Anthem remains committed to completing its merger with Cigna, the company says, despite reports that the two major health insurers may be close to scrapping their deal.
Anthem Chief Financial Officer John Gallina told analysts recently that the company is working on “remediation plans” in case the deal falls through--including buying assets from Aetna--according to the New York Post, which cited two unnamed sources who attended the meeting.
Anthem, however, flatly denies the report. "Anthem and Cigna are not in discussions regarding a termination of the merger agreement or the payment of a break-up fee," spokeswoman Jill Belcher tells the Hartford Courant, adding that company is still working with federal regulators and that the deal's completion remains “the highest priority.”
The Anthem-Cigna deal, announced last summer within weeks of another merger between Aetna and Humana, has run into rough waters recently. First, a Wall Street Journal report revealed disagreements among the companies’ leaders about issues including the regulatory review process, Anthem’s lawsuit against Express Scripts and executive exits at Anthem.
Then news broke of a meeting between the insurers’ leaders and Justice Department officials, during which the latter were skeptical that the companies offered adequate fixes for concerns about the deal’s effect on competition. Finally, an analysis produced for Reuters found that the Anthem-Cigna deal would raise costs for employer-sponsored plans.
Given these developments, “many on the Street expect the deal to break,'' Leerink Partners Senior Analyst Ana Gupte tells the Courant. Should the deal indeed fall apart, Anthem will have to pay Cigna $1.85 billion, FierceHealthPayer previously reported.
The Aetna-Humana merger, meanwhile, faces troubles of its own, as it recently encountered opposition from the Missouri Department of Insurance. It also extended its deal-completion deadline by six months, though the company says the move its “routine and expected.”