What You Should Know:
– Change Healthcare buys back pharmacy network eRx Network (eRx) for $212.9 million-plus cash on the balance sheet.
– eRx Network runs a network connected to about 59,000 pharmacies that process more than 1.5 billion transactions annually and also markets insurance verification, e-prescribing, and claims billing services, among others.
Change Healthcare buys back pharmacy unit eRx Network (“eRx”), a leading provider of comprehensive, innovative, and secure data-driven solutions for pharmacies. Change Healthcare acquired 100 percent of the ownership interest in eRx Network for a purchase price of $212.9M plus cash on the balance sheet. eRx generated approximately $67M in annual revenue for the twelve-month period ended February 29, 2020. The transaction supports Change Healthcare’s commitment to focus on and invest in core aspects of the business to fuel long-term growth and advance innovation.
Buy-Back Clause Triggers Acquisition
eRx previously spun out as part of the McKesson deal to former Change shareholders and private equity investment firms Blackstone Group and Hellman & Friedman as well as President and CEO Neil de Crescenzo. The deal also included an option for Change Healthcare to buy back the business if McKesson’s stake in the combined company falls below 5 percent. The disbursement of its holding to its shareholders triggered the buy-buy clause.
Real-Time Pharmacy Network
eRx’ s real-time pharmacy network is integrated into pharmacies’ workflows. eRx helps pharmacies improve operational efficiency and optimize reimbursement, enabling providers to cost-effectively exchange electronic prescriptions with pharmacies. eRx also facilitates partner programs that help pharmacies improve profitability and helps payers, pharmaceutical companies, and other industry stakeholders administer patient-centric programs. The addition of eRx brings strategic benefits including a broader solutions portfolio to offer pharmacies, the ability to serve patients, providers, and payers more comprehensively and the potential to enter new markets.
The combined synergies will offer a broader solutions portfolio to pharmacies and life sciences companies and facilitate innovations on health plan solutions driven by a comprehensive view of members’ claims, bills, payments, and now, pharmacy interactions. From an innovation standpoint, Change Healthcare will now be able to leverage the valuable combination of medical and pharmacy data and provide eRx customers the benefits of the Intelligent Medical Network with scalable cloud-based technologies.
“Bringing eRx back into the fold will enable us to leverage our combined scale, breadth of solutions, and network capabilities to increase market penetration, advance innovation, and create new opportunities,” said Neil de Crescenzo, president, and CEO, Change Healthcare. “As a leader in delivering advanced technology solutions for pharmacies, providers, and pharmaceutical companies, eRx aligns with our strategy to reduce costs, improve outcomes, and enhance consumer engagement for our customers.”