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CVS CEO responds to PharMerica-Walgreens deal

CVS Health Corp. President and CEO Larry Merlo told analysts Aug. 8 that his company is well-positioned to compete in the long-term care business despite a plan from rival Walgreens Boots Alliance Inc. and private equity firm KKR & Co. LP to acquire institutional pharmacy firm PharMerica Corp.

Speaking to analysts during a call Aug. 8 to explain CVS' fiscal second-quarter earnings, Merlo said Walgreens' proposed purchase of PharMerica is "a confirmation of both the growth potential for long-term care and post-acute services as well as the additional value their retail pharmacy can bring to this market," according to a transcript compiled by S&P Capital IQ.

At the same time, Merlo said CVS has spent two years fine-tuning technology and other aspects of Omnicare, the company's own long-term care business. That work gives the division an edge over PharMerica, Merlo told analysts.

"Omnicare remains the leader in the market, and this potential acquisition does nothing to change that," he said.

PharMerica announced Aug. 2 that it had reached an agreement to be acquired by KKR and Walgreens, which will hold a minority stake in a new company. The deal is worth about $1.4 billion, PharMerica said in a news release.

Both PharMerica and Omnicare provide products and services to healthcare facilities, including hospitals.