Hong Kong, London, Luxembourg, Melbourne, Moscow, Mumbai, São
Paulo, Shanghai, Singapore and Tokyo. TPG has extensive experience
with global public and private investments executed through
leveraged buyouts, recapitalizations, spinouts, growth investments,
joint ventures and restructurings. The firm has a strong history of
healthcare investing and its well-known investments include
Aptalis, Fenwal, Healthscope, IASIS Healthcare, Immucor, IMS
Health, Par Pharmaceutical, Quintiles Transnational and Surgical
Care Affiliates, among others. For more information visit
www.tpg.com.
FORWARD-LOOKING STATEMENTS
Statements, including those regarding the impact of the
transaction contemplated hereby on Rite Aid’s future financial
performance, in this release that are not historical are
forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Words such as "anticipate," "believe," "continue," "could,"
"estimate," "expect," "intend," "may," "plan," "predict,"
"project," "should," and "will" and variations of such words and
similar expressions are intended to identify such forward-looking
statements. These forward-looking statements are not guarantees of
future performance and involve risks, assumptions and
uncertainties, including, but not limited to, Rite Aid’s ability to
consummate the acquisition of EnvisionRx and realize the benefits
of the transaction, EnvisionRx’s ability to meet its projected 2015
revenue and EBITDA targets, our ability to make interest and
principal payments on our debt and satisfy the other covenants
contained in our debt agreements, general economic, market,
industry and competitive conditions, the risk that EnvisionRx's
business will not be successfully integrated with Rite Aid's
business, costs associated with the merger, delays and other
matters arising in connection with the parties' efforts to comply
with and satisfy applicable regulatory approvals and closing
conditions relating to the transaction, risks associated with the
financing of the transaction, other events that could adversely
impact the completion of the transaction and other risks,
assumptions and uncertainties as described in Item 1A (Risk
Factors) of our most recent Annual Report on Form 10-K and in other
documents that we file or furnish with the Securities and Exchange
Commission, which you are encouraged to read. Should one or more of
these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially
from those indicated or anticipated by such forward-looking
statements. Accordingly, you are cautioned not to place undue
reliance on these forward-looking statements, which speak only as
of the date they are made. Rite Aid expressly disclaims any current
intention to update publicly any forward-looking statement after
the distribution of this release, whether as a result of new
information, future events, changes in assumptions or
otherwise.
Included in this release is a non-GAAP financial measure for
EnvisionRx, EBITDA, which is defined as net income excluding the
impact of income taxes, interest expense, depreciation and
amortization.
This release does not constitute an offer of any securities for
sale.
Rite Aid Media:Susan Henderson,
717-730-7766skhenderson@riteaid.comorRite Aid Investor
Contacts:Matt Schroeder, 717-214-8867investor@riteaid.comorEnvisionRx / TPG Media:Owen
Blicksilver Public Relations, Inc.Lisa Baker,
914-725-5949lisa@blicksilverpr.comorJennifer Hurson,
845-507-0571jennifer@blicksilverpr.com
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