- Close to a year has passed since CVS Health announced its plan to acquire Aetna in a $69-billion acquisition. Now only the approval of two state departments of insurance stands in its way.
In a recent filing to the Securities and Exchange Commission, CVS Health reported itself to be within the “final” stages of receiving approval from the last two state departments of insurance to have not yet furnished a decision, a process that began formally in January 2018.
The filing noted that the company “has received approval from 26 of the 28 state departments of insurance” and “made significant progress and is in the final stages of the approval process with the remaining two states.”
As a result, CVS Health stated the expected closing of the deal to occur after the holiday rather than before, countering remarks made by CEO Larry Merlo in a third-quarter earnings call earlier this month of an anticipated pre-Thanksgiving close.
The most recent filing by CVS Health does not indicate which two state departments of insurance have yet to render approval, but Reuters reports that the New York State Department of Financial Services is in the process of reviewing the deal.
The deal received approval from California’s regulator following an agreement from CVS Health and Aetna to invest $240 million in the state’s health system, according to a Forbes report.
Last December, Aetna Chairman and CEO Mark Bertolini heralded the deal as a sign of things to come.
“This is the next step in our journey, positioning the combined company to dramatically further empower consumers. Together with CVS Health, we will better understand our members' health goals, guide them through the health care system and help them achieve their best health,” he said.
Merlo touted the acquisition as critical to meeting the needs of consumers, especially those with complex conditions for whom early interventions could improve health outcomes and prevent escalating care costs.
“These types of interventions are things that the traditional health care system could be doing, but the traditional health care system lacks the key elements of convenience and coordination that help to engage consumers in their health,” Merlo said.
Over the past few months, the health plan has shed parts of its business to ensure approval of the deal and fast-track its closing.
In September, Aetna sold its Medicare Part D prescription plan business of 2.2 million beneficiaries to WellCare in an attempt to increase the likelihood of the CVS-Aetna merger closing before year’s end.
In SEC filings, the health insurer explained that WellCare will own Aetna’s national Part D business operations in 2020, which is not likely to impact Aetna’s other Medicare-sponsored business products. WellCare is now anchored to the CVS-Aetna merger since its Part D acquisition will only complete once the CVS-Aetna merger closes.
In October, the company’s work paid off with the Department of Justice announcing its preliminary approval of the proposed merger.
“Today’s settlement resolves competition concerns posed by this transaction and preserves competition in the sale of Medicare Part D prescription drug plans for individuals,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division.
“The divestitures required here allow for the creation of an integrated pharmacy and health benefits company that has the potential to generate benefits by improving the quality and lowering the costs of the healthcare services that American consumers can obtain.”
“DOJ clearance is an important step toward bringing together the strengths and capabilities of our two companies to improve the consumer health care experience,” said Merlo. “We are pleased to have reached an agreement with the DOJ that maintains the strategic benefits and value creation potential of our combination with Aetna. We are now working to complete the remaining state reviews.”