FINANCE

Walgreens, Humana reportedly in talks to take stakes in one another

BY Marianne Wilson

Walgreens Boots Alliance and health insurer Humana are reportedly in early discussions to take equity stakes in each other.

The news was first reported by the Wall Street Journal, which cited people familiar with the matter. It comes as CVS Health is close to finalizing its acquisition of Aetna.

The report noted that an equity stake deal would reduce the cost of providing health services akin to those that will come as a result of CVS Health and Aetna’s combination.

In June, Walgreens and Human announced a partnership to provide easier access to primary care and other services for senior citizens in Kansas City, Mo. Through the joint effort, Partners in Primary Care, a subsidiary of Humana, operates senior-focused primary care clinics inside two Walgreens stores in the area. Although the effort is still new, the initial signs are “very, very positive and that’s a big deal,” Walgreens executive VP and global CFO James Kehoe said at the Credit Suisse Healthcare Conference last week in Scottsdale, Ariz., Forbes reported.

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FINANCE

Gap sounds concern about its namesake brand

BY Marianne Wilson

Gap Inc.’s namesake brand continues to cast a shadow over the company at large.

The retailer reported flat same-store sales for its third quarter, compared with a 3% increase in the year-ago period. Analysts had expected a 1% increase. Same-store sales fell 7% at Gap, a much larger drop than expected. Comp sales rose 4% at Old Navy and 2% at Banana Republic.

“We are pleased to report continued solid performance from Old Navy, Banana Republic and Athleta leading into the important holiday season,” said Art Peck, president and CEO, Gap Inc. “We are clearly not satisfied with the performance of Gap brand. We know this iconic brand is important to customers, and we are committed to taking the bold and necessary steps to ensure that it delivers value to shareholders.”

Gap earned $266 million, or 69 cents a share, in the quarter, up from $229 million, or 58 cents a share, in the year-ago period. Analysts had expected earnings per share of 67 cents a share.

Net sales increased 7% to $4.1 billion, just ahead of analysts’ estimates. Excluding the presentation changes from the adoption of the new revenue recognition standard, net sales increased 2% compared with last year.

Gap narrowed its full-year earnings per share guidance range to $2.55 to $2.60, compared with previous guidance of $2.55 to $2.70.

The company ended the quarter with 3,688 store locations in 43 countries, of which 3,218 were company-operated.

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CVS Health gives new date for Aetna closing

BY SANDRA LEVY

The closing of one of the blockbuster deals of the year has been pushed back.

CVS Health said Tuesday that it now anticipates to close its $69 million purchase of health insurer Aetna after the Thanksgiving holiday, according to a regulatory filing with the Securities and Exchange Commission. CVS had previously said it expected the transaction to close by Thanksgiving. In its filing, CVS Health said it has received approval from 26 of the 28 state departments of insurance.

“CVS Health has made significant progress and is in the final stages of the approval process with the remaining two states. CVS Health is confident that these remaining approvals will be secured,” the filing said.

In October, CVS Health received the Department of Justice’s conditional approval for the acquisition with the requirement that Aetna divest its standalone Medicare Part D prescription drug plan, a move that had been announced, with WellCare Health Plans set to take over the plans, which have roughly 2.2 million members.

CVS Health also announced in October that three additional with Aetna directors deep insurance company oversight experience, Edward Ludwig, Fernando Aguirre, and Roger Farah will join the CVS Health Board following the completion of its acquisition of Aetna. The appointment of these three Aetna directors, together with the previously announced addition of Mark Bertolini, Aetna’s current chairman and CEO, will bring the total number of CVS Health Board members to 16.

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