McKesson may be moving its McKesson Provider Solutions division into a new venture with Change Healthcare, but the San Francisco-based megacorporation is continuing to expand its health IT holdings.
Wednesday, McKesson divulged plans to acquire CoverMyMeds, a maker of technology to automate medication prior authorizations for pharmacies, prescribers, payers and pharmacy benefits managers. The buyer will pay about $1.1 billion, and an additional $270 million is contingent upon CoverMyMeds financial performance the next two years.
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The companies expect the deal to close in the first half of McKesson’s 2018 fiscal year, which starts April 1, 2017.
“Our announced acquisition of CoverMyMeds supports McKesson’s commitment to provide a comprehensive set of services and solutions that drive value across the healthcare continuum and secure patients’ access to their prescribed drugs.,” Chairman and CEO John H. Hammergren said in a press release.
McKesson announced the deal at the same time it released its results for the 2017 fiscal third quarter. Net income was $633 million, down marginally from the $634 million profit reported in the same period a year earlier. Revenues grew 5 percent, from $47.9 billion to $50.1 billion.
“CoverMyMeds takes costs out of the system,” Hammergren said in the earnings conference call.
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McKesson will operate CoverMyMeds as an independent business — much as it does with RelayHealth — and CoverMyMeds will keep its headquarters in Columbus, Ohio. The company did receive a seven-year, half-million-dollar tax credit from the state of Ohio to expand its Columbus office in September 2010.
CoverMyMeds has used the RelayHealth Pharmacy connectivity network since 2010. “Together, CoverMyMeds and RelayHealth Pharmacy can develop even more innovative tools for manufacturers, pharmacies, patients, payers and prescribers and continue to take administrative costs and inneficiency out of the healthcare system,” Hammergren said.
RelayHealth Pharmacy will remain part of McKesson after the Change Healthcare deal is consummated. The U.S. Department of Justice ended its antitrust review of that transaction Dec. 20, Hammergren said, and CFO James Beer said in the conference call that the deal should be done this quarter.
Matt Scantland will remain as CEO of CoverMyMeds. According to CoverMyMeds, cofounders Scantland and Sam Rajan “have made a long-term commitment to the company.” They also pledged allegiance to Ohio, saying they would keep operations in Columbus and Cleveland.
The $1.1 billion sale price indicates major growth for CoverMyMeds since its founding in 2008. Back in 2010, it was news for the then-startup to land a $250,000 investment. A year later, a $1 million fundraise was newsworthy.
CoverMyMeds has raised at least $5.04 million in venture capital in four rounds, according to Crunchbase. The total does not include an unspecified fundraise in November 2014, that site indicated.
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