-- Divestitures Designed to Preserve Robust
Competition for Seniors Choosing to Receive Medicare Coverage
Through Medicare Advantage Plans --
-- Transactions Contingent on Successful
Closing of Aetna-Humana Transaction --
Aetna (NYSE:AET) and Humana Inc. (NYSE:HUM) today announced they
have entered into separate agreements to sell certain of their
respective Medicare Advantage assets to Molina Healthcare, Inc.
(NYSE: MOH) for a total estimated $117 million in cash for both
transactions, based on the estimated number of members in the plans
involved in the transactions. The transactions are subject to the
successful completion of Aetna’s proposed acquisition of Humana,
CMS approvals and actions, and customary closing conditions,
including state and other regulatory approvals.
This Smart News Release features multimedia.
View the full release here:
http://www.businesswire.com/news/home/20160802005904/en/
As a result of the transactions, Molina is expected to gain
approximately 290,000 Medicare Advantage members in 21 states,
preserving robust competition for seniors choosing to receive
Medicare coverage through Medicare Advantage plans and addressing a
key concern of the U.S. Department of Justice in its challenge to
the Aetna-Humana transaction.
“Our agreements with Molina promote competition within the
large, diverse and highly regulated Medicare industry, and ensure
that seniors continue to have an abundance of options when they
decide how to receive Medicare coverage,” said Mark T. Bertolini,
Aetna chairman and CEO, and Bruce Broussard, Humana president and
CEO. “We believe that these divestitures taken together would
address the Department of Justice’s perceived competitive concerns
regarding Medicare Advantage. We are confident in Molina’s ability
to deliver continued access to quality care for our members in
these areas.”
On the Aetna-Humana combination, Bertolini and Broussard
commented, “We look forward to making our position clear in court,
where the facts will show that our combination will result in a
broader choice of products, access to higher quality and more
affordable care, and a better overall experience for
consumers.”
The Medicare Advantage plans involved in the transactions
include certain Aetna Medicare Advantage plans in Alabama,
Arkansas, Florida, Georgia, Illinois, Louisiana, North Carolina,
Nevada, Ohio, Oklahoma, Texas, Virginia and West Virginia, and
certain Humana plans in Delaware, Illinois, Iowa, Kansas, Missouri,
Nebraska, Ohio, Pennsylvania, South Dakota and Utah. Aetna and
Humana expect to continue administering their respective plans
involved in the transaction for a transition period following the
closing to provide consistency for Medicare beneficiaries
involved.
The companies remain committed to vigorously defending their
pending transaction against a U.S. Department of Justice lawsuit
seeking to block it. Aetna and Humana remain confident that their
transaction is in the best interest of consumers, particularly
seniors who elect to seek Medicare coverage through affordable,
high-quality Medicare Advantage plans.
For more information on the competitive dynamics of traditional
Medicare and Medicare Advantage, visit
http://www.aetnaandhumana.com/wp-content/uploads/2016/07/Medicare_MA_Competitive7.21.16.pdf
For more information on the overall benefits of a combined
Aetna-Humana, visit
http://www.aetnaandhumana.com/why-were-combining/building-a-healthier-world/.
About Aetna
Aetna is one of the nation's leading diversified health care
benefits companies, serving an estimated 46.5 million people with
information and resources to help them make better informed
decisions about their health care. Aetna offers a broad range of
traditional, voluntary and consumer-directed health insurance
products and related services, including medical, pharmacy, dental,
behavioral health, group life and disability plans, and medical
management capabilities, Medicaid health care management services,
workers' compensation administrative services and health
information technology products and services. Aetna's customers
include employer groups, individuals, college students, part-time
and hourly workers, health plans, health care providers,
governmental units, government-sponsored plans, labor groups and
expatriates. For more information, see www.aetna.com and learn
about how Aetna is helping to build a healthier world.
@AetnaNews
About Humana
Humana Inc., headquartered in Louisville, Ky., is a leading
health and well-being company focused on making it easy for people
to achieve their best health with clinical excellence through
coordinated care. The company’s strategy integrates care delivery,
the member experience, and clinical and consumer insights to
encourage engagement, behavior change, proactive clinical outreach
and wellness for the millions of people we serve across the
country.
Cautionary Statement Regarding Forward-Looking
Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. You can generally identify forward-looking statements by
the use of forward-looking terminology such as “anticipate,”
“believe,” “continue,” “could,” “estimate,” “expect,” “explore,”
“evaluate,” “intend,” “may,” “might,” “plan,” “potential,”
“predict,” “project,” “seek,” “should,” or “will,” or the negative
thereof or other variations thereon or comparable terminology.
These forward-looking statements are only predictions and involve
known and unknown risks and uncertainties, many of which are beyond
Aetna’s and Humana’s control.
