CVS closes $70B Aetna buy

CVS Health (NYSE:CVS) said yesterday that it closed the $70 billion buyout of health insurer Aetna (NYSE:AET).

When the deal was announced in December 2017, the chief executives of CVS and Aetna said that they plan to transform CVS’s pharmacies and clinics into community-based healthcare sites, where people can access care at a more reasonable price than for a visit to the doctor’s office.

“Today marks the start of a new day in health care and a transformative moment for our company and our industry,” CVS Health president & CEO Larry Merlo said in prepared remarks. “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.

“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 10,000 CVS locations across the country provide a strategic advantage in that they’re already available and established within communities, Aetna CEO Mark Bertolini told The New York Times late last year.

“CVS has the draw,” Bertolini said. “People trust their pharmacist.”

“We think of it as creating a new front door to healthcare in American,” Merlo added.

The deal calls for Aetna stockholders to receive $145 in cash and 0.8378 CVS shares for each AET share, for a total value of $212 per share or roughly $70 billion, CVS said. The Woonsocket, R.I.-based company said it financed the deal with cash on hand and debt, including a $40 billion senior notes offering and a two-tranche term loan of $5 billion.

In order to close the deal Aetna had to deal its 2.2-million-member Medicare Part D drug plan to WellCare Health Plans (NYSE:WCG) per the terms of an agreement with the U.S. Justice Dept., CVS said. That deal is slated to close within the next few business days, the company said.

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