Eight years after drugstore chain giant CVS bought PBM Caremark, Rite Aid followed suit yesterday in announcing plans to acquire EnvisionRx, a 14-year-old PBM with estimated 2015 revenue of $5 billion, and 21 million covered lives.

Rite Aid, the nation’s third largest drugstore chain with 4,569 locations, previously had a PBM arm but sold it in 2001. With a geographic reach in 21 states, Rite Aid falls behind CVS with about 7,600 retail locations, and industry leader Walgreens, with about 8,200.

For perspective, industry giant Express Scripts covers 85 million lives.

EnvisionRx’s $5 billion estimated 2015 revenue is dwarfed by CVS Health’s Pharmacy Services segment, which had $24 billion in revenue in the 4th quarter of 2014.

Also see: PBM expands access to specialty meds at retail pharmacies

In announcing yesterday the $2 billion transaction, expected to be completed in September, Rite Aid Chairman and CEO John Standley said it “meaningfully expands our health and wellness offerings.”

“Cost-effective solutions”

“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 an health plans,” he added.

A statement attributed to EnvisionRx CEO Frank Sheehy asserted that the combination of EnvisionRx’s “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.”

Sheehy will remain at the helm of Envision Rx, as it will exist as a wholly owned subsidiary of Rite Aid.

Full-disclosure PBM model

EnvisionRx, currently owned by TPG, a private equity firm, was founded in 2001 “on a commitment to provide full disclosure in the PBM marketplace” and “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,” the company boasts.

It charges a flat monthly fee for its services.

Divisions under the EnvisionRx corporate umbrella include:

  • Envision Medical Solutions, LLC, an administrator of prescription savings plans and prescription savings cards.
  • Orchard Pharmaceutical Services, LLC, a mail-order pharmacy for specialty drugs.
  • MedTrak, a “traditional spread-based PBM managing benefits for small to mid-sized employers.”
  • DesignRx, a provider of cash pay services for infertility and fertility services.
  • Envision Insurance Company, a fully insured provider of Medicare Part D plans.

Investors’ initial response to news of the pending transaction was positive; shares of Rite Aid jumped as high as 12% following the announcement.

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