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11/28/2018

Done deal: CVS Health finalizes acquisition of Aetna

The biggest healthcare merger of the year is complete.

CVS Health has completed its nearly $70 billion acquisition of Aetna Inc., creating a new health-care powerhouse that brings together one of the nation’s largest drug store operators and pharmacy benefit managers with the country’s third-biggest health insurance company. The two companies announced the deal in December 2017, and received preliminary approval from the Department of Justice in October.

“Today marks the start of a new day in health care and a transformative moment for our company and our industry,” said Larry Merlo, CVS Health president and CEO. “By delivering the combined capabilities of our two leading organizations, we will transform the consumer health experience and build healthier communities through a new innovative health care model that is local, easier to use, less expensive and puts consumers at the center of their care.”

CVS said the combination — which will see Aetna operate as a standalone business unit with the CVS Health enterprise — will break down barriers to health care while also making it easier for consumers to access healthcare information, resources and services. It also said it anticipates introducing new programs and services in the coming months that are designed to improve access to care and health outcomes while bringing costs down for patients, with a particular focus on chronic disease management efficiencies.

“As the front door to quality health care, our combined company will have a community focus, engaging consumers with the care they need when and where they need it, will simplify a complicated system and will help people achieve better health at a lower cost,” Merlo said. “We are also leading change in health care by challenging the status quo with new technologies, business models and partnerships. In doing so, we will continue to deliver on our purpose of helping people on their path to better health.”

CVS Health noted that services and products the new company develops will be available to all consumers, regardless of their health plan, pharmacy benefit manager or preferred pharmacy. Additionally, Aetna members will have access to a network of pharmacies while CVS Pharmacy will continue to participate with pharmacy networks for other PBMs and health plans.

“By fully integrating Aetna’s medical information and analytics with CVS Health’s pharmacy data, we can develop new ways to engage consumers in their total health and wellness through personal contacts and deeper collaboration with their primary care physicians,” Merlo said. “As a result, we expect patients will benefit from earlier interventions and better-connected care, leading to improved health outcomes and lower medical costs.”

The enhanced services will include offerings focused on self-management of chronic conditions, expanding services at MinuteClinic, nutritional and behavioral counseling and support navigating benefits, as well as durable medical equipment assistance, digital health apps and connected devices. CVS Health said it would build on its Project Health Screenings and other preventive efforts with the aim of improving health outcomes through a community-based approach. MinuteClinic also will introduce expanded chronic care management services, as well as expanded hours — all in an effort to cut down on unneeded emergency room visits, the company said.

“Healthcare delivery is changing before our eyes and we are excited to be in the vanguard of that change,” Merlo said. “With a physical presence in almost every community across the country, we have the unmatched ability to meet consumers where they are and provide the care and services they need either face-to-face or with the unique set of virtual and physical delivery service capabilities that extends our physical presence in real-time to meet their needs.”

As part of the transaction and the Department of Justice approval, the company is selling Aetna’s standalone Medicare Part D prescription drug plans to Wellcare Health Plans.

The transaction will see each outstanding share of Aetna common stock exchanges for $145 in cash and 0.84 shares of CVS Health common stock. Rather than issue fractional shares, CVS Health is rounding the share of its common stock Aetna shareholders are entitled to down to the nearest whole number, with Aetna shareholders able to receive cash for any fractional share they are otherwise entitled to receive. The final transaction values Aetna at roughly $70 billion — or about $212 per share. (Including the assumption of Aetna’s debt, the transaction is valued at $78 billion.)

CVS Health continues to expect $750 million in two-year synergies after the close, while building a platform it anticipates will help accelerate future growth.