Universal American Shares Soar 38.8% After CVS Agrees To Buy Medicare Unit (UAM, CVS)

Shares of Universal American Financial Corp. UAM are trading up 38.8% at $20.28 per share during the Friday morning trading session. The company announced on Friday morning before the market opened that it had agreed to sell its medicare prescription drug business to CVS Caremark Corporation CVS. The deal calls for CVS Caremark Corporation to pay $1.25 billion plus the excess capital in the entities that operate the medicare prescription drug business, estimated at $150 million, less Universal American's outstanding debt and trust preferred securities, estimated at $340 million. Universal American shareholders should expect to receive $12.80 to $13.00 per share in cash. Chairman and chief executive officer Richard Barasch said, “We are very proud of the Medicare Part D business that we have built since the inception of the program and this transaction reflects our success. The scale and efficiencies generated by combining these plans should result in more value to our members and to our partners in the government. Universal American will now focus its energies on overcoming our regulatory challenges and building momentum in the Medicare Advantage business to take advantage of our Healthy CollaborationSM approach to healthcare. More than ever, we believe that our model, in which we work closely with providers for the benefit of our members, will continue to thrive.” The day's range for shares of Universal American Financial Corporation has been between $19.71 and and a 52-week high of $20.36 per share. The average price target of analysts who cover Universal American Financial Corp. (UAM) is $17.00 per share. Volume of 3.2 million shares is nearly 20 times the daily average volume of 168,000 shares. Universal American Financial Corporation, through its family of healthcare companies, offers health benefit plans designed to promote collaboration among our members and their healthcare professionals. Read more from Benzinga's Company news.