CVS Health expects to close its $69 billion acquisition of Aetna in the next two weeks, with regulatory approval anticipated from the final five states.
The company expects the deal to close by Thanksgiving. The merger was cleared by federal antitrust regulators last month contingent on Aetna selling its Part D business to WellCare.
CEO Larry Merlo said the company has already “reached an agreement on all material terms” with California regulators, and he anticipated the state would grant formal approval this week once the paperwork is finalized.
He added that CVS was “pretty far down the road” with New York regulators, which had expressed some concern about the merger. Merlo expects the state to approve the deal “in the very near term.” New Jersey was the last state to hold a hearing, which took place on Monday.
RELATED: Confidence remains in CVS-Aetna deal despite pushback from New York regulators
CVS executives again pointed to synergies between the two companies that would generate more than $750 million in savings, a slight uptick from prior estimates. While the company declined to go into specifics around the savings, Merlo said the integration will reduce medical costs, close gaps in care, optimize sites of care and allow the company to focus on high-cost chronic conditions.
Aetna Update: Areas of value creation we’re focused on: pic.twitter.com/a2GkhGtz46
— CVS Health (@CVSHealth) November 6, 2018
As part of the integration, CVS is planning to launch concept stores early next year that will target Aetna's membership and focus on managing chronic illnesses, extending primary care and reducing avoidable hospital admissions.
The company reported third-quarter revenues at $47.3 billion and gross profit exceeding $7.3 billion.
During Tuesday’s earnings call, executives also hinted that the company is exploring “new, simpler economic models” for its PBM business that includes a greater emphasis on drug mix.
Chief Operating Officer Jonathan Roberts, who oversees CVS Caremark, said while the current model in the marketplace relies on discounts off of the average wholesale price, there is an “opportunity to align around drug mix that drives overall cost to the client.” The company has been talking to consultants and clients about the potential shift.
“I think the market is ripe for this type of change,” Roberts said.