CVS Says It’s Still ‘Moving Forward’ With $68 Billion Aetna Deal
CVS Health Corp. said it’s making progress on the regulatory review of its $68 billion deal to buy health insurer Aetna Inc., and has suspended its share buyback plan while waiting for the approval.
Both CVS and rival Express Scripts Holding Co., which is being bought by Cigna Corp., are trying to get their megamergers approved by regulators, as drug middlemen combine with large insurers in the U.S. to offer a larger suite of medical services under one roof. The two deals are being reviewed by the Justice Department.
“We are moving forward on both the regulatory and integration planning fronts in support of a close in the second half of this year and a smooth, efficient integration of operations,” CVS Chief Executive Officer Larry Merlo said in a statement Wednesday.
CFO Dave Denton announced the suspension of the stock repurchase program on a conference call with analysts. The shares opened down 1.8 percent to $66.77 at 9:59 a.m. in New York, after rising in premarket following first-quarter results.
Earnings were $1.48 a share, excluding some items, CVS said, compared with the $1.41 average of 20 analysts’ predictions compiled by Bloomberg. Revenue rose 2.6 percent to $45.7 billion, in line with the $45.8 billion average of estimates.
CVS’s proposed takeover of Aetna would bring together around 10,000 CVS stores and the health insurer’s 22 million customers. A central plank of the deal is transforming the stores into health hubs where consumers can get care, pick up their drugs, buy some cosmetics, and stay out of the hospital. In a sign of its ambition, last month, CVS hired a senior executive from a startup that specializes in primary-care clinics to oversee expanded health-care services across the company.
Aetna reported first-quarter earnings that surpassed estimates Tuesday.
“Aetna is firing on all cylinders, validating that CVS would gain pristine health insurance assets should the deal go through,” wrote Jason McGorman, an analyst at Bloomberg Intelligence.
Concerns that Amazon.com Inc. may start directly competing with CVS by selling prescription drugs have receded recently, following a CNBC report in April that the internet retailer had shelved plans too sell drugs to hospitals and other businesses.