Editorial: Cheers To Aetna, CVS

A city that desperately needed some good news got some on Friday: Mother Aetna is staying in Hartford. When the word came last summer that the insurance giant was moving its headquarters from Farmington Avenue to Manhattan, it echoed across the region like a death rattle. Hartford, once among the nation's most prosperous cities, was losing its marquee tenant, the company that had called the city home since 1853. Even if it was mostly symbolic — only a few hundred of the area's 5,800 Aetna employees would have been moving to New York — it was a devastating assessment of the region at the worst possible time. The state was in the midst of a budget crisis, the fiscal year was coming to a close with no solutions in sight, and Hartford was at the brink of bankruptcy. Aetna CEO Mark Bertolini's words at the time were cruel. He told The New York Times that New York has "the ecosystem of having people in the knowledge economy, working in a town they want to be living in, and we want to attract those folks, and we want to have them on our team ... It's very hard to recruit people like that to Hartford." Mr. Bertolini also told The Times: "We have continued to work with the governor and mayor of Hartford to try and improve the quality of life in the Hartford area, but that is too slow in coming." That rankled. The quality of life in the Hartford area is top-shelf. But there was some local satisfaction on Wednesday when it was learned that New York Mayor Bill de Blasio had withdrawn a $9.6 million incentive package for Aetna to move there. And now comes CVS Heath Corp., which had already announced plans to buy Aetna for $69 billion. It had been unclear what it would do with Aetna's headquarters until Friday. The news that Aetna would stay right where it's been for more than 150 years was good enough, but a CVS spokesman said it also plans to make Hartford a "future location of our center of excellence for the insurance business," or a corporate hub. Terrific. A Continue Reading

Amazon is ‘scaring’ CVS, says former Aetna CEO about Aetna-CVS deal

There are three things that are triggering the CVS-Aetna deal and one of them is Amazon, former Aetna CEO John Rowe told CNBC on Monday. The deal would combine CVS' pharmacy business and pharmacy-benefit-manager platform (PBM) with Aetna's insurance business. "Both of these companies are trying to increase their footprint in health care," Rowe said in an interview with "Closing Bell." The deal comes as ecommerce giant holding preliminary talks with generic-drug makers. "It's not quite explicit yet what they're planning on doing but whatever it is, it's scaring CVS," Rowe said about Amazon. Another thing spurring the deal is United Healthcare, which "has had some success with their integrated model of a payer provider," he added. Lastly, he thinks the failure of recent horizontal mergers, like Aetna-Humana deal, has forced companies to think more vertically across sectors to increase their footprint. The CEOs of Aetna and CVS both told CNBC on Monday that the merger will reduce health-care costs for consumers immediately. Rowe believes there are two areas that will see costs reduced — at the point of care at CVS Minute Clinics and in premiums. "The infusion of millions of Aetna members into CVS program is going to give them more leverage with the drug wholesalers," he said. Continue Reading

CVS Health to buy Aetna for around $69 billion

retail and health care, the companies announced on Sunday. The landmark agreement is one of the year's largest so far. It comes as insurers are under pressure to lower medical costs, and retailers are under attack from new competitors, including an increasingly powerful According to the agreed terms, Aetna stockholders will receive $207 per share, $145 in cash and $62 in stock. Including debt, the deal is valued at $78 billion. Upon the closing of the transaction, three of Aetna's directors, including Chairman and CEO Mark Bertolini, will join the CVS board of directors. Aetna will operate as a stand-alone business unit within the larger company, led by members of the insurer's current management team. The transaction is expected to close in the second half of 2018, subject to regulatory and shareholder approval. "This combination brings together the expertise of two great companies to remake the consumer health care experience," CVS President and CEO Larry Merlo said in a statement. "With the analytics of Aetna and CVS Health's human touch, we will create a health care platform built around individuals." The takeover comes as has held preliminary talks with makers of generic drugs about its potential entry into the pharmacy space, according to people familiar with the discussions. With Amazon as a pharmacy competitor, CVS risks losing the key draw to its stores. Shoppers can already find CVS's cosmetic and household staples in other retailers and online, often for Continue Reading

