CVS-Aetna deal prompts more DOJ scrutiny

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CVS-Aetna deal prompts more DOJ scrutiny

By Gina Acosta - 02/02/2018

The Department of Justice has asked CVS and Aetna to provide more information in connection with their proposed $69 billion merger.

The companies said in an SEC filing that they still expect the deal to go through by the end of the year.

"Aetna and CVS Health have been cooperating with the DOJ staff since shortly after the announcement of the Merger Agreement and are continuing to cooperate with the DOJ staff in its review of the transactions contemplated by the Merger Agreement," the companies said in the filing.

The deal, announced in December, is subject to shareholder and other approvals.

"This combination brings together the expertise of two great companies to remake the consumer health care experience. With the analytics of Aetna and CVS Health's human touch, we will create a health care platform built around individuals. We look forward to working with the talented people at Aetna to position the combined company as America's front door to quality health care, integrating more closely the work of doctors, pharmacists, other health care professionals and health benefits companies to create a platform that is easier to use and less expensive for consumers," said CVS Health President and Chief Executive Officer Larry J. Merlo.

If approved, the $69 billion acquisition would drastically alter the health care industry and the transaction would be the largest health insurance deal in history, far exceeding the Express Scripts $29 billion acquisition of Medco in 2012.

“With about $245 billion in combined revenue and around $19 billion in combined EBITDA, we believe the combination of Aetna and CVS will create a vertically integrated company with a diversified revenue stream, unsurpassed scale and reach in the industry and the potential to reshape the entire health plan market,” Moody’s Vice President Mickey Chadha said. “The combination of CVS and Aetna will mark an industry shift towards a more seamless approach to managing healthcare costs as it brings together the overall management of a patient’s medical bills and prescription drugs under one umbrella. This will particularly be beneficial for the company as the fastest growing part of the pharmacy business is specialty drugs for patients with considerable medical needs and therefore requires a more coordinated approach to medical care.” 

CVS says the deal is a natural evolution for both companies as they seek to put the consumer at the center of health care delivery. CVS Health has steadily become an integrated health care company, and Aetna has moved beyond being a traditional insurer to focus more on consumer well-being.

"This is the next step in our journey, positioning the combined company to dramatically further empower consumers. Together with CVS Health, we will better understand our members' health goals, guide them through the health care system and help them achieve their best health," said Mark T. Bertolini, Aetna chairman and CEO. "Aetna has a proud tradition of continually innovating to address unmet consumer needs and providing leading products and services to the marketplace."

CVS says consumers will benefit from a uniquely integrated, community-based health care experience. The combined company will also be able to better understand patients' health goals, guide them through the health care system, and help them achieve their best health. CVS Pharmacy locations will include space for wellness, clinical and pharmacy services, vision, hearing, nutrition, beauty, and medical equipment, in addition to the products and services our customers currently enjoy. An entirely new health services offering available in many locations will function as a community-based health hub dedicated to connecting the pathways needed to improve health and answering patients' questions about their health conditions, as well as prescription drugs and health coverage.

This personalized health care experience will be delivered by connecting Aetna's network of providers with greater consumer access through CVS Health. This includes more than 9,700 CVS Pharmacy locations and 1,100 MinuteClinic walk-in clinics as well as further extensions into the community through Omnicare's senior pharmacy solutions, Coram's infusion services, and the more than 4,000 CVS Health nursing professionals providing in-clinic and home-based care across the nation. As a result, there will be a better opportunity to utilize local care solutions in a more integrated fashion with the goal of improving patient outcomes.

The transaction is expected to close in the second half of 2018. CVS Health operates 9,700 retail locations and more than 1,100 walk-in medical clinics.

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