CVS makes $69B offer for Aetna insurance

Updated December 3, 2017 - 10:06 pm

Drugstore operator CVS is making a $69 billion offer for insurer Aetna as it tries to position itself as a one-stop shop for Americans’ health care needs with prescription drugs, clinics and insurance plans to cover those goods and services.

The companies announced Sunday that CVS Health Corp. will pay about $207 in cash and stock for each share of Aetna Inc., a 29 percent premium over Aetna’s stock price before the first report about a possible deal in October.

The mammoth acquisition pairs a company that runs more than 9,700 drugstores and 1,100 walk-in clinics with an insurer covering around 22 million people. CVS Health Corp. is also one of the nation’s biggest pharmacy benefit managers, processing more than a billion prescriptions a year for insurance companies, including Aetna.

The companies planned a Monday morning conference call to discuss the deal.

Deal may lead to new customers

The deal’s impact on prescription drug prices is uncertain. Aetna customers could first see some changes in how their plans are managed. Over time, a bulked-up CVS may gain more negotiating leverage over prices, but it is difficult to say how much would trickle down to customers.

The deal could generate a new stream of customers to CVS stores, many of which now offer a growing menu of medical services in addition to the usual fare of prescriptions and cold-and-cough supplies.

That could help fuel a push by CVS to become more of a one-stop shop for health care, a place where patients can get blood drawn, then see a nurse practitioner and pick up prescriptions.

By acquiring Aetna, CVS can enter new businesses including health savings accounts, home care and telemedicine and go after more of the consumer’s health-care dollars, said RBC analyst George Hill.

With traditional lines blurring in health care, CVS must worry about competition from the likes of UnitedHealth Group Inc. The nation’s biggest health insurer also manages a large pharmacy benefits business, and it runs doctor practices and clinics.

CVS and Aetna together “have the chance to close the competitive gap quickly,” Hill said. “You can see the path where CVS is going.”

CVS Health started adding clinics to its drugstores years ago and has been expanding the services they offer. Customers can get physicals, flu shots or treatments for sinus infections at the clinics. They also can receive cholesterol screenings or find help monitoring chronic conditions such as diabetes.

Analysts say clinics aren’t especially profitable, but they are important because they draw people into the stores and help build deeper customer relationships.

The clinics also provide services that can’t be purchased online. Like other retailers, drugstores are struggling to hold onto customers who are buying more goods through outlets such as Amazon.

By expanding its medical services, CVS would essentially be “replacing aisles and products with services,” Jefferies analyst Brian Tanquilut said. He and others on Wall Street expect the Aetna deal to fuel a health care services expansion for CVS. The company might open more clinics or add services such as eye care or hearing aid centers.

The deal also will help CVS keep Aetna’s business managing the insurer’s pharmacy benefits. That could keep millions of customers away from Amazon if the retail giant decides to expand into prescription drugs. Investors have been worried about that prospect since reports about the possibility first appeared earlier this year. Amazon has not commented.

Aetna stockholders will get $145 cash and 0.8378 CVS shares for each Aetna share. They would own 22 percent of the company, with 78 percent remaining with current CVS shareholders.

Antitrust hurdles

Antitrust regulators still need to approve the deal, and that is not guaranteed.

Last month, the Justice Department sued to block AT&T’s $85 billion purchase of Time Warner. Regulators also sued to stop Aetna’s proposed $34 billion purchase of Humana Inc. — a deal that fell apart earlier this year. Opposition from antitrust regulators also helped kill Anthem Inc.’s $48 billion bid to buy Cigna Corp.

The latter two were deals in which one major health insurer sought to buy another.

“This is a different kind of alignment,” Carl Tobias, a law professor at the University of Richmond, said of the CVS move. “If it works well for consumers, then maybe it will be OK (to regulators). The companies can make that pitch.”

Leerink analyst David Larsen said in a recent note that the CVS-Aetna deal has a decent chance of approval because regulators may believe it will put pressure on manufacturers to hold down drug prices.

