The 4 biggest health care mega-mergers of the past year

Topics: Industry, Prescription Drugs, Insurance, Health Plans/Insurance Companies, Providers

By Jackie Kimmell, Senior Analyst

We're more than six months into 2018, and global merger and acquisition (M&A) activity isn't slowing. After a record start—more than $2.5 trillion in mergers were announced during the first half of 2018—the year's activity is on pace to surpass $5 trillion, topping 2015 as the largest total on record.

And, of course, M&A in the health care sector is a huge component of the increase. It's also likely to continue growing. According to a HealthLeaders's survey on the topic, 71% of health leaders believe their organizations' merger, acquisition, and partnership (MAP) activity will increase in the next three years, and 68% say their organizations are already actively exploring potential deals.

To provide a sense of the scale of the change, here are the four biggest health care mergers and acquisitions pending right now:

  1. Cigna acquires Express Scripts

    Deal size: Cigna pays $67B in cash and stock

    Timeline: Deal was announced on March 8, 2018 and is expected to close by December 31, 2018

  2. CVS acquires Aetna

    Deal size: CVS pays $69B in cash and stock

    Timeline: Deal was announced December 3, 2017. The Department of Justice requested more information in February 2018

  3. Walmart in talks with Humana

    Deal size: Unknown, but Walmart has a market cap of $258.8B and Humana has a market cap of $39.7B

    Timeline: First rumors of the deal were reported on March 29, 2018

  4. Optum acquires DaVita

Deal size: UnitedHealth Group pays $4.9B in cash

Timeline: Deal was announced December 6, 2017 and the Federal Trade Commission requested a second round of additional information on March 12, 2018 

American Health Line is published by Advisory Board, a division of Optum, which is a wholly owned subsidiary of UnitedHealth Group.

What do these deals say about the state of health care M&A today?

Health care M&A activity is hardly new. What is new, however, is the new-in-kind combinations of players involved. The variety in the stakeholders involved (pharmacy benefit managers, major payers, commercial companies, medical groups, and so on) indicate a trend towards vertical integration of diverse stakeholders once thought to be in "separate parts" of the sector.

When these diverse stakeholders combine, they can have remarkable synergies—aligned incentives, large complementary data sets, and combined assets—which experts say have the potential to greatly disrupt market dynamics.