What: After reports that the company may be open to being acquired, shares in PharMerica Corporation (NYSE: PMC) rallied 13.4% today.
So what: Weeks after announcing the retirement of its CFO and years after fighting off a takeover attempt by Omnicare, specialty pharmacy player PharMerica Corporation may be ready to deal.
According to Reuters, PharMerica has enlisted the efforts of investment bankers to test the waters on a potential sale. The company may find significant interest, given that large pharmacy benefit managers, including CVS Health (NYSE:CVS), have been gobbling up smaller players over the past few years. CVS Health bought Omnicare for $12.7 billion, including debt, late last year, and Omnicare competes against PharMerica Corporation in the long-term care market.
Now what: PharMerica manages pharmacy programs for 15% of the country's nursing homes, and with aging and longer-living baby boomers in the mix, it's not unreasonable to believe that demand for PharMerica Corporation's services will grow, rather than shrink, in the coming years.
If a sale happens, PharMerica Corporation will add $519 million and $0.47 in quarterly revenue and earnings per share, respectively, to the buyer. It's too soon to say whether this rumor has teeth (and investors shouldn't buy stocks on rumors anyway), but I wouldn't be shocked if PharMerica Corporation gets some tire kickers. Given the market opportunity in this patient population and the fact that CVS Health paid 1.7 times annualized quarterly sales, ex-debt, to buy Omnicare, a bid for the company could come in higher than this company is currently trading.