CVS closes $69B acquisition of Aetna in a 'transformative moment' for the industry

CVS pharmacy
CVS-Aetna will now try and make good on their promise of generating $750 million in savings. (Mike Mozart/CC BY 2.0)

Aetna is now officially part of CVS Health.

The two companies closed the $69 billion deal on Wednesday, finishing off a vertical merger that makes one of the largest healthcare giants even larger.

“Today marks the start of a new day in healthcare and a transformative moment for our company and our industry,” CVS Health President and CEO Larry Merlo said in a statement. “By delivering the combined capabilities of our two leading organizations, we will transform the consumer health experience and build healthier communities through a new innovative healthcare model that is local, easier to use, less expensive and puts consumers at the center of their care.”

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Merlo reemphasized the new company would have a community focus, "simplify a complicated system and will help people achieve better health at a lower cost." He said patients will benefit from earlier interventions as CVS integrates Aetna's medical information and analytics.

CVS plans to introduce new programs and services in the coming months. Those new offerings will focus on helping patients manage chronic conditions, expanding MinuteClinics, and rolling out new digital apps.

"We expect patients will benefit from earlier interventions and better-connected care, leading to improved health outcomes and lower medical costs," Merlo said.

Aetna sold for $212 per share. The total value of the transaction, including assuming Aetna's debt, was $78 billion.

The Department of Justice signed off on the merger back in October, but the deal was awaiting approval from several states—notably California, New York and New Jersey—in what some observers called a negotiating battle. Final holdouts New York and New Jersey, which forced the company to push the closing past Thanksgiving, gave their signoff earlier this week, clearing the way for the merger to close.

RELATED: CVS-Aetna got the green light. Brace yourselves, stakeholders say

Initially, the states expressed concerns that the merger would create antitrust concerns, provide fewer options for consumers and cement the current trend of rising drug prices.

But regulators ultimately came around, and on Monday, New York announced it would approve the deal given some "key conditions and ongoing oversight." CVS promised the state a $40 million investment in health insurance education and enrollment and vowed not to increase premium payments to pay for the acquisition.

California, meanwhile, approved the deal earlier this month after securing a $240 million investment in the state's healthcare system. Most of the funding will be used to build and renovate CVS facilities in the state.

The merger is sure to change the dynamics of the industry. Both companies have said the deal will generate more than $750 million in savings in the first two years by reducing medical costs, closing gaps of care, optimizing sites of care and providing localized services for patients with high-cost chronic conditions.

The new healthcare behemoth will compete with the likes of UnitedHealthcare and its formidable Optum division, as well as Cigna after it closes its acquisition of Express Scripts, expected in the coming weeks. Walgreens and Humana, meanwhile, have been reportedly discussing equity stakes in one another in order to keep pace.

RELATED: California approves CVS-Aetna merger with a $240M investment back to the state

“If you’re in the healthcare world in any way, shape or form, this decision says your world is about to change," David Friend, M.D., BDO’s managing director and chief transformation officer, previously told FierceHealthcare.

Consumer advocates aren't convinced, however. The advocacy group Public Citizen has said the merger would create a "corporate goliath" and leave consumers with fewer choices and higher prices. Consumer Union concurred, writing that the deal creates "an enormous market force that we haven’t seen before."

The American Medical Association also continues to express skepticism over the merger. It urged state and federal agencies to make sure the postmerger environment doesn't get out of hand.

“We now urge the DOJ and state antitrust enforcers to monitor the postmerger effects of the Aetna acquisition by CVS Health on highly concentrated markets in pharmaceutical benefit management services, health insurance, retail pharmacy and specialty pharmacy,” AMA President Barbara L. McAneny, M.D., said in a statement after the DOJ approved the deal.