Leerink: UnitedHealth Group Inc. May Spin Out Benefits Unit

UnitedHealth Group Inc.

improved its prospects for the potential spin-out of its pharmacy benefits unit with the $12.8 billion acquisition of Catamaran Corp.

, an analyst said Tuesday. UnitedHealth, the largest U.S. health insurer, expects to acquire Catamaran and fold the business into its existing OptumRx benefits unit. Leerink's Ana Gupte raised her target on UnitedHealth nearly 4 percent to $135, maintaining an Outperform rating. The deal will boost UnitedHealth's 2016 earnings by about 6 percent to $7.13 a share, while having no affect on 2015 profits, Gupte said. Gupte estimated that UnitedHealth will borrow $10.2 billion to complete the deal, raising its ratio of debt to capitalization to 46 percent, from 35 percent. "It offers substantially more optionality for a future spin-out" of OptumRX in the medium term, Gupte said. OptumRX fills about 600 million prescriptions annually versus Catamaran's 400 million. Following the deal, the resulting business would have about 65 million customers and tie with CVS Health Corp.

as the nation's second-largest pharmacy benefits manager. Express Scripts Holding Co.

would retain the top slot with 100 million customers.