Summary
This 8-K filing from CVS Health (CVS) on September 27, 2018, primarily announces a key divestiture related to their pending acquisition of Aetna. Aetna is selling its standalone Medicare Part D prescription drug plan business, which served approximately 2.2 million members as of June 30, 2018, to a subsidiary of WellCare Health Plans. This divestiture is presented as a significant step towards obtaining regulatory approval for the larger CVS Health-Aetna merger. While the divestiture itself is noted as not material to Aetna's financial performance and Aetna will retain administrative services and financial results through 2019, its importance lies in its role as a condition precedent for the CVS Health Transaction. CVS Health continues to anticipate the closing of the Aetna acquisition in early Q4 2018, reiterating expectations for the transaction to be accretive in the second full year post-close and generate over $750 million in year-two synergies. The company maintains productive discussions with the DOJ and is working to secure remaining regulatory clearances.
Key Highlights
- 1Aetna is divesting its standalone Medicare Part D prescription drug plan business to WellCare Health Plans.
- 2The divested business had approximately 2.2 million members as of June 30, 2018.
- 3This divestiture is a condition for the closing of CVS Health's acquisition of Aetna.
- 4The sale is considered not material to Aetna's financial performance.
- 5CVS Health expects the Aetna acquisition to close in early Q4 2018.
- 6The company reiterates expectations for the transaction to be accretive in the second full year after closing.
- 7Projected year-two synergies from the Aetna acquisition are expected to exceed $750 million.