Cigna to Acquire Express Scripts for $69B to Expand Consumer Value

Fredrick Soto
March 19, 2018

The move follows the $69 billion merger of insurer Aetna and drugstore chain CVS Health announced last December.

St. Louis-based Express Scripts is the largest independent manager of pharmacy benefits in the USA and one of the country's largest pharmacies, with more than 85 million customers.

"Now neither of those entities are now available for Amazon", said Gupte, an analyst with more than 20 years of health care and strategy consulting experience.

They're not the only ones hunting for solutions.

The combination will "drive greater affordability", improve links within health care and prescriptions, while simplifying health care for customers, the companies said Thursday. No one knows what that means yet, but it sent a shudder through the industry.

Another point was the patient-provider alignment. They are especially focused on those with chronic conditions, like a diabetic who needs regular blood sugar monitoring and care to stave off heart attacks or other serious illnesses.

The third key factor was the personalized value by making health care simpler for consumers.

The deal comes at a time when consumers and lawmakers are increasingly concerned about rising health care costs, including prescription drugs. That push will help the company steer patients away from hospitals and cut down on unnecessary emergency room visits. Corient Capital Partners LLC increased its position in Express Scripts by 4.8% during the fourth quarter.

The combined company will use a network of "delivery system partnerships" to connect individuals and their health care providers, "providing a more coordinated approach to an individual's health care", the companies said. For instance, if a doctor prescribes an antidepressant, that data may show that the medicine won't work well for that person.

Health insurer Cigna Corp. In exchange, the PBMs include the drug companies' products on their formularies, or the list of drugs covered by insurers.

More notable recent Express Scripts Holding Company (NASDAQ:ESRX) news were published by: Bloomberg.com which released: "Cigna Agrees to Buy Express Scripts in $54 Billion Deal" on March 08, 2018, also Courant.com with their article: "Cigna To Buy Express Scripts in $67 Billion Deal" published on March 08, 2018, Seekingalpha.com published: "Express Scripts Holding (ESRX) Q4 2017 Results - Earnings Call Transcript" on February 28, 2018. During the same quarter in the previous year, the company posted $1.88 EPS. research analysts expect that Express Scripts Holding will post 9.35 earnings per share for the current fiscal year. That same year, Cigna agreed to combine with Anthem Inc., a deal that was also blocked by regulators.

Shares of Express Scripts have surged over 10% as of Thursday afternoon on the deal, which some on the Street see as spelling equally bad news for Amazon.

Express Scripts Holding Company (NASDAQ:ESRX) gross margin percentage stands at 8.8% while its operating margin for the past trailing twelve month is 5.5 percent and its overall profit margin (ttm) is 4.5 Percent.

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