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.

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.