MedcoHealth dispenses more than 500 million prescriptions each year, and assists drug plans with negotiating discounts with pharmaceutical companies and processing claims. The company reported 2006 net income of $630.2 million on sales of $42.54 billion.
MedcoHealth expects the transaction to add slightly to earnings in 2008.
PolyMedica will retain its patient engagement and service model and Liberty brand, the company said.
The transaction was unanimously approved by the boards of both companies, and is expected to close late this year, subject to the approval of PolyMedica shareholders and other customary closing conditions.
MedcoHealth said an estimated 17 million Americans are currently treated for diabetes, with more than 1 million patients diagnosed each year. With diabetes care spending increasing by 14.5 percent annually, diabetes treatments by 2009 are expected to overtake cholesterol medicines as the fastest-growing drug category.
MedcoHealth currently manages more than $6.5 billion in drug spending related to its 2.8 million patients under treatment for diabetes. The PolyMedica acquisition brings 1 million members under care and creates a large-scale practice focused on diabetes-related pharmacy care.
MedcoHealth and PolyMedica began partnering in 2006, and Medco currently fulfills more than 50,000 prescriptions per week for PolyMedica's patients.
Earlier this year, PolyMedica began providing Medicare Part B administration services and supplies to certain Medco clients.
Lazard served as Medco's financial adviser and Sullivan & Cromwell acted as Medco's primary external legal counsel; Deutsche Bank Securities represented PolyMedica in the transaction and Weil, Gotshal & Manges acted as PolyMedica's legal counsel.