Medco acquires PolyMedica – Another Diabetic Investor Prediction Comes True

Medco acquires PolyMedica – Another Diabetic Investor Prediction Comes True

This morning Medco Health Solutions (NYSE:MHS) announced they have acquired PolyMedica (NASDAQ:PLMD) in a deal valued at $1.5 billion. Under the agreement Medco will pay $53 per share in an all-cash transaction. This agreement should come as no surprise to subscribers as Diabetic Investor long ago predicted this transaction was coming.

This agreement is a win-win for shareholders of both companies and will provide PolyMedica with the additional resources needed to further extend their reach into the diabetes market. Already the number one player in the Medicare market, PolyMedica has long looked at extending their dominance into the private pay arena. Combined the companies will service nearly 4 million patients with diabetes giving the company tremendous leverage with vendors.

With the ink barely dry on the deal it’s too early to tell how this deal will benefit AgaMatrix, who supplies Liberty Medical in-house blood glucose meter. Should Medco adopt the AgaMatrix meter for their current crop of diabetes patients, this would vault AgaMatrix into the upper echelon of blood glucose monitoring companies. Such a move also is an ominous sign for the members of the big four as it will only add more pricing pressure.

This deal will also affect the many companies in the disease management field. With their vast experience in diabetes Liberty Medical has viewed disease management as logical extension of their business. Given the increasing interest in disease management and the many synergies between Medco and PolyMedica this combination could become a powerful player in this emerging market.

All in all this great deal for both companies and could signal the beginning of new dynamic in diabetes.

David Kliff
Diabetic Investor
847-634-4646 fax
224-715-3761 mobile