CVS To Buy Aetna for $69 Billion

In what’s being described as a landmark deal in the health care industry, CVS Health has agreed to buy Aetna for $69 billion, the Wall Street Journal (WSJ) reports. Unlike the proposed deals that would have allowed the mergers of Cigna and Anthem, and Aetna and Humana—which the courts barred this year on the grounds that they would constitute a monopoly—the CVS-Aetna deal would marry two very different types of health care industries: insurance company and pharmacy provider. (Managed Care reported on the Anthem-Cigna and Aetna-Humana merger attempts here and here.)

Experts tell the WSJ that the deal would equip both companies to better face major challenges. Amazon has been making noises to jump into the pharmacy business, in direct competition with CVS. And Aetna lacks the pharmacy presence that the larger UnitedHealth Group has thanks to United’s affiliated PBM business Optum RX.

It won’t necessarily be an easy merger for either CVS or Aetna.

“The combination faces substantial challenges, including the huge operational task of knitting together the companies’ diverse operations so that customer experiences are smooth and seamless,” the WSJ reports. “The deal isn’t likely to deliver as many cost-cutting benefits as combinations with more direct overlap, such as Aetna’s scuttled acquisition of Humana, analysts said. CVS will need to keep much of Aetna’s infrastructure since it doesn’t currently provide health insurance.”

Source: Wall Street Journal