A federal district judge on Monday blocked the proposed $37 billion merger of Aetna (AET) and Humana (HUM - Get Report) , after finding that the merger would likely harm competition in Medicare Advantage in hundreds of counties around the U.S. and in the public Obamacare exchanges in Florida.

The Department of Justice sued to block the merger.

"We're reviewing the opinion now and giving serious consideration to an appeal, after putting forward a compelling case," Aetna spokesman T.J. Crawford told TheStreet.

The news sent shares of both companies tumbling. Aetna fell 2.7%% to $119.20. Humana shares rose slightly to $205.02. Shares of Cigna (CI - Get Report)  rose slightly while Anthem (ANTM - Get Report) declined a bit, as their $44 billion merger has also been challenged by the FTC and a judge's ruling is pending.

In his decision, U.S. District Judge John Bates based his ruling on the level of market concentration the merger would cause and evidence that substantial head-to-head competition between Aetna and Humana that would be lost. Bates added that there is insufficient evidence to conclude that Humana's dropping market share will decline to such an extent that the merger would not increase market concentration or that the markets are too volatile to reasonably predict the anticompetitive effects of the merger.

Bates also said he was "unpersuaded" that the efficiencies generated by the merger would be sufficient to offset the anticompetitive effects.

"AET has the option to appeal the deal though we see HUM enjoying options including CI (most likely), ANTM (second most likely), and even [ExpressScripts]  (ESRX) and [CVS Corp.] (CVS - Get Report)  as likely bidders," wrote Leerink analyst Ana Gupte in a note to investors Monday.

The firm added that they expect fundamental investors to remain on the sidelines. The firm reiterated its $250 price target on Humana. 

As part of the deal, Aetna and Humana had tentatively agreed to sell a portion of the combined business to Molina Health. Molina is set to receive a $70 million breakup fee.