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Aetna, CVS merger sparks talk of Humana eyeing deal with Walmart

The combination of Aetna's analytics and CVS' pharmacy business has the potential to reshape the entire health plan market, Moody's says.

Susan Morse, Managing Editor

The $69 billion merger between CVS Health and Aetna, announced by CVS on Sunday, has spurred industry analysts to talk about a possible deal between Walmart and Humana, as the retailer feels the increased competition from an integrated pharmacy business and is currently in an arms race against online giant Amazon.

Leerink analyst Ana Gupte reportedly told CNBC last week that Humana and Walmart have been in a tight relationship for six or seven years, according to U.S. News.

Amazon is also poised to enter the pharmacy business, the report said. 

Humana did not immediately respond for comment.

So far, the American Hospital Association has offered no comment on what an Aetna-CVS deal, and its analytically-boosted pharmacy health hubs, would mean as competition to providers.

The CVS Health-Aetna merger could face an uphill battle from regulators, despite the pharmacy giant touting the synergies and savings for consumers.

Last year, the Department of Justice blocked a $37 billion merger between Aetna and Humana. The DOJ's decision was upheld in court.

The deal yields no short-term benefit for CVS Health, according to The Wall Street Journal.

Moody's Investors Service was bullish about the deal, saying its diversified revenue stream, unsurpassed scale and reach in the industry had the potential to reshape the entire health plan market.

But Moody's Vice President Mickey Chadha also said that CVS will pay the price from weakened credit metrics as the merger would be financed largely from debt and would come with high execution and integration risks. 

The merger does have the potential to reduce the cost of healthcare, due to Aetna's membership data, technology and strong Medicare Advantage growth, combined with CVS's pharmacy operations including minute clinics and prescription drug programs, he said. 

"The combination of CVS and Aetna will mark an industry shift towards a more seamless approach to managing healthcare costs as it brings together the overall management of a patient's medical bills and prescription drugs under one umbrella," Chadha said. "This will particularly be beneficial for the company as the fastest growing part of the pharmacy business is specialty drugs for patients with considerable medical needs and therefore requires a more coordinated approach to medical care." 

Twitter: @SusanJMorse
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