CVS Caremark

CVS Caremark

Company type	Subsidiary
Industry	Pharmacy benefit management
Predecessor	Caremark Rx, MedPartners, Inc.
Founded	1993 in Birmingham, Alabama, United States
Headquarters	Woonsocket , United States
Area served	United States
Key people	Alan Lotvin (President, 2020)
Parent	CVS Health

CVS Caremark—previously known as Caremark Rx—operates as the pharmacy benefit management (PBM) division of CVS Health, with its corporate headquarters situated in Woonsocket, Rhode Island.

Initial phase

Established in 1993 under the name MedPartners, Inc. in Birmingham, Alabama by entrepreneurs from the area, the enterprise initially concentrated on physician practice management (PPM). Early investment support came from entities including HealthSouth, New Enterprise Associates, and Richard M. Scrushy. The company’s inaugural CEO was Larry House, an executive associated with HealthSouth.

MedPartners went public in February 1995 and pursued growth by acquiring PPM firms across the nation. Significant acquisitions encompassed Mullikin Medical Enterprises and Pacific Physicians Services located in California. The company further expanded by integrating physician groups such as Kelsey-Seybold Clinic in Houston, Summit Medical Group in New Jersey, and Ross–Loos Medical Group based in Los Angeles. By 1996, MedPartners had become the largest PPM organization in the United States and entered the Fortune 500 rankings in 1997.

Caremark International

Originating in 1979 in Newport Beach, California, Caremark International specialized in providing medical care and supplies to chronically ill patients within their homes. It held the position of the second-largest mail-order pharmacy benefit manager in the U.S. In 1987, Baxter International (then Baxter Travenol) acquired Caremark before spinning it off in 1992; this transition included relocating its headquarters to Northbrook, Illinois, near Baxter’s base in Deerfield. The spin-off encompassed services such as home intravenous drug administration, mail-order pharmacy operations, physician practice management (PPM), and physical therapy clinics. In 1995, Caremark divested its intravenous drug service to Coram and sold its physical therapy division to HealthSouth. Subsequently, MedPartners purchased Caremark for $2.5 billion in May 1996.

Abandoned merger and withdrawal from PPM

In October 1997, MedPartners announced plans for a $6.8 billion acquisition by PhyCor, Inc., a smaller PPM competitor headquartered in Nashville, Tennessee. However, this merger was called off in January 1998 after due diligence uncovered complications within MedPartners’ western PPM operations. Following these developments, Larry House stepped down as chairman and CEO; Richard Scrushy took over as interim CEO while continuing his role at HealthSouth. Edwin "Mac" Crawford assumed the CEO position in March 1998 and was appointed chairman by December of that year.

After the failed merger attempt, MedPartners’ board resolved to exit the physician practice management sector and concentrate on growing its Caremark PBM division, which accounted for $2.3 billion of its $6.3 billion total revenue in 1997. In 1999, MedPartners sold its hospital-based physician management business, Team Health, to Madison Dearborn Partners along with company management.

By the year 2000, following the divestiture of all PPM clinics, MedPartners rebranded itself as Caremark Rx, Inc., signaling a dedicated focus on its pharmacy benefit management operations.

Caremark Rx era

In 2003, Caremark merged with AdvancePCS via a $5.6 billion transaction and shifted its headquarters from Birmingham, Alabama to Nashville, Tennessee. The company continued to operate a mail-order pharmacy facility in Birmingham with a workforce of approximately 500 employees until it ceased operations there in 2010.

In March 2007, Caremark combined forces with CVS Corporation, resulting in the creation of CVS Caremark and leading to the closure of its Nashville office. By 2014, CVS Caremark had become a subsidiary under the umbrella of CVS Health.

In January 2019, amid disagreements over pricing, Walmart terminated its relationship with CVS Caremark as its pharmacy benefit manager. The following year, in February 2020, Alan Lotvin was named president of CVS Caremark to strengthen leadership within the organization.