What CVS’s acquisition of Aetna could mean for shoppers, patients

SAN FRANCISCO — A possible $66 billion takeover of health insurer Aetna by CVS Health could lower costs to both companies, leading to the hope that at least some savings might be passed through to patients.On Thursday, the Wall Street Journal, citing unnamed people who said they are familiar with situation, reported CVS Healthcare was in talks to acquire Aetna for more than $200 per share.  Representatives of both companies declined to comment on the report. While at first glance, a bid by CVS, with its 9,000 national pharmacies, for Aetna might seem like the mouse swallowing the cat, it's actually the opposite. The market capitalization of CVS is currently about three times that of Aetna, approximately $180 billion versus $60 billion.There are other facets to its business that make an insurance company an interesting target for a pharmacy, experts say.An important part of CVS' business is CVS Caremark, the pharmacy benefit management subsidiary of CVS Health. Pharmacy benefit management companies work with insurers to decide which drugs are most beneficial and cost-efficient. They also negotiate discounts from drug manufacturers."Aetna participants are likely to see the most benefit … because CVS would be maybe able to offer them lower co-pays if they shop with them," said Joseph Agnese, a senior analyst with investment research firm CFRA.Agnese says don't expect the deep discounts, but he adds that "the more (CVS) is purchasing, the better the deals they'll be able to get (from drug companies)."CVS Caremark has expertise and access to customers’ pharmaceutical information and medical needs, so it makes sense that the company would want to expand that to include not just pharmacy, but full health care, says Mohamed Jalloh, a spokesman for the American Pharmacists Association.“It could be that they’re trying to expand their service and extend the pharmacy insurance benefit Continue Reading

CVS buying Aetna in deal valued at $69 billion, reports

CVS Health is buying Aetna for a reported $69 billion in cash and stock, the Wall Street Journal and Reuters reported, citing unnamed people familiar with the matter. The long-awaited deal could be announced later on Sunday.Aetna stockholders are to receive around $207 a share — $145 in cash and $62 in stock — and will own about 22 percent of the combined company, Reuters says. CVS shareholders will own the remainder. The deal could result in lower costs to both CVS and Aetna, with the size of any savings passed along to consumers remaining to be seen. If CVS-Aetna is approved, the deal could ignite additional mergers in health care.  Amazon is poised to enter the drug business in some fashion, leading to further disruption and uncertainty in the industry. More: What CVS's acquisition of Aetna could mean for shoppers, patients What does the CVS-Aetna pairing mean for consumers?  A key component of CVS's business is its CVS Caremark, its so-called pharmacy benefit management subsidiary or PBM. In a climate of both rising health care costs and rancorous partisan divisions over the Affordable Care Act, the combination may produce greater savings for the companies as opposed to individuals. Joseph Agnese, a senior analyst with investment research firm CFRA has said that Aetna participants are likely to benefit the most because CVS may be able to offer them lower co-pays if they shop with them. But Agnese doesn't expect the deep discounts.Under the deal, three Aetna directors, including Aetna Chairman and CEO Mark Bertolini, will join CVS’s board of directors, Reuters reported.The acquisition must still receive the blessing of shareholders and regulators, and could close in the second half of 2018. But there are no guarantees. The Justice Dept. recently sued AT&T to block its acquisition of Time Warner.Carl Tobias, law professor at the University of Continue Reading

