Heath insurer Aetna plans to sell its Medicare prescription drug business to WellCare Health Plans, a move that will potentially clear the way for CVS Health to complete its $69 billion takeover of the insurer.
While Aetna has not disclosed the terms of the sale to WellCare, the company did state that its Medicare Part D plans cover more than 2.2 million members. Matt Borsch, BMO capital markets analyst estimated the acquisition will add $3 billion to WellCare’s annual revenue and 50 cents to $1 per share to earnings starting 2020.
Late last year, CVS began preparations to buy Aetna in a deal that is expected to give the drugstore chain a more prominent role in the healthcare industry. However, industry experts have pointed to regulator concerns about a Medicare business overlap between the companies as a potential setback for the acquisition.
Aetna’s Medicare sale aims to avoid an antitrust lawsuit over the amount of control CVS would have over the Medicare prescription drug market. Currently, CVS controls 24 percent of the Medicare prescription drug market. Aetna says the closing of deal is contingent on the antitrust approval.
According to CVS, the Aetna acquisition is expected to close in early in the fourth quarter of 2018.
WellCare shares rose four percent to $319.76, Aetna added 0.7 percent to $203.13, and CVS was up 0.6 percent to $78.93.