Express Scripts to Buy Priority Healthcare Corp. for 0.71 Times Revenue

Weekly Corporate Growth Report, Aug 1, 2005

The Deal: Express Scripts Inc. has agreed to purchase Priority Healthcare Corporation for about $1.2 billion. Under the terms of the deal, each share of Priority Healthcare will be exchanged for $28 in cash. The transaction is expected to close in the fourth quarter of 2005. Express Scripts does not anticipate significant cost savings from combining the two businesses.

Discussion: Priority Healthcare distributes specialty pharmaceuticals and related medical supplies across the US. The company supplies dialysis centers, doctors' offices, and ambulatory surgery centers. Priority's pharmacy division delivers individual prescriptions from 32 locations in 17 states.

Express Scripts is one of the largest pharmacy benefits management firms in the United States. The company provides its members access to to a network of about 58,000 retail pharmacies and about a dozen mail-order pharmacies. The company processes prescriptions, and provides services such as disease management programs and consumer drug data analysis.

The addition of Priority's expertise and distribution channels will allow Express Scripts to offer its clients more of a onestop shop for specialty drugs. The deal will expand Express Scripts' presence in the specialty drug sector, which includes biotech and injectable medicines that often sell for high prices.