Hartford, Connecticut-based Aetna and Woonsocket, Rhode Island-based CVS both manage Medicare prescription drug coverage. Some of that business may have to be sold to address antitrust concerns.

ad-high_impact_4
Business
UNLV Tech Park innovation building breaks ground
Construction on the first innovation building at the UNLV Tech Park is underway. (Bailey Schulz/Las Vegas Review-Journal)
Caesars Forum Meeting Center
Caesars broke ground Monday on its $375 million Caesars Forum Meeting Center (convention center) just east of the High Roller observation wheel. (Caesars Entertainment)
Technology reshapes the pawn shop industry
Devin Battersby attaches a black-colored device to the back of her iPhone and snaps several of the inside and outside of a Louis Vuitton wallet. The device, installed with artificial intelligence capabilities, analyzes the images using a patented microscopic technology. Within a few minutes, Battersby receives an answer on her app. The designer item is authentic.
Recreational marijuana has been legal in Nevada for one year
Exhale Nevada CEO Pete Findley talks about the one year anniversary of the legalization of recreational marijuana in Nevada. (K.M. Cannon/Las Vegas Review-Journal)
Young adults aren't saving for retirement
Financial advisors talk about saving trends among young adults. (Bailey Schulz/Las Vegas Review-Journal)
President Trump’s tariffs could raise costs for real estate developers, analysts say
President Donald Trump made his fortune in real estate, but by slapping tariffs on imports from close allies, developers in Las Vegas and other cities could get hit hard.
Las Vegas business and tariffs
Barry Yost, co-owner of Precision Tube Laser, LLC, places a metal pipe into the TruLaser Tube 5000 laser cutting machine on Wednesday, June 20, 2018, in Las Vegas. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
Nevada Film Office Connects Businesses To Producers
The director of the Nevada Film Office discusses its revamped locations database and how it will affect local businesses. (Bailey Schulz/Las Vegas Review-Journal)
Opendoor isn't the typical house flipping company
Unlike most house flippers, the company aims to make money from transaction costs rather than from selling homes for more than their purchase price.
The Venetian gondoliers sing Italian songs
Gondolier Marciano sings a the classic Italian song "Volare" as he leads guests through the canals of The Venetian in Las Vegas. (K.M. Cannon/Las Vegas Review-Journal)
Building In Logandale
Texas homebuilder D.R. Horton bought 43 lots in rural Logandale. (Eli Segall/Las Vegas Review-Journal)
Indoor farming in Southern Nevada
Experts discuss Nevada's indoor farming industry. (Bailey Schulz/Las Vegas Review-Journal)
Former Fontainebleau could have become a Waldorf Astoria
Months after developer Steve Witkoff bought the Fontainebleau last summer, he unveiled plans to turn the mothballed hotel into a Marriott-managed resort called The Drew. But if Richard “Boz” Bosworth’s plans didn’t fall through, the north Las Vegas Strip tower could have become a Waldorf Astoria with several floors of timeshare units. (Eli Segall/Las Vegas Review-Journal)
LVCVA CEO Rossi Ralenkotter announces plans to retire
Rossi Ralenkotter, CEO of the LVCVA, on Tuesday confirmed a Las Vegas Review-Journal report that he is preparing to retire. Richard N. Velotta/ Las Vegas Review-Journal
Cousins Maine Lobster to open inside 2 Las Vegas Smith’s stores
Cousins Maine Lobster food truck company will open inside Las Vegas’ two newest Smith’s at Skye Canyon Park Drive and U.S. Highway 95, and at Warm Springs Road and Durango Drive. Cousins currently sells outside some Las Vegas Smith’s stores and at Fremont Street and Las Vegas Boulevard. (K.M. Cannon/Las Vegas Review-Journal)
Las Vegas home prices to continue to rise, expert says
Lawrence Yun, chief economist at the National Association of Realtors, gives homebuyers a pulse on the Las Vegas housing market. (Eli Segall/Las Vegas Review-Journal)
NV Energy announces clean energy investment
The company is planning to add six solar projects in Nevada, along with the state's first major battery energy storage capacity. Bailey Schulz/Las Vegas Review-Journal
3 Mario Batali restaurants on Las Vegas Strip to close
Days after new sexual misconduct allegations were made against celebrity chef Mario Batali, his company announced Friday that it will close its three Las Vegas restaurants July 27. Employees of Carnevino Italian Steakhouse, B&B Ristorante and Otto Enoteca e Pizzeria, all located in The Venetian and Palazzo resorts, were informed of the decision Friday morning. Bastianich is scheduled to visit the restaurants Friday to speak to employees about the next two months of operation as well as how the company plans to help them transition to new positions.
Nevada has its first cybersecurity apprenticeship program
