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’s 31% cheaper than the stock’s closing price of $5.81 on Friday. Shares of Diplomat tumbled in early trading.
Diplomat provides specialty drugs that treat cancer patients and others with complex medical conditions. It also offers infusion services. The company said Nov. 12 that it lost $177 million in the third quarter, and it was in advanced discussions about strategic alternatives for its business.
Diplomat said then that it had been hurt by larger competitors, and it couldn’t renew a deal to stay in the specialty pharmacy and retail networks of a big payer it did not name.
Specialty drugs are big business for pharmacy benefit managers or PBMs. Insurers and employers see these expensive drugs as a major factor behind rising health care costs, and they are focusing more on managing the cost of the drugs and where they are administered.
OptumRx is one of the nation’s largest PBMs.
The offer for Diplomat amounts to about $304 million. Diplomat had about $563 million in net debt as of last month, which pushes the total deal price closer to $900 million.
Board members at Diplomat Pharmacy Inc., based in of Flint, Michigan, have unanimously approved the deal.
Shares of Diplomat dropped nearly 32 percent to $3.97 in Monday morning trading. Shares of Minnetonka, Minnesota-based UnitedHealth Group Inc., a Dow Jones industrial average component, slipped $1.24 to $278.95. Broader markets were mixed.