MEMPHIS — Fred’s Inc. has reported that CVS Health is purchasing its specialty pharmacy business EntrustRx for $40 million.
The general merchandise and pharmacy store announced yesterday afternoon that it had reached a definitive agreement to sell certain assets of its specialty pharmacy unit — EntrustRx — to CVS Health for $40 million “plus an amount equal to the value of inventory of EntrustRx.” The three specialty mail order facilities are located in Mississippi and Tennessee
“One of Fred’s top priorities for 2018 has been to monetize non-core assets and we are pleased to have reached an agreement for the sale of EntrustRx,” Fred’s interim chief executive officer Joseph Anto said in a statement. “The cash proceeds will allow us to pay down a significant portion of our debt and also be used for general corporate purposes.”
For CVS, the acquisition is an upgrade to an already expanding specialty pharmacy business. In its first quarter earnings report, CVS said revenues in its pharmacy services segment grew more than 3% with the increase “primarily driven by growth of pharmacy network and specialty claim volume.”
Fred’s three “specialty pharmacy-only locations” are part of a portfolio of assets that also includes 600 general merchandise and pharmacy stores. CVS, which is working its way through an acquisition of health insurance giant Aetna, said the transition of Fred’s Entrust specialty pharmacies to CVS Specialty “will be seamless to patients” when the deal is complete at the end of May.