CVS announced in December plans to buy Aetna for about $69 billion in cash and stock. The deal would combine CVS' drugstores and pharmacy benefits manager platform with Aetna's insurance business, blurring traditionally distinct lines in hopes of lowering costs.
The deal comes as both the retail and health-care industries are coming under pressure. Drugstores like CVS are finding a fierce competitor in e-commerce, particularly Amazon, which CNBC has reported to be interested in selling prescription drugs. It already sells over-the-counter drugs, including an exclusive line of Perrigo products.
Health-care companies, including insurers, are searching for ways to lower costs. Health spending equals 18 percent of the nation's gross domestic product, and that number is expected to reach 20 percent by 2025.
Amazon CEO Jeff Bezos, J.P. Morgan CEO Jamie Dimon and Berkshire Hathaway CEO Warren Buffett have even joined the health-care space. They're partnering to try to tackle the "hungry tapeworm on the American economy," as Buffett dubbed health-care costs in January.
Since the CVS-Aetna acquisition was announced, grocer Albertsons said it would acquire drugstore chain Rite Aid. Pharmacy retailer Walgreens Boots Alliance was reportedly considering buying the rest of the wholesale drug distributor AmerisourceBergen it doesn't already own, but talks have cooled.
CVS and Aetna have touted their combination as a way to use CVS' retail stores to help rein in health-care costs. They're hoping to get more people into their walk-in clinics at drugstores and keep them out of more expensive sites like emergency rooms.
Within the next year or so, CVS and Aetna expect MinuteClinics to perform about 90 percent of services provided in primary care facilities, up from about 40 to 45 percent now, CVS Executive Vice President Thomas Moriarty told a congressional panel last month.
If shareholders approve the deal, it will bring CVS and Aetna closer to finalizing the transaction, though the Justice Department will still need to sign off on it. The agency requested more information from the two companies last month, but Merlo said the companies built that into the timeline and still expect the deal to close in the second half of the year.