Aetna (AET) CEO Bertolini Discusses DOJ Block to Humana Merger on CNBC
NEW YORK (TheStreet) -- The Department of Justice has sued to block a pair of mergers within the health insurance industry on Thursday. The $37 billion deal between Aetna (AET) and Humana (HUM) has been blocked, as has the $48 billion combination of Cigna (CI) and Anthem (ANTM).
"These mergers would reshape the industry, eliminating two innovative competitors - Cigna and Humana - at a time when the industry is experimenting with new ways to lower health care costs," the lawsuit to stop the deal said, according to the New York Times.
Aetna CEO Mark Bertolini appeared on CNBC's "Fast Money: Halftime Report" today to discuss the blocked deal and how the company plans to fight back.
Bertolini is prepared to "vigorously defend" Aetna's planned merger with Humana and the CEO is ready to go to court if need be.
Bertolini has said in the past that the deal will cut costs and negotiate better prices for customers, CNBC anchor Scott Wapner reported. However, Attorney General Loretta Lynch believes that the merger would improve company profits at the expense of "consumers, employers, and health professionals."
"This is not about the commercial employer business between Aetna and Humana," Bertolini told Wapner. "Humana has very little commercial business, we have no overlap in the markets."
In terms of prices the CEO pointed out that Medicare prices are set by the government in relation to Medicare fee for service.
There are currently five major health insurance companies and these mergers would knock the number down to three.
"Five companies on a national basis don't have any more than 11% market share across the country. The real competition is at the local market level," Bertolini said.
The CEO would go on to continue to defend the mergers and vowed to go as far as needed to make sure the deal goes through as planned.
Shares of Aetna are higher by 2.92% to $119.87 on Thursday afternoon.
Separately, TheStreet Ratings has set a "buy" rating and a score of A+ on Aetna stock. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that TheStreet Ratings covers.
The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. TheStreet Ratings feels its strengths outweigh the fact that the company has had sub par growth in net income.
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: AET