Aetna clears path to CVS merger with sale of assets to WellCare

(Bloomberg) -- Aetna said it plans to sell its Medicare prescription-drug business to WellCare Health Plans, a key step toward completing its $67.5 billion merger with CVS Health.

Financial terms of the deal weren’t disclosed. In a securities filing, Aetna said that the “purchase price is not material” to the company. The divestiture of the Medicare Part D plans to WellCare may help resolve objections to the CVS-Aetna deal from U.S. antitrust regulators.

“Aetna believes the divestiture is a significant step toward completing the DOJ’s review” of the CVS deal, the company said in the filing.

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Aetna world headquartersare seen in Hartford, Connecticut on December 13, 2001. The largest US health insurer will eliminate 6,000 jobs, or about 16% of its workforce. Photographer: Michael J. Doolittle/ Bloomberg News.

CVS has said that selling off some Medicare prescription-drug plans wouldn’t have a material impact on the expected benefits of the Aetna deal, because they’re a small portion of the combined firm’s overall business. CVS is a drugstore giant, and manages drug benefits for employers and insurers, while Aetna is the No. 3 U.S. health insurer, with about 22 million members.

WellCare, a smaller health insurer based in Tampa, Florida, has been using deals to fuel its expansion. The company completed a $2.5 billion deal for the health insurer Meridian in early September, adding about 1.1 million insurance customers to its base of 4.4 million members. As a sign of its growth, WellCare was added to the S&P 500 Index this month.

Medicare Part D plans offer prescription-drug insurance for the elderly and disabled, subsidized by the federal government. As of June, CVS had the biggest Part D business, with about 6.1 million customers, while UnitedHealth was No. 2 at 5.4 million members, according to data compiled by Bloomberg. Aetna was smaller, with about 2.2 million members.