By Dana Cimilluca, Dana Mattioli and Anna Mathews
CVS Health Corp. has agreed to buy Aetna Inc. for about $69 billion in cash and stock, a landmark deal that would change the U.S. health-care landscape by bringing a large insurer and a big provider of pharmacy services under one roof.
In an agreement that has been months in the making and is likely to be announced later Sunday, Aetna stockholders are to receive $207 per share, $145 in cash and $62 in stock, according to people familiar with the matter.
As part of the deal, CVS plans to use its nearly 10,000 pharmacy locations to provide consumers with more local care options.
The deal -- the biggest announced in more than a year -- pulls together two giants from very different corners of the health-care industry. CVS, with annual revenue of $178 billion, is a major pharmacy-benefits manager in addition to its vast collection of drugstores, some of which already have retail clinics. Aetna, with revenue of around $63 billion, is the third-largest U.S. health insurer, providing coverage to around 22.2 million members enrolled in employer, Medicare, Medicaid and other plans.
Both companies have challenges in their core businesses. CVS faces the potential threat of Amazon.com Inc., which may enter the pharmacy business.
Aetna was forced earlier this year to give up its planned acquisition of Humana Inc. and has retreated from the money-losing Affordable Care Act exchange business, leaving it with an unclear path to future growth, analysts say. It also lacks the diversity of larger rival UnitedHealth Group Inc., which has a fast-expanding health-services arm that includes a pharmacy-benefits manager as well as doctor practices and surgery centers.
The deal "feels more defense than offense," Ana Gupte, an analyst with Leerink Partners LLC, said recently. In Aetna's case, "I don't see a path to growth" in its current configuration, she said.
The combination faces substantial challenges, including the huge operational task of knitting together the companies' diverse operations so that customer experiences are smooth and seamless. The deal isn't likely to deliver as many cost-cutting benefits as combinations with more direct overlap, such as Aetna's scuttled acquisition of Humana, analysts said. CVS will need to keep much of Aetna's infrastructure since it doesn't currently provide health insurance.
CVS plans to repurpose portions of its pharmacies so they become community health centers where customers can go to get answers to more questions about their health and coverage, the companies plan to announce. The pharmacies will have space dedicated to wellness, and provide services for things like vision, hearing and nutrition.
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