Bruce Japsen Sep
6, 2018
The timing of potential divestitures from the
merger of Aetna and CVS Health comes at a good time for a regional health
insurer like Wellcare Health Plans.
Wellcare has been mentioned as a
potential buyer of Medicare drug plans that may have to be sold off by Aetna
and CVS as part of a deal with the U.S. Justice Department to
approve their merger. Reports are emerging that
DOJ is nearing approval of both the CVS-Aetna deal and the Express
Scripts-Cigna merger. None of the companies involved nor Wellcare is commenting
publicly, however.
But CVS executives have already said from the
moment they announced their merger that there may be divestitures where the
pharmacy chain and insurer sell overlapping Medicare drug coverage. “When we
announced the transaction last December, we contemplated a range of
possibilities in limited (Medicare part D) prescription drug plan area in which
both CVS and Aetna offer plans, and we determined the impact of any
divestitures would not be material to the deal model,” CVS Health CEO Larry Merlo told analysts last
month on the pharmacy chain’s second-quarter earnings call.
Wellcare just closed its acquisition of a pharmacy
benefit manager (PBM) in MeridianRx as well as Meridian Health Plans in
Michigan and Illinois, giving the insurer a larger presence in the Medicaid
business, Medicare Advantage as well as Medicare Part D drug coverage. Wellcare
already has a relationship with CVS and its Caremark PBM, which has a
contract with WellCare to manage pharmacy benefits of its health plan members
through 2020.
But WellCare executives have said they are
interested in growing their own proprietary PBM and have the financing to do
so. In July, WellCare announced a five-year $1.3 billion credit
agreement that the insurer described as an "upsized facility to support
its long-term growth plans," the insurer has said.
"WellCare has demonstrated an appetite
for acquisitive growth the last 12-plus months and believes they have the
platform to quickly ingest new programs while finding cost take-out
opportunities that allow them to pay a premium," said Brad Haller, a director in West Monroe Partners’
mergers & acquisitions practice
The addition of Medicare drug plan members via
a divestiture from CVS, Aetna or other companies could give Wellcare a welcome
boost. Wellcare’s Medicare prescription drug plan membership was 1.1 million
at the end of the second quarter,
which was down by 60,000 members, or 5.4% “primarily (as) a result of the
company's 2018 bid positioning,” Wellcare said in reporting its second quarter earnings.
https://www.forbes.com/sites/brucejapsen/2018/09/06/wellcare-ready-to-buy-divested-cvs-aetna-drug-plans/#17c8c4f927b0
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