Statements in this press release regarding Aetna and Humana that
are forward-looking, including the number of members subject to the
divestiture transactions; the impact of the Humana Acquisition
and/or the divestiture transactions on competition, the ability of
the divestiture transactions to address Department of Justice
concerns, the quality of Molina’s future services to Aetna and/or
Humana members, the resolution of the Department of Justice
litigation relating to the Humana Acquisition, and the duration of
administrative services provided by Aetna and/or Humana to Molina,
are based on management’s estimates, assumptions and projections,
and are subject to significant uncertainties and other factors,
many of which are beyond Aetna’s and Humana’s control. Important
risk factors could cause actual future results and other future
events to differ materially from those currently estimated by
management, including, but not limited to: the timing to consummate
Aetna’s proposed acquisition of Humana (the “Humana Acquisition”);
the timing and resolution of the Department of Justice litigation
relating to the Humana Acquisition; the timing to consummate the
proposed divestitures of certain of Aetna’s and Humana’s Medicare
Advantage assets (collectively, the “Divestitures”); the risk that
a condition to closing of the Humana Acquisition and/or the
Divestitures may not be satisfied; the risk that a regulatory
approval that may be required for the Humana Acquisition and/or the
Divestitures is delayed, is not obtained or is obtained subject to
conditions that are not anticipated; the outcome of various
litigation matters related to the Humana Acquisition; Aetna’s
ability to achieve the synergies and value creation projected to be
realized following the completion of the Humana Acquisition;
Aetna’s ability to promptly and effectively integrate Humana’s
businesses; the diversion of management time on Humana
Acquisition-related and/or Divestiture-related issues; the
profitability of Aetna’s and Humana’s public health insurance
exchange and ACA compliant small group products, where membership
has had and may continue to have more adverse health status and/or
higher medical benefit utilization than Aetna and/or Humana
projected; unanticipated increases in medical costs (including
increased intensity or medical utilization as a result of flu or
otherwise; changes in membership mix to higher cost or
lower-premium products or membership adverse selection; medical
cost increases resulting from unfavorable changes in contracting or
re-contracting with providers (including as a result of provider
consolidation and/or integration); and increased pharmacy costs
(including in Aetna’s and/or Humana’s public health insurance
exchange products)); uncertainty related to Aetna’s and Humana’s
accruals for health care reform’s reinsurance, risk adjustment and
risk corridor programs (“3R’s”); uncertainty related to the funding
for and final reconciliations with respect to health care reform's
risk management and subsidy programs; the implementation of health
care reform legislation, including collection of health care reform
fees, assessments and taxes through increased premiums; adverse
legislative, regulatory and/or judicial changes to or
interpretations of existing health care reform legislation and/or
regulations (including those relating to minimum medical loss ratio
(“MLR”) rebates); the implementation of health insurance exchanges;
Aetna’s and Humana’s ability to offset Medicare Advantage and PDP
rate pressures; and changes in Aetna’s and Humana’s future cash
requirements, capital requirements, results of operations,
financial condition and/or cash flows. Health care reform will
continue to significantly impact Aetna’s business operations and
financial results, including Aetna’s pricing and medical benefit
ratios. Key components of the legislation will continue to be
phased in through 2020, and Aetna will be required to dedicate
material resources and incur material expenses during 2016 to
implement health care reform. Significant parts of the legislation,
including aspects of public health insurance exchanges,
nondiscrimination requirements, reinsurance, risk corridor and risk
adjustment, continue to evolve through the promulgation of
regulations and guidance at the federal level. In addition, pending
efforts in the U.S. Congress to amend or restrict funding for
various aspects of health care reform and pending litigation
challenging aspects of the law continue to create additional
uncertainty about the ultimate impact of health care reform. As a
result, many of the impacts of health care reform will not be known
for the next several years. Other important risk factors include:
adverse changes in health care reform and/or other federal or state
government policies or regulations as a result of health care
reform or otherwise (including legislative, judicial or regulatory
measures that would affect Aetna’s and/or Humana’s business model,
restrict funding for or amend various aspects of health care
reform, limit Aetna’s and/or Humana’s ability to price for the risk
it assumes and/or reflect reasonable costs or profits in its
pricing, such as mandated minimum medical benefit ratios, or
eliminate or reduce ERISA pre-emption of state laws (increasing
Aetna’s and/or Humana’s potential litigation exposure)); adverse
and less predictable economic conditions in the U.S. and abroad
(including unanticipated levels of, or increases in the rate of,
unemployment); reputational or financial issues arising from
Aetna’s and/or Humana’s social media activities, data security
breaches, other cybersecurity risks or other causes; Aetna’s
ability to diversify Aetna’s sources of revenue and earnings
