AET Aetna Inc. (delisted)

By Aisha Al-Muslim 

CVS Health Corp. executives gave investors a window into its strategy after closing the acquisition of health insurer Aetna Inc., with an eye on becoming a one-stop shop for patients.

The CVS-Aetna merger -- which brings together the giant drugstore chain and pharmacy-benefit manager with the No. 3 health insurer -- needs the approval from five more states to complete the deal. So far, CVS said it has received approval from 23 of the 28 states needed. The purchase is expected to close before Thanksgiving.

"We are well down the line with the remaining five" states, the company said in a statement Tuesday.

CVS and Aetna operate in largely different businesses, with their most direct overlap coming in selling plans under the Medicare prescription-drug program, known as Part D.

Last month, Justice Department antitrust enforcers cleared CVS's nearly $70 billion deal to buy Aetna after the companies took steps to ease concerns about reducing competition among Medicare insurance-plan providers. Aetna in September agreed to sell its Medicare Part D prescription business, which had about 2.2 million members, to WellCare Health Plans Inc.

CVS Chief Executive Larry Merlo said during the call the combined company will focus on reducing medical costs by increasing consumers' adherence to prescription regimens, expanding its membership base, and offering more services through its bricks-and-mortar stores. CVS also said the combination would close gaps in care, reduce unnecessary emergency-room visits, and move expensive therapies to lower-cost care sites.

Mr. Merlo said CVS expects to exceed its original goal of stripping out $750 million of corporate expenses and other costs from the combined organization.

The new integrated model, for instance, would target better management of five common chronic conditions, such as diabetes, cardiovascular disease, hypertension, asthma and behavioral health, by integrating pharmacy and medical claims, using its clinical data-set access, and expanding the services available at MinuteClinic to help with early identification and ongoing management of chronic disease. It also plans to have programs and services that reduce hospitalization.

The company will pilot new programs and services through its first concept stores that will be open early in 2019.

"We are hard at work creating a plan to differentiate CVS Health in these patient journeys with the goal of making them simpler and more personalized while making care more accessible," Mr. Merlo said.

Shares, which are up more than 15% in the last 12 months, rose 4.7% to $77.20 in afternoon trading Tuesday after the company posted stronger revenue and profit in the latest quarter and continued to see growth in the number of prescriptions filled at its pharmacies.

The Woonsocket, R.I.-based company's third-quarter revenue rose 2.4% to $47.3 billion, ahead of estimates from analysts. Same-store sales grew 6.7%, beating the FactSet estimate of a 5.4% increase

The company posted a profit of $1.39 billion, or $1.36 a share, up from $1.29 billion, or $1.26 a share, a year earlier. Excluding items including costs related to the Aetna deal, earnings were $1.73 a share, ahead of the consensus forecast of $1.71 a share.

Write to Aisha Al-Muslim at aisha.al-muslim@wsj.com

(END) Dow Jones Newswires

November 06, 2018 16:04 ET (21:04 GMT)

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