- Cigna said it acted because the $67 billion tie-up is the “most effective means to accelerate” its strategy of clinical and medical management, it said in a filing Tuesday with the U.S. Securities and Exchange Commission.
- The deal more efficiently uses capital than the Aetna-CVS deal, which is built on a bricks and mortar premise.
Cigna Corp. began its pursuit of Express Scripts Holding Co. in October 2017, not waiting for regulators to rule on a separate deal between CVS Health Corp. and Aetna Inc., the Bloomfield health insurer said in a filing with securities regulators.
Cigna said it acted because the $67 billion tie-up is the “most effective means to accelerate” its strategy of clinical and medical management, it said in a filing Tuesday with the U.S. Securities and Exchange Commission.
“Pharmacy is the most frequently consumed health care product for Americans and is the No. 1 cause of gaps in care,” Cigna said. “Our combination allows Cigna to fully leverage Express Scripts’ leading pharmacy management capabilities, including its specialty pharmacy capabilities.”
The combination of the two companies is expected to provide a “highly specialized and personalized” approach for consumers, resulting in high consumer satisfaction, better treatment and better health outcomes, it said.
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Express Scripts became a “preferred option due to its market-leading capabilities,” Cigna said.
Cigna and Express Scripts announced the acquisition by the Bloomfield health insurer March 8. The two companies say the deal will help control health care costs as consolidation picks up in the insurance and pharmacy benefits management industries.
Cigna said it expects to drive revenue growth to between 6 percent and 8 percent, from 4.5 percent, despite growth by Express Scripts in the low single digits. Express Scripts also will account for about two-thirds of the revenue of the combined company.
Cigna said it expects employer customer overlaps of about 30 percent, with a “substantial cross-selling opportunity” for products and services.
And it said it can expand its services into health plans and government entities now served by Express Scripts.
By leveraging Express Scripts’ pharmacy management services, Cigna will “more deeply drive” value-based models with health care providers and pharmaceutical manufacturers, Cigna said.
Leerink Research analyst Ana Gupte said in a client note Wednesday the deal faces a long regulatory review.
The stock is “likely in anti-trust purgatory for the next several months” and possibly through the end of the year, she said.
The deal more efficiently uses capital than the Aetna-CVS deal, which “is built on a bricks and mortar premise,” she said.
The deal bringing Aetna into an enlarged CVS is expected to provide a coast-to-coast chain of stores, including 9,700 retail sites and 1,600 in Target stores.
Cigna also said it sees the January announcement of a health care alliance by Amazon Inc., Berkshire Hathaway Inc. and JPMorgan Chase & Co. as consistent with widespread opinions that the health care system is unsustainable.
“We welcome additional voices to change the status quo and we believe there are potential partnership opportunities,” the company said.
Shares of Cigna closed up more than 2 percent, at $167.05. Express Scripts shares were down 1 percent, at $71.68
Date: March 22, 2018
