Analysts will watch Aetna very carefully, following its agreement to take health care off Prudential's hands. Aetna will buy Prudential's HMO, preferred-provider organization, indemnity health and dental lines for $1 billion.
Last year, Aetna bought New York Life's health care products while Aetna was still struggling to digest its acquisition of U.S. Healthcare. As it did with NYLCare, Aetna plans a go-slow approach to bringing Prudential HealthCare into the fold.
Though Prudential HealthCare is a money loser, the sale nonetheless makes Aetna the largest managed care company, with 18 million subscribers.
In another major transaction, Eli Lilly & Co. plans to sell PCS Health Systems, the country's largest pharmacy benefit manager with 56 million subscribers, to Rite-Aid. The pharmacy chain will pay $1.5 billion for PCS, whose profitability has been hampered by a slower-than-expected spread of managed care and by regulation. According to Securities and Exchange Commission filings, Lilly downgraded PCS's value more than $2 billion last year.