Humana to drop ObamaCare plans in 2018
- Author: Joanne Flowers Feb 15, 2017,
Feb 15, 2017, 3:59
Federal Judge John Bates ruled against health insurer Aetna's $37 billion bid to buy Humana.
In his 158-page decision, Bates rejected both arguments, saying, "The Court concludes that defendants' proffered efficiencies do not offset the anti-competitive effects of the merger", and that "neither entry by new competitors nor the proposed divestiture to Molina would suffice to replace competition eliminated by the merger".
Cigna shares were up 0.5% at $146.58 while Anthem were down 0.2% at $163.22 on Tuesday.
Under terms of the now-failed agreement, Cigna, of Bloomfield, Connecticut, is entitled to a $1.85 billion breakup fee.
The Louisville-based carrier said their decision to leave the market next year was in response to 2017 marketplace enrollment data that shows "further signs of an unbalanced risk pool", in which more younger, healthier enrollees are needed to offset the higher cost of sicker, older plan members.
Last week, Anthem filed an appeal of the court's ruling, but expectations for winning were seen as scant.
The merger agreement was reached over 19 months ago, but the two companies will now move ahead with their own strategies.
Anthem said that on January 18, Anthem extended its merger agreement with Cigna through April 30.
According to both companies, Aetna will pay Humana the breakup fee of $1 billion, which was $630 million after taxes.
'Cigna fulfilled all of its contractual obligations and Anthem throughout the fully cooperated with approval process'.
'Anthem will continue to enforce its rights under the Merger Agreement and remains committed to closing the transaction, ' Anthem said.
Cigna officials announced Tuesday they had sued Anthem in a DE court seeking a judge's affirmation that the company had lawfully ducked out of the merger agreement, and that Anthem couldn't extend the merger's expiration date.
Shares of Cigna rose 0.6 percent, while Anthem dropped 0.4 percent.