Cigna/Express Scripts, CVS/Aetna Deals Inch Closer to Closing

From Health Plan Weekly

Cigna Corp.'s acquisition of Express Scripts Holding Co. and CVS Health Corp.'s purchase of Aetna Inc. are looking more and more likely to close, though both deals have recently faced some blowback, industry experts say.

In the case of CVS and Aetna, the California insurance commissioner and the American Medical Association have both publicly opposed the transaction. Yet neither has the authority to block the deal, and an Aug. 7 report from Bloomberg indicated that the acquisition overcame a major hurdle in the federal government's review, as antitrust regulators reportedly found no vertical-competition issues.

Still, to gain federal regulators' approval, CVS and Aetna might have to divest some Medicare Part D assets.

CVS has about 6 million Part D lives and Aetna has about 2.2 million, according to Leerink analyst Ana Gupte. She estimated the Department of Justice could require divestitures of approximately 1.65 million lives — most of which are Aetna Part D members.

Cigna, meanwhile, appears to have fended off influential investor Carl Icahn, who threatened to derail a shareholder vote on the company's transaction with Express Scripts. Gupte advised investors that "we fully expect the Aug 24 shareholder vote to garner the sufficient majority" for the Cigna/Express Scripts transaction to be approved.

In addition to getting clearance from federal regulators, the two mega-deals must win over state officials. On an Aug. 2 earnings call, Cigna CEO David Cordani said the insurer has approvals in approximately 40% of the states it needs to sign off on its acquisition of Express Scripts. On CVS's Aug. 8 earnings call, CEO Larry Merlo said a "substantial" number of states had approved the company's transaction with Aetna, and several additional states had already held or scheduled hearings.

CVS says it expects its acquisition of Aetna to close late in the third quarter of 2018 or in the fourth quarter. Cigna expects its purchase of Express Scripts to close by the end of the year. 

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