CVS Caremark to complete acquisition of Universal American's Part D business

WOONSOCKET, R.I. — CVS Caremark is expected to complete its acquisition of the Medicare Part D business of Universal American on April 29, the company has announced.

As previously reported, CVS Caremark will pay Universal American shareholders cash consideration of $1.25 billion plus the excess capital in the entities that operate Universal American's Medicare Part D business, less Universal American's outstanding trust preferred securities, which are being assumed by CVS Caremark.

Upon closing, CVS Caremark and Universal American will begin working to integrate the two businesses' Medicare prescription drug plans, which will more than double the size of CVS Caremark's Medicare Part D program.

"This transaction will make CVS Caremark a top provider of service in Medicare Part D, one of the nation's fastest-growing healthcare segments," stated Per Lofberg, president of CVS Caremark Pharmacy Services. "This acquisition will strengthen our business and allow us to expand products and services to Medicare beneficiaries while we work to lower the cost of pharmacy care."

CVS Caremark continues to expect the acquisition to be about 8 cents accretive to adjusted earnings per share in 2011. This acquisition is consistent with the company's goal of investing in core businesses that help drive growth and improve returns on invested capital. It is not expected to impact the company's previously announced dividend growth and share buyback initiatives, company officials stated.

Medicare Part D is the federally subsidized prescription benefit program provided to Medicare beneficiaries, citizens who are ages 65 years and older or who otherwise qualify through disability. Prescription drug coverage funded by Medicare is projected to be one of the fastest-growing segments of the PBM market, given the nation's aging demographics and the growing trend to transition retiree coverage to Medicare funding, the company noted.