CVS Said in Advanced Talks to Buy Omnicare to Expand Pharma

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CVS Health Corp., the biggest U.S. retailer of prescription drugs, is in advanced talks to acquire nursing-home pharmacy Omnicare Inc., people with knowledge of the matter said.

A deal could be reached as soon as this week, the people said, asking not to be identified discussing private information. Omnicare, with a market value of about $9.2 billion, hired advisers to explore a sale earlier this year.

The companies are still finalizing the terms of the deal, and no agreement is certain, the people said. Representatives for Omnicare and CVS didn’t immediately reply to e-mail and phone calls seeking comment. Omnicare jumped as much as 8.8 percent in afterhours trading. The shares climbed 2.5 percent to $94.63 at the close in New York, giving the company a market value of $9.2 billion.

Omnicare delivers drugs and helps senior-living facilities manage residents’ medications. CVS is the nation’s second-largest pharmacy-benefits manager, handling drug plans for health insurers and employers. In its most recent quarter, growth in sales from that business far outpaced the company’s retail division.

Both CVS and Omnicare are big in Medicare Part D, a federal program that subsidizes medicine for retirees, Charles Rhyee, a New York-based analyst for Cowen Group Inc., said in an interview last month. Omnicare also drew interest from industry leader Express Scripts Holding Co., people with knowledge of the matter said last month.

Rising Demand

Demand for pharmacy services is rising as patients, insurers and companies look for ways to manage costs with drug prices increasing. Pharmacy-services providers are combining to gain a bigger piece of the growing market.

UnitedHealth Group Inc. said in March that it would buy Catamaran Corp. in a $12.8 billion deal to create a large third-place competitor. That deal came on the heels of Rite Aid Corp.’s agreement to buy pharmacy benefits manager EnvisionRx for about $2 billion.

Express Scripts became the biggest pharmacy-benefits management company after purchasing Medco Health Solutions Inc. three years ago for $34 billion including net debt.

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