CVS Health Corp. today completed its $78 billion acquisition of Aetna Inc.
Aetna, a Hartford-based insurer that was founded in 1853, is now a business unit at CVS Health.
Larry Merlo, president of CVS Health said in a statement that the combined company will develop a new health care model that is local, easier to use, less expensive and puts consumers at the center of their care.
“As the front door to quality health care, our combined company will have a community focus, engaging consumers with the care they need when and where they need it, will simplify a complicated system and will help people achieve better health at a lower cost,” Merlo said.
(Related: CVS Gets Final Approval to Acquire Aetna)
Karen Lynch, who has been president of Aetna, is now the president of the Aetna business unit at CVS, and she is the top Aetna executive who is still part of the Aetna business unit.
Lynch said in a video statement about the consummation that Aetna and VS have been working together for years.
“We share a common vision to improve the consumer experience and to reduce overall costs,” Lynch said.
The CVS Health-Aetna Deal
CVS Health is paying $70 billion to Aetna shareholders, and it is also taking responsibility for $8 billion in Aetna debt.
CVS Health, has stock that trades on the New York Stock Exchange, under the symbol CVS.
The company now owes about $40 billion on unsecured senior notes related to the Aetna deal. The notes pay an average blended rate of about 4.19%, the company said today.
The notes have maturities ranging from two to 30 years.
CVS Health also has established a $5 billion term loan facility agreement, with a $3 billion three-year portion and a $2 billion five-year portion. CVS Health can use that facility to borrow cash when it needs cash, at rates to be determined by what CVS Health’s debt ratings are when it borrows the cash, the company said.
The Combined Company
CVS Health has about 9,800 retail drugstores, about 1,100 MinuteClinic walk-in clinics, a pharmacy benefits manager (PBM) with about 93 million drug plan enrollees, a pharmacy business aimed at the long-term care facility market, and a large Medicare Part D drug plan program.
CVS Health said it will operate Aetna as a stand-alone business unit.
CVS Health said it will make new products and services available to the entire health care marketplace, “regardless of one’s insurer, pharmacy benefit manager…or pharmacy of choice.”
Non-CVS Health PBMs, and health plans from companies other than Aetna, can continue to use all CVS Health pharmacy and PBM services, and members of Aetna plans can still use non-CVS pharmacies, CVS Health said.
CVS Health predicted that the CVS Health-Aetna deal could lead to about $750 million in synergies by 2020.
Labor department officials in Connecticut and Rhode Island have not posted any recent layoff notices from CVS Health or Aetna.
Aetna’s Medicare Part D Plans
To deal with antitrust concerns at the U.S. Department of Justice, CVS Health agreed that it would sell Aetna’s Medicare Part D plan program to WellCare Health Plans Inc. once the Aetna deal was completed.
“The divestiture transaction is expected to close within the next few business days,” CVS Health said today.
The divestiture could affect the coverage of about 2.2 million Aetna Medicare drug plan enrollees.
CVS Health managers have said they want to get the workers in their stores more involved with screening people for health problems and managing the health of people who already have chronic health problems.
CVS Health said today that it expects to offer consumers nutritional and behavioral counseling, access to benefits navigation support, and help with using digital health apps and digital health monitoring devices.
To support people with newly diagnosed chronic health problems, “MinuteClinic will also be introducing newly expanded chronic care management services,” CVS Health said.
— Read Hartford to Acquire Aetna Group Life and Disability Unit, on ThinkAdvisor.