CVS reportedly near deal to buy Aetna for around $66 billion

CVS Health could announce an acquisition of insurer Aetna for more than $66 billion as early as Monday, it was reported Thursday.The talks are advanced and would likely see Aetna valued at between $200 and $205 a share and be comprised mainly of cash, the Wall Street Journal reported.The talks, like all deal discussions, could be delayed or ultimately fail, the Journal cautioned.Aetna had a market capitalization of $59.27 billion after the report came out Thursday morning. Shares rose about 1%. CVS had a market capitalization of $77.2 billion as of Thursday morning, and its shares rose more than 2% on the report.CVS and Aetna both declined to comment.Woonsocket, Rhode Island-based CVS has been transforming itself into a health-care business for years, propelled by its acquisition of the Caremark pharmacy benefit manager platform in 2007. (A PBM typically is a third party that negotiates prescription drug benefits for a commercial health plan.)This past quarter, CVS generated roughly 70%  of its sales from its PBM business — up 8.1% from the quarter before.An acquisition of an insurer like Aetna could give CVS more scale to bargain better prices for the prescription drugs it sells on its counters. It could fortify Aetna's insurance business by creating the ability to offer its insured cheaper copayments, presumably only in CVS stores. Its vast retail footprint could serve as a cost-effective distribution center, or locations for in-store clinics.It comes as Amazon has been threatening to enter the drug industry in some fashion. With Amazon as a competitor, customers would have even less reason to go into CVS stores than they do now. Shoppers can now find cosmetic and household staples at other retailers and online, sometimes for a lower price. More: CVS to offer nationwide next-day delivery in preemptive shot at Amazon More: What CVS's acquisition of Aetna could mean for shoppers, patients More: Aetna Continue Reading

3 reasons why CVS would want to buy health insurer Aetna

A CVS-Aetna combination could create a health colossus that can reach deeper into the average customer's life to manage care and cut costs, according to analysts who follow the companies. Drugstore chain and pharmacy benefits manager CVS Health Corp. is in talks to buy the nation's third-largest insurer, Aetna Inc., according to a report Thursday from The Wall Street Journal. The newspaper, citing people familiar with the matter, said CVS might pay more than $200 a share in a deal that could be worth more than $60 billion. Such a deal would combine a health insurer that covers around 22 million people with a company that runs 9,700 drugstores and more than 1,100 walk-in medical clinics. It also processes more than a billion prescriptions annually through CVS Caremark, its pharmacy benefits management business. Pharmacy benefit managers run prescription drug plans for employers, government agencies and insurers. They use their large purchasing power to negotiate prices This marriage makes sense for a number of reasons, according to early reviews on Wall Street. Here are three key factors. BETTER CARE MANAGEMENT Insurers and pharmacy benefits managers have long wanted to do more than just process claims and pay bills. They believe the key to controlling health care costs is making sure people stay on their medicines, get care at the right locations and do whatever they can to avoid expensive hospital stays. The idea is to work with patients while they are healthy instead of waiting until they're sick. For example, Aetna could use the CVS network of clinics to help patients with diabetes keep tabs on their blood sugar and cholesterol levels. That could stave off more serious complications like a heart attack. The combined company also could push the clinics and telemedicine as an alternative to expensive emergency rooms. Insurers have long fought to curb the use of ERs for anything that isn't life threatening. Retail clinics can cost a third of the Continue Reading

Aetna 3Q profit soars, issues strong forecast

Aetna trumped third-quarter earnings expectations and raised its 2017 forecast again, even as the health insurer's withdrawal from the Affordable Care Act's insurance marketplaces contributed to a revenue miss. The nation's third-largest insurer balanced a 5-percent drop in revenue with a bigger decrease in health care costs and improvements in its Medicare Advantage business. Overall net income jumped 39 percent, to $838 million. While detailing third-quarter results Tuesday, Aetna leaders stayed quiet on a report from late last week that drugstore chain and pharmacy benefits management giant CVS intends to buy the insurer. Chairman and CEO Mark Bertolini said at the start of a call with analysts that they wouldn't comment on "rumors or speculation." In the third quarter, Aetna Inc. said that its Medicare Advantage enrollment grew more than 7 percent to about 1.5 million people. Medicare Advantage plans are privately run versions of the government's Medicare coverage program for the elderly. Health insurance is Aetna's main product, and most of its enrollment of more than 22 million people comes from commercial coverage sold through employers or directly to individuals. But the insurer and its competitors also have been growing their business tied to government-funded Medicare and Medicaid programs. Aetna said Tuesday that contributions from government business now represent more than half the company's total health care premiums. Insurers also have been scaling back their presence in another government-backed market: the ACA's marketplaces. The sign-up window for 2018 coverage starts Wednesday, and Aetna intends to sit that one out by completely leaving the market for next year. Aetna once covered more than 900,000 people through the ACA's insurance marketplaces, but it rapidly scaled back participation after being hit with steep losses. Insurers have struggled in those marketplaces with a sicker-than-expected patient population and not enough Continue Reading

