Oh, the irony.
Health insurers Aetna and Humana have officially terminated their merger plans, and they did it on Valentine’s Day. What’s more, Aetna has to pony up a cool $1 billion to do so.
Aetna and Humana also said they have terminated separate agreements to sell some of their Medicare Advantage business to Molina Healthcare for $117 million. That plan, announced in August 2016, was contingent on the closing of the big merger.
“We find it ironic that we signed the deal with Aetna on Independence Day weekend and that the deal broke on Valentine’s Day,” Humana President and CEO Bruce Broussard said during a conference call with investors Tuesday afternoon.
Humana also announced that it would exit all individual commercial markets at the beginning of 2018. The company plans on diving deeper into chronic care management, particularly the lucrative Medicare Advantage segment.
“We are beginning to see signs of an unbalanced risk pool,” Broussard said of the individual market. He based that assessment on results of the 2017 open enrollment period.
The split became inevitable on Jan. 23, when a federal judge in Washington, D.C., blocked Aetna’s $37 billion purchase of its rival on antitrust grounds. But the two companies made it official on Tuesday.
Under terms of the merger agreement struck July 2, 2015, Aetna would have to pay a $1 billion breakup fee should the deal not be consummated by Feb. 15, 2017. It just so happened that the companies decided to mess with Cupid by calling off their union one day early.
Louisville, Kentucky-based Humana said it would receive approximately $650 million after taxes.
The two companies had every intention to enter into this union, but U.S. District Court Judge John D. Bates saw a motive other than true love. He ruled that the deal would “substantially” reduce competition in the Medicare Advantage market.
Read More – Source: On Valentine’s Day, Aetna breaks up with Humana for $1B (updated) – MedCity News
By NEIL VERSEL