The Learning Center education company in Las Vegas has launched the first apprenticeship program for cybersecurity in Nevada. It was approved by the State Apprenticeship Council on May 15. (K.M. Cannon/Las Vegas Review-Journal)
Las Vegas union members voting to authorize the right to strike
Thousands of Las Vegas union members voting Tuesday morning to authorize the right to strike. A “yes” vote would give the union negotiating committee the power to call a strike anytime after June 1 at the resorts that fail to reach an agreement. (Todd Prince/Las Vegas Review-Journal)
Small businesses struggle to find qualified candidates
A 2018 survey found that over two-thirds of small businesses in Nevada find it somewhat to very difficult to recruit qualified candidates. Bailey Schulz/Las Vegas Review-Journal
Nevada secretary of state website offers little protection against fraudulent business filings
Property developer Andy Pham tells how control of his business was easily seized by another person using the secretary of state website.
Caesars may be going solo in its marijuana policy
Several Southern Nevada casino companies aren’t following Caesars Entertainment’s lead on marijuana testing.
How much is the Lucky Dragon worth?
Less than a year-and-a-half after it opened, the Lucky Dragon was in bankruptcy.
Gyms and discount stores take over empty retail spaces
Grocery stores used to draw people to shopping centers. But many large retail spaces have been vacant since 2008. Discount stores like goodwill and gyms like EOS Fitness are filling those empty spaces, and helping to draw shoppers back in. K.M. Cannon/Las Vegas Review-Journal
Funding source of Las Vegas stadium for the Raiders is sound, expert says
The stadium is funded in part by $750 million of room taxes, the biggest such tax subsidy ever for a professional sports stadium. Robert Lang, executive director of Brookings Mountain West and The Lincy Institute at UNLV, says that is a good use of public funds. (Richard Velotta/Las Vegas Review-Journal)
Las Vegas needs light rail, expert says
Robert Lang, executive director of Brookings Mountain West and the Lincy Institute said he is afraid of a "congestion mobility crisis." Las Vegas needs a light rail system, he said, to accommodate the city's growing number of attractions. (Richard Velotta/Las Vegas Review-Journal)
Three takeaways from Wynn Resorts' Earnings Call
Matt Maddox came out swinging in his first earnings conference call as Wynn Resorts chief executive officer, boasting of record Las Vegas quarterly revenues and applicants lining up for work.
Star Wars VR Comes to Las Vegas
Sneak peak at the new "Star Wars: Secrets of the Empire" VR experience at the Grand Canal Shoppes.
Elaine Wynn continues her fight to change Wynn Resorts board
Elaine Wynn, the largest shareholder of Wynn Resorts Ltd., is seeking to kick a friend of her ex-husband Steve Wynn off the company’s board of directors. (Todd Prince/Las Vegas Review-Journal)
Life
Camp Broadway teaches kids how to sing and dance
The Smith Center's seventh annual Camp Broadway musical theater program gives 150 kids ages 6-17 an opportunity to learn musical theater skills from industry professionals over a five-day period. Marcus Villagran/ Las Vegas Review-Journal @brokejournalist
Las Vegas police officer on being PETA's Sexiest Vegan Next Door
Las Vegas police officer David Anthony talks vegan lifestyle and how he feels about being voted PETA's sexiest Vegan next door from his home on Monday, July 9, 2018. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
'NO H8' Campaign comes to Las Vegas
Hundreds of locals participate in the NO H8 campaign founded by Adam Bouska and Jeff Parshley as a response to Proposition 8, a California ban on same-sex marriage. The campaign has since evolved to represent equal treatment for all. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Over 40,000 People Attend The 4th Of July Parade In Summerlin In Las Vegas
Over 40,000 People Attend The 4th Of July Parade In Summerlin In Las Vegas. (Janna Karel Las Vegas Review-Journal)
Star Wars and Golden Knights mashup at downtown art shop
Star Wars and Vegas Golden Knights fans attend the Boba Fett Golden Knight Paint Class at The Bubblegum Gallery in Las Vegas, Friday, June 29, 2018. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Bark-Andre Furry meets Capitals superfan Ovie the Bulldog
Two of NHL's furriest fans met at the Forum Shops in Caesars Palace on Tuesday, June 18, 2018, in Las Vegas. Vegas Golden Knights superfan Bark-Andre Furry and Washington Capitals superfan Ovie the Bulldog shared a plate of meatballs and spaghetti with help from Logan, "The Girl with the Hat." (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
TOP NEWS
News Headlines
Add Event
Home Front Page Footer Listing
Circular
You May Like

You May Like