CarepathRx, a Nautic Partners-backed pharmacy and medication management company, plans to prioritize business implementation after scooping up a string of significant acquisitions this year, including a pending deal with UPMC, said CEO John Figueroa and COO Randy Hyun.
Earlier this week, the Mercer Island, Washington-based company announced a USD 400m deal to acquire the management services organization of Chartwell Pharmacy from the University of Pittsburgh Medical Center. Under the terms of the deal, UPMC, one of the nation’s top hospital systems, will become a strategic investor in CarepathRx.
“The Chartwell acquisition is the final piece of our key M&A strategy,” Figueroa said, noting the deal expands CarepathRx’s capabilities in specialty and home infusion.
Since founded in 2019, CarepathRx has already brought in a few key programs as well as technologies through acquisitions, the CEO said. It is building a comprehensive, end-to-end pharmacy solution for health systems, hospitals, and other provider organizations designed to drive better clinical and financial outcomes.
CarepathRx now serves more than 15 health systems and 600 hospitals, with more than 1,500 employees and 400 payor contracts, according to a press release.
Earlier this year, it bought the nation’s largest independent specialty pharmacy BioPlus Specialty Pharmacy, and ProHealth, a significant provider of infusion pharmacy management services. It also added ExactCare, the country’s leading polypharmacy for chronically ill patients. It further acquired PipelineRx for its technology capabilities of tracking pharma data, according to the executives.
Following the acquisitions, Figueroa said the company will likely slow down its M&A hunt and focus on integration and business execution. “I think we have punctuated all the major acquisitions that we need to be successful. The key strategy now is to implement the end-to-end programs with more integrated delivery networks,” he said.
CarepathRX now expects to generate around USD 2bn revenue next year with an estimated 30% growth, he said, noting that he expects the year-on-year growth to continue for the next several years.
Still, CarepathRx could consider tuck-in acquisitions that fit its core strategy or partnership deals with telehealth providers, said COO Hyun. “Access to capital would be no issue for us. It just comes down to finding the right assets,” he said.
The Chartwell deal was backed by financing from direct lender HPS Investment Partners, which also funded its earlier acquisition of BioPlus, according to Hyun. This news service reported in April that CarepathRx managed to score USD 250m loans from HPS despite a broader market slowdown over the COVID-19 pandemic.
Around 95% of patient care occurs outside of hospitals but there is a big gap in pharmacy support from hospital to home, which CarepathRx’s delivery model aims to address, according to the CEO.
The COVID-19 pandemic has provided a tailwind to CarepathRx, since it expedited the process for health systems to explore how to better deliver pharmacy care to home-based patients, Figueroa said.
“The acceleration of CarepathRx’s success has a lot to do with the fact we were dealing with COVID. It was advantageous to us to talk about how we can implement our programs to take care of patients in the alternative sites of care, including at home,” he explained.
Pharmacy sector’s consolidation and disruption
The last few years have brought a wave of consolidation in the highly competitive pharmacy space among regional and specialized players, while e-commerce giant Amazon.com [NASDAQ:AMZN] also marched into the area, launching its own online pharmacy last month.
The CEO was part of the consolidation trend as the CEO of Genoa Healthcare, which was acquired by UnitedHealth in 2018 for USD 2.5bn, in a move to expand its OptumRX PBM division into behavioral health treatments. Figueroa went on to launch CarepathRX. Advent International and Nautic backed Genoa at the time of its sale.
With the emerging market disruption from Amazon and retail pricing services like GoodRX and others, CarepathRx has a differentiated position of providing end-to-end, comprehensive pharmacy programs from specialized medication to infusion services, allowing patients to receive care once leave hospitals, the CEO noted.
Elsewhere in the market, last year Walgreens [NASDAQ:WBA] teamed up with Welsh, Carson, Anderson and Stowe to acquire Shields Health Solutions for around USD 800m, while Comprehensive Pharmacy Services sold to Frazier Healthcare for north of USD 500m, as this news service reported.
In the adjacent infusion care area, Vital Care, a Meridian, Mississippi-based pharmacy and home infusion services provider drew a majority investment from Linden Capital Partners in October. Paragon Health, a Texas-based specialty infusion therapy pharmacy network, was acquired by Peak Rock Capital in September for around USD 250m in enterprise value, as reported.
Cantor Fitzgerald served as financial adviser to Chartwell in the formation of the management services organization and partnership with CarepathRx. The acquired unit is responsible for the operational and strategic management of Chartwell, while UPMC will retain the specialty pharmacy, warehousing, and delivery.
The company provides a combination of technology, market-leading clinical pharmacy services, and wrap-around services that improve pharmacy performance across the enterprise for fully integrated pharmacy operations, expanded healthcare services, improved ambulatory access, minimized clinical variation, and new health system revenue streams, according to the company website.