On December 3, 2017, CVS Health Corp. (NYSE: CVS) announced it would purchase health insurer Aetna Inc. (NYSE: AET) for $67.5 billion, a transaction that would be one of the biggest healthcare mergers in the past decade. The proposed deal would combine the largest U.S. drugstore chain with one of the country's largest health insurers. Although consolidation is not a new trend in healthcare, the merger between CVS and Aetna would present a new type of framework, a vertically consolidated company that offers healthcare services through CVS's pharmacies, Minute Clinics and pharmacy benefit manager services, while also providing managed care services to Aetna's millions of plan members.
The transaction raises an intriguing question: is this the beginning of a transformational shift in healthcare? With 2017's failure of the proposed horizontal mergers between health insurance giants still fresh, the CVS–Aetna deal could be the first of many cross-sector mergers. Indeed, only a few days after the announcement, UnitedHealth Group Inc. (NYSE: UNH), the largest U.S. health insurer, announced that it would expand its OptumCare business by acquiring approximately 300 physician practices from DaVita Inc. (NYSE: DVA). If the CVS-Aetna deal is in fact the beginning of a new era, the integration of different healthcare sectors and service lines would be a possible response to the government's emphasis on value-based care, and could serve as a solution to the challenges of traditional reimbursement models.
Below, we've outlined 2017 M&A activity and drivers in the following hot sectors:
- Managed Care
- Post-Acute Care—Home Health & Hospice
- Ambulatory Surgery Centers (ASCs)
- Healthcare Information Technology (HIT)
- Behavioral Health
- Physician Practice Management