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Morning Briefing

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Tuesday, Dec 10 2019

Full Issue

UnitedHealth To Acquire Specialty Drug Provider Diplomat Pharmacy At A Steep Discount

"This combination will expand the innovative specialty pharmacy and infusion solutions OptumRx can offer to the consumers and clients we serve," said John Prince, the chief executive of OptumRx, a division under UnitedHealth. In other health industry news: cigarette stocks rebrand, a former executive pleads guilty to fraud, Banner Health agrees to a settlement over a data breach.

UnitedHealth plans to acquire Diplomat Pharmacy at a steep discount about a month after the specialty drug provider said it may not be able to make its debt payments. United Health Group's OptumRx said Monday that the company will spend $4 for each share of Diplomat in a cash tender offer. That鈥檚 31% cheaper than the stock鈥檚 closing price of $5.81 on Friday. Shares of Diplomat tumbled in early trading. (12/9)

Diplomat provides specialty pharmacy and infusion services nationwide, specializing in managing medications that treat patients with complex chronic diseases. It entered the PBM business at the end of 2017 but has had trouble holding on to clients. In August, Diplomat said it was considering a sale or merger of the company. OptumRx said the combination would help improve health outcomes and reduce prescription drug costs. Evercore ISI analyst Michael Newshel noted in a research report that the deal would help Optum expand its specialty business while building out a national network of lower cost infusion centers. (Livingston, 12/9)

The acquisition price of $4 per share is roughly a 30% discount to Diplomat's market value on Friday, and the acquired company's stock traded down sharply on Monday. Diplomat has a track record of providing specialty pharmacy and infusion services, analysts said, but ran into trouble developing a pharmaceutical benefits management (PBM) business. (Snowbeck, 12/9)

Tobacco-free investing is an old story, dating back to at least the 1980s. But the volume of cash actively avoiding the industry is becoming harder for cigarette bosses to ignore.聽Almost 130 companies from the banking and insurance sectors have signed the United Nations Tobacco-Free Finance Pledge since its launch late last year. The signatories manage $8 trillion of assets鈥攁round 10% of the funds managed by the global asset management industry. And in a sign that tobacco aversion is spreading beyond the public markets, French bank BNP Paribas promised to withdraw all corporate lending to the big cigarette manufacturers. AXA, one of the world鈥檚 largest insurers, will no longer underwrite them. (Ryan, 12/10)

The first person charged in the ongoing fraud investigation into Outcome Health pleaded guilty today in federal court. Ashik Desai, who was in charge of business development at the healthcare advertising company, pleaded guilty to one count of wire fraud this morning before U.S. District Judge Thomas Durkin. Desai faces up to 10 years in prison as part of the plea agreement, prosecutors said. (Pletz, 12/9)

Banner Health has agreed to pay up to $6 million to victims of a massive data breach the Arizona health system experienced in 2016, according to court documents filed last week. The plaintiffs in the case filed the motion for preliminary approval of a settlement to end a proposed class action over the cyberattack in federal court in Arizona. Under the deal, nearly 3 million people who Banner notified after a 2016 data breach would be able to request reimbursement claims for expenses from the incident. (Cohen, 12/9)

This is part of the Morning Briefing, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
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