CVS to offer nationwide next-day delivery in preemptive shot at Amazon

CVS Health plans to begin offering next-day delivery of prescriptions and retail merchandise from its nationwide network of more than 9,700 stores, marking a potentially preemptive strike at Amazon as the online giant weighs entry into the pharmacy business.CVS CEO Larry Merlo said Monday that the company would begin offering the service in 2018.Stores in Miami, Boston, Philadelphia, Washington, D.C., and San Francisco will offer same-day delivery, he said.The move comes as Amazon is said to be considering selling prescription drugs, which would require navigating a complex thicket of regulatory approvals but would represent a significant threat to CVS.It also comes as CVS grapples with declining in-store sales as many of the retail products the company sells are contracting.The company will also offer free, same-day from all of its locations in Manhattan starting Dec. 4.CVS spokeswoman Erin Pensa declined to say how the company would handle the logistics of packaging and shipping, but said it would be handled by "a national partner." Products will be shipped from local pharmacies, not from a warehouse. She said in an email that pricing will be announced later but will be "affordable."Merlo said CVS has an advantage because 70% of Americans live within three miles of a CVS store.CVS Pharmacy President Helena Foulkes said next-day shipping has already been tested in 1,600 stores.A division that manages prescription drug benefits helped offset a declining in-store performance in the third quarter for the drug-store chain.CVS on Monday reported slightly better-than-expected revenue and profit for the period but stayed tight-lipped on its rumored talks to acquire health insurance giant Aetna.CVS recorded third-quarter revenue of $46.18 billion, up 3.5%. That narrowly edged S&P Global Market Intelligence expectations of $46.17 billion.Hurricanes Harvey, Irma and Maria took a $55 million bite out of the company's earnings, mostly in the form of payments in insurance Continue Reading

CVS Health pharmacy network offsets decline in retail store sales

A CVS Health division that manages prescription drug benefits helped offset a declining in-store performance in the third quarter for the drug-store chain.CVS on Monday reported slightly better-than-expected revenue and profit for the period but stayed tight-lipped its rumored talks to acquire health insurance giant Aetna.With more than 9,700 drug stores, CVS recorded third-quarter revenue of $46.18 billion, up 3.5%. That narrowly edged S&P Global Market Intelligence expectations of $46.17 billion.Hurricanes Harvey, Irma and Maria took a $55 million bite out of the company's earnings, mostly in the form of payments in insurance deductibles, CEO Larry Merlo said on a conference call. Some 925 CVS locations were closed at some point because of the storms.The company's pharmacy services division, which manages drug benefits as an intermediary between insurers and drug companies, grew into an even bigger part of its business in the third quarter.That unit's sales rose 8.1% to $32.9 billion as prescription volume, mail orders and specialty drugs increased.The way CVS reports its results, its pharmacy services division overlaps with its retail segment, whose revenue was down 2.7% to $19.6 billion.Sales at CVS stores open at least a year, a metric viewed as a vital gauge of a retailer's health, declined 3.2%.CVS said its same-store sales were hurt by an increase in generic drugs, lower insurance reimbursement rates, an intentional move to cut store discounts and less foot traffic. More: CVS to limit opioid drug prescriptions amid national epidemic More: What CVS's acquisition of Aetna could mean for shoppers, patients More: Aetna stock soars on report of potential acquisition by CVS Health Facing the potential entry of online giant Amazon into the pharmacy business, CVS is said to be considering a massive offer to buy Aetna, which recently abandoned a proposed tie-up with Humana amid regulatory pressure.A deal with Aetna would give Continue Reading