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CVS Health to buy Aetna for $69 billion

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Unique combination creates far-reaching health care player

WOONSOCKET, R.I. — Following mounting speculation over the past month, CVS Health has unveiled a cash-and stock-deal to acquire health insurer Aetna Inc. for $69 billion.

CVS and Aetna said Sunday evening that under the merger pact, Aetna shareholders will receive about $207 per share, including $145 in cash and 0.8378 CVS shares for each Aetna share. Including the assumption of Aetna’s debt, the total value of the transaction is $77 billion.

With the completion of the transaction, CVS shareholders would own about 78% of the merged company, while Aetna shareholders would own roughly 22%.

Plans call for three of Aetna directors, including Aetna chairman and chief executive officer Mark Bertolini, to join to the CVS Health board of directors. The companies said Aetna will operate as a stand-alone business unit within CVS Health and be led by members of its current management team, with Aetna executives slated to play key roles in the combined organization.

The CVS-Aetna merger fills gaps in the nation’s health care system and provides an opportunity to redefine access to high-quality care in lower cost, local settings, including in the community, at home or via digital tools, according to CVS and Aetna executives.

“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,” CVS Health president and CEO Larry Merlo said in a statement.

“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,” he added.

A CVS-Aetna merger would bring a number of significant benefits to health care consumers, the companies noted.

For example, CVS and Aetna said they could provide a “uniquely integrated, community-based health care experience” by connecting Aetna’s extensive network of providers with CVS Health’s multiple health access points and broad menu of health services. That includes more than 9,700 CVS Pharmacy stores, 1,100 MinuteClinic medical clinics, Omnicare’s senior pharmacy solutions, Coram’s infusion services and over 4,000 CVS Health nursing professionals providing in-clinic and home-based care nationwide.

CVS Health’s businesses also include the second-largest U.S. pharmacy benefits manager — CVS Caremark, serving nearly 90 million members — plus CVS Specialty, one of the nation’s leading specialty pharmacies.

Serving about 44.6 million people, Aetna brings to the table a diverse range range of traditional, voluntary and consumer-directed health insurance products and related services, including medical, pharmacy, dental, behavioral health, group life and disability plans, medical management capabilities, Medicaid health care management services, workers’ compensation administrative services and health IT products and services.

Aetna’s customers include employer groups, individuals, college students, part-time and hourly workers, health plans, health care providers, governmental units, government-sponsored plans, labor groups and expatriates.

Executives said the vision is to leverage high-quality, local care solutions in a more integrated and cost-effective fashion to improve patient health outcomes.

“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,” Bertolini stated. “Aetna has a proud tradition of continually innovating to address unmet consumer needs and providing leading products and services to the marketplace.”

“Aetna has a talented and dedicated group of employees working to build a healthier world every day,” he added. “Our combined company will be more competitive in the marketplace and accelerate progress toward achieving this mission.”

Other key benefits of a CVS-Aetna merger, the companies said, are the opportunity to provide more integrated data and analytics and better fight chronic disease.

Broader use of data and analytics could spur improved patient health at much lower cost, such as by helping patients avoid unnecessary hospital readmissions. The companies noted that 20% of Medicare patients are readmitted to the hospital soon after being discharged at high annual costs, much of which is avoidable.

Together, CVS and Aetna said they could better address the cost of treating chronic diseases, such as the 30 million Americans with diabetes, whose treatment costs the health care system about $245 billion annually. Patients with diabetes will receive care in between doctor visits through face-to-face counseling at a store-based health hub and remote monitoring of key indicators such as blood glucose levels. Also, patients can receive text messages to let them know when their glucose levels deviate from normal ranges. For follow-up, they can receive counseling on medication adherence, pick up diabetes-related supplies and engage services such as advice on weight loss and programs to reverse diabetes through nutrition.

“These types of interventions are things that the traditional health care system could be doing, but the traditional health care system lacks the key elements of convenience and coordination that help to engage consumers in their health,” noted Merlo “That’s what the combination of CVS Health and Aetna will deliver.”

The CVS-Aetna merger agreement has been approved by the boards of both companies. Pending shareholder and regulatory approval and other customary closing conditions, the transaction is slated to close in the 2018 second half of 2018.


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