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Humana, Aetna announce merger; governor ‘cautiously optimistic’ it’s a ‘net positive’

Louisville-based Humana and Aetna today announced an agreement under which Aetna will acquire all outstanding shares of Humana for a combination of cash and stock valued at $37 billion, or approximately $230 per Humana share based on the closing price of Aetna common shares on July 2.

Humana's Bruce Broussard

Humana’s Bruce Broussard

According to a press release, Aetna will make Louisville the headquarters for its Medicare, Medicaid and TRICARE businesses, and will maintain a significant corporate presence in Louisville, where it was founded more than 50 years ago.

Kentucky Gov. Steve Beshear was quick to release a statement regarding the news of the merger: “In addition to the information contained in the news release, I have spoken to Bruce Broussard, CEO of Humana, this morning and Mark Bertolini, CEO of Aetna, earlier this week.) Based upon all the information available, I am cautiously optimistic that this merger will be a net positive for Louisville and the commonwealth. Both Humana and Aetna are progressive, innovative companies in the health care field, and that bodes well for the new entity because of the rapidly changing health care landscape.

Under the terms of the agreement, which has been unanimously approved by the board of directors of each company, Humana stockholders will receive $125 in cash and 0.8375 Aetna common shares for each Humana share. As a result of the transaction, Aetna’s shareholders would own approximately 74 percent of the combined company and Humana’s shareholders would own approximately 26 percent.

The combined company would have projected 2015 operating revenue of approximately $115 billion, with approximately 56 percent from government sponsored programs (including Medicare and Medicaid), according to the press release. The combined company will have over 33 million medical members, based on memberships as of March 31, 2015. The combined membership includes Humana’s 3 million TRICARE members, under a program of health care coverage for military families and retirees administered by the U.S. Department of Defense.

Humana's Louisville headquarters

Humana’s Louisville headquarters

The combination of Aetna and Humana, according to the announcement:

Builds on each company’s respective efforts to provide innovative, technology-driven products, services and solutions to build healthier populations, promote higher quality health care at lower cost, and offer greater transparency and convenience for consumers.

Increases Aetna’s Medicare Advantage membership to 4.4 million and improves Aetna’s ability to serve members and their providers with cutting-edge technology and best practices.

Brings together two companies with leading percentages of membership in Medicare plans rated four Stars or higher.

Creates a leading health care services and pharmacy benefit franchise, serving members who use over 600 million prescriptions annually.
Strengthens care management capabilities by taking the best-of-breed provider solutions, including robust offerings of patient-centered provider services, clinical intelligence, value-based reimbursement models, data integration and analytics solutions from both companies.

Brings together two companies with longstanding commitments to promoting wellness, health and access to high-quality health care for everyone, while supporting the communities in which they serve.
Transaction Details

Following the close of the transaction, Aetna’s Mark Bertolini will serve as chairman and CEO of the combined company. At the time of the closing, the Aetna board of directors will be comprised of 12 current Aetna directors and four Humana directors, for a total of 16 directors.

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