CVS Health will sell PayFlex, its provider of flexible spending and health savings accounts, to the financial services firm Millennium Trust, the companies announced Tuesday.
The transaction is expected to close in the second quarter, the companies said. CVS Health and the Millennium Trust Company didn’t close the financial terms of the deal. CVS Health’s Aetna insurance subsidiary will retain PayFlex as its preferred provider for HSAs, FSAs and other tax-advantaged consumer accounts.
CVS Health didn’t immediately respond to an interview request.
“This acquisition extends Millenium Trust’s core business and complements our strong retirement solutions,” Millennium Trust CEO Gary Anetsberger said in a news release.
PayFlex offers medical flexible spending accounts, health savings accounts, health reimbursement arrangements and dependent care flexible spending accounts.
HSAs grew to $92.9 billion in assets in more than 31 million accounts as of June, according to the latest data from HSA advisory group Devenir. Balances increased 26% year-over-year and the number of accounts grew 6%, HSA assets have doubled in the last three years, the data show.
PayFlex currently has more than 2,500 employer clients and 2.4 million accounts held by individual customers. The acquisition will nearly double the number of Millenium Trust’s accounts to 5 million and boost its assets under administration to $47 billion.
UnitedHealth Group’s Optum Financial is the leading provider of HSAs nationwide with more than 8 million accounts. Other top vendors include Fidelity Investments, HealthEquity and HSA Bank.
The space has also attracted venture-backed competitors, including FirstDollar, which received a $14 million Series A round led by the Blue Cross and Blue Shield Association this year, and Lively, which has raised $122.2 million in venture funding.