(Reuters) - Canadian pharmacy benefit manager Catamaran Corp CCT.TO CTRX.O said it would buy privately held Restat LLC for $409.5 million to expand its client base.
Pharmacy benefit managers (PBMs) administer health plans and drug benefits for employers and run mail-order pharmacies. They help cut costs by encouraging more use of generic drugs.
Catamaran said it expects the acquisition to add $20 million in annual synergies once completed, likely by the fourth quarter.
The company, which reported a better-than-expected second-quarter profit, expects to finance the deal with cash on hand and its revolving credit.
Headquartered in Milwaukee, Wisconsin, Restat provides prescription claim processing and PBM services for self-funded employers and third-party administrators among others.
Catamaran said it expects to incur transaction costs of about $10 million in the fourth quarter.
The company’s second-quarter profit more than doubled as it added customers and prescription claim volumes increased.
Net income rose to $63.4 million, or 31 cents per share, in the quarter ended June 30 from $27.3 million, or 20 cents per share, a year earlier.
Excluding items, earnings were 49 cents per share, above the average analyst estimate of 44 cents per share, according to Thomson Reuters I/B/E/S.
Revenue rose 101 percent to $3.4 billion.
Reporting By Kanika Sikka in Bangalore; Editing by Sriraj Kalluvila