Business & Real Estate

Sacramento Republic investor’s pharma company is sold

Sacramento Republic FC investor and EnvisionRx co-founder Kevin Nagle, center, is flanked by Republic FC investor Jed York, left, and team president Warren Smith, right, at the recent state of the city address at Memorial Auditorium in Sacramento.
Sacramento Republic FC investor and EnvisionRx co-founder Kevin Nagle, center, is flanked by Republic FC investor Jed York, left, and team president Warren Smith, right, at the recent state of the city address at Memorial Auditorium in Sacramento. jvillegas@sacbee.com

The lead investor in Sacramento Republic FC, already a rich man, got a good deal wealthier Wednesday. The drug-benefit company he co-founded was sold for $2 billion.

EnvisionRx, a $5 billion-a-year company co-founded by El Dorado Hills businessman and soccer investor Kevin Nagle, agreed to a buyout with Rite Aid Corp., the giant drugstore chain based in Camp Hill, Pa.

Envision employs 250 workers at an office complex in El Dorado Hills, and those jobs are expected to remain in place, Nagle said.

“Rite Aid bought it because they see value in the whole operation,” he said in an interview. The El Dorado Hills office employs account managers, pharmacists, physicians, call-center workers and others.

Nagle said his share of the $2 billion in proceeds “will be significant,” but he wouldn’t go into detail. He and several other investors controlled about 35 percent of Envision after selling a controlling interest two years ago to private investment firm TPG.

Nagle has been vice chairman of Envision for the past two years. He has turned much of his attention to soccer in recent months and said his future role with the company “has not been finalized as of yet.”

In an interview last fall, Nagle said his fortune totaled several hundred million dollars. The price paid by TPG for Envision two years ago wasn’t disclosed, but a report by Moody’s Investors Service said the deal valued the entire company at $885 million.

Nagle has been a major investor in El Dorado Hills Town Center, an office and retail complex in the suburb, and is a minority partner in the group that purchased the Sacramento Kings in 2013, preventing the team’s planned relocation to Seattle.

But it wasn’t until last fall, when he became managing partner of Republic FC, that he rose to prominence in greater Sacramento. Along with team founder Warren Smith, he is leading the minor-league club’s surprisingly strong effort to gain admission to Major League Soccer. About a dozen other investors have joined in, including the Kings and several owners of the San Francisco 49ers.

Sacramento is believed to be running neck-and-neck with Minneapolis for an MLS expansion team, although the decision is months away.

Envision was created 14 years ago by Nagle and some business partners, and makes its headquarters in Twinsburg, Ohio.

As a pharmacy benefits manager, or PBM, Envision acts as a middleman between pharmaceutical companies and corporations, unions, hospital chains and other big purchasers of prescription drugs. The pharmacy-benefits industry has come under criticism for taking large and sometimes undisclosed markups on the drugs it distributes, but Envision has been praised by industry experts for its business model. Envision simply charges its customers a clearly stated administrative fee.

“EnvisionRx’s innovative business model has always set it apart from other PBMs, and as part of a recognized pharmacy leader, will now be well positioned for further success,” said Sharad Mansukani, chairman of Envision, in a press release.

The company is expected to generate cash flow of $150 million this year on sales of $5 billion, according to Rite Aid. Cash flow is a measure of profit that doesn’t account for certain expenses.

Envision is held in high esteem in the industry. Analysts said the acquisition could be an enormous boost to Rite Aid in the same way that purchasing pharmacy benefit manager Caremark eight years ago was a positive for drug store chain CVS. Rite Aid shares closed at $8.08, up 50 cents, on the New York Stock Exchange.

Call The Bee’s Dale Kasler, (916) 321-1066. Follow him on Twitter @dakasler.

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