(including by developing, operating and expanding Aetna's consumer
business and expanding Aetna’s foreign operations), transform
Aetna’s business model, develop new products and optimize Aetna’s
business platforms; the success of Aetna’s Healthagen® (including
Accountable Care Solutions and health information technology)
initiatives; adverse changes in size, product or geographic mix or
medical cost experience of membership; managing executive
succession and key talent retention, recruitment and development;
failure to achieve and/or delays in achieving desired rate
increases and/or profitable membership growth due to regulatory
review or other regulatory restrictions, the difficult economy
and/or significant competition, especially in key geographic areas
where membership is concentrated, including successful protests of
business awarded to Aetna and/or Humana; failure to adequately
implement health care reform; the outcome of various litigation and
regulatory matters, including audits, challenges to Aetna’s and/or
Humana’s minimum MLR rebate methodology and/or reports, guaranty
fund assessments, intellectual property litigation and litigation
concerning, and ongoing reviews by various regulatory authorities
of, certain of Aetna’s and/or Humana’s payment practices with
respect to out-of-network providers, other providers and/or life
insurance policies; Aetna’s ability to integrate, simplify, and
enhance Aetna’s existing products, processes and information
technology systems and platforms to keep pace with changing
customer and regulatory needs; Aetna’s ability to successfully
integrate Aetna’s businesses (including Humana, Coventry, bswift
LLC and other businesses Aetna may acquire in the future) and
implement multiple strategic and operational initiatives (including
the Divestitures) simultaneously; Aetna’s and/or Humana’s ability
to manage health care and other benefit costs; adverse program,
pricing, funding or audit actions by federal or state government
payors, including as a result of sequestration and/or curtailment
or elimination of the Centers for Medicare & Medicaid Services’
star rating bonus payments; Aetna’s ability to reduce
administrative expenses while maintaining targeted levels of
service and operating performance; failure by a service provider to
meet its obligations to Aetna or Humana; Aetna’s and Humana’s
ability to develop and maintain relationships (including
collaborative risk-sharing agreements) with providers while taking
actions to reduce medical costs and/or expand the services each
company offers; Aetna’s ability to demonstrate that Aetna’s
products and processes lead to access to quality affordable care by
Aetna’s members; Aetna’s and/or Humana’s ability to maintain their
relationships with third-party brokers, consultants and agents who
sell their products; increases in medical costs or Group Insurance
claims resulting from any epidemics, acts of terrorism or other
extreme events; changes in medical cost estimates due to the
necessary extensive judgment that is used in the medical cost
estimation process, the considerable variability inherent in such
estimates, and the sensitivity of such estimates to changes in
medical claims payment patterns and changes in medical cost trends;
a downgrade in Aetna’s financial ratings; and adverse impacts from
any failure to raise the U.S. Federal government’s debt ceiling or
any sustained U.S. Federal government shut down. For more
discussion of important risk factors that may materially affect
Aetna, please see the risk factors contained in Aetna’s 2015 Annual
Report on Form 10-K (“Aetna’s 2015 Annual Report”) and Aetna's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2016
("Aetna's March 2016 Quarterly Report"), each on file with the
Securities and Exchange Commission ("SEC"), and Aetna’s Quarterly
Report on Form 10-Q for the quarter ended June 30, 2016 (“Aetna’s
June 2016 Quarterly Report”), when filed with the SEC. For more
discussion of important risk factors that may materially affect
Humana, please see the risk factors contained in Humana’s 2015
Annual Report on Form 10-K (“Humana’s 2015 Annual Report”) and
Humana's Quarterly Reports on Form 10-Q and Current Reports on Form
8-K filed or furnished during 2016, each on file with the SEC. You
should also read Aetna’s 2015 Annual Report and Aetna's March 2016
Quarterly Report, each on file with the SEC, and Aetna’s June 2016
Quarterly Report, when filed with the SEC, for a discussion of
Aetna’s historical results of operations and financial condition.
You should also read Humana’s 2015 Annual Report, Humana's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2016,
each on file with the SEC, and Humana’s Quarterly Report on Form
10-Q for the quarter ended June 30, 2016, when filed with the SEC,
for a discussion of Humana’s historical results of operations and
financial condition.
No assurances can be given that any of the events anticipated by
the forward-looking statements will transpire or occur, or if any
of them do occur, what impact they will have on the results of
operations, financial condition or cash flows of Aetna or Humana.
Neither Aetna nor Humana assumes any duty to update or revise
forward-looking statements, whether as a result of new information,
future events or otherwise, as of any future date.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160802005904/en/
Aetna Media Contact:T.J. Crawford,
212-457-0583crawfordt2@aetna.comorAetna Investor Contact:Joe
Krocheski, 860-273-0896krocheskij@aetna.comorHumana Media
Contact:Tom Noland, 502-580-3674tnoland@humana.comorHumana
Investor Contact:Regina Nethery,
502-580-3644rnethery@humana.com
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