Walgreen to sell pharmacy benefit business for $525 million

(AP) — Walgreen Co. said Wednesday it is leaving the pharmacy benefits management business, selling that operation to Catalyst Health Solutions Inc. for $525 million in cash and freeing it to focus on its drugstore network, the largest in the United States.

The companies expect to complete the deal by the end of June assuming regulators approve. The pharmacy benefits management business, known as Walgreens Health Initiatives, has never approached the size of Caremark, the pharmacy benefits management business of CVS Caremark Corp., which is Walgreen's largest drugstore competitor. Caremark says it manages prescription benefits for about 60 million people.

Caremark is the third-largest pharmacy benefits manager in the U.S., behind Medco Health Solutions Inc. and Express Scripts Inc.

While Catalyst remains much smaller than those companies, the purchase more than doubles its size. After the deal is complete, Catalyst's total membership will rise to about 18 million from 7 million. The Rockville, Md., company said it will handle about 165 million prescriptions a year, compared to about 80 million previously.