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CVS Completes Acquisition of Aetna

In October 2017, it was first reported that CVS was in talks to acquire Aetna.

Now, just over a year later, the $70 billion transaction has closed. Aetna is now a business unit of a company that has nearly 10,000 retail locations across the United States. CVS plans to push an integrated healthcare model with more space in its stores being allocated for healthcare delivery (think MinuteClinics) and a particular focus put on managing chronic conditions such as heart disease and diabetes. CVS also sees opportunity to reduce patients’ unnecessarily going to the hospital or emergency room when a less expensive, more convenient treatment option for some conditions may exist in a CVS location.

In the year since the CVS-Aetna merger was first reported, the competitive landscape has changed in a similar fashion. In March, Cigna announced its intention to buy ExpressScripts, a pharmacy benefit manager. That deal is expected to close in a few weeks. Humana and Walgreens have had a partnership for some time and are now reported to be in talks of expanding their ties, if not merging altogether. Walgreens itself acquired a large portion of the RiteAid pharmacy chain in March. More recently, Amazon purchased online pharmacy PillPack and had been posturing to disrupt healthcare in ways yet to be announced or fully understood.

In the midst of it all, there’s been a predictable use of the words “synergies,” “greater value,” and all the other terms favored by executives when describing how two companies will be better as one. Now, these newly integrated companies must turn their focus from obtaining the approval of investors and regulators to convincing consumers that they provide a truly differentiated product.

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