DOJ's spectre looms over falling Humana stock
- Humana's stock price fell by 2.6% to $154 per share at the close of business Monday, Modern Healthcare reported.
- The stock on June 21 at the open of business was trading at $190.73.
- On Friday, Aetna executives met with the Justice Department following reports of concerns the agency had over the pending merger between the two carriers. The concerns could have fueled the drop in stock value last Thursday by as much as 11%.
While the pending Humana/Aetna merger is seen to likely have an easier regulatory process than the pending Cigna/Anthem merger, that doesn't mean DOJ doesn't have cause for concern. The pending mergers are seen as potentially reducing competition, which could result in higher healthcare costs for consumers.
Humana has a strong Medicare Advantage (MA) portfolio; the insurer claimed nearly 3.3 million Medicare Advantage policyholders as of April 1. Last week, reports stated Aetna had put its MA business on the market to ease antitrust concerns. WellCare and Centene are among the companies reported to have put their bids in for the assets.
The Kaiser Family Foundation determined last year a merger of Aetna and Humana would give the company at least half of all Medicare Advantage enrollees in 10 states, and at least two-thirds in five states, Bloomberg noted.
“If Aetna-Humana doesn't happen…it's not gonna be that pretty,” Steven Halper, an analyst at FBR Capital Markets & Co., was quoted in Modern Healthcare, adding the reason is Humana's core business has been all over the map in recent quarters.
Reuters reported last Friday that a source close to the deal said at the DOJ meeting, Aetna had presented a divestiture package to the federal agency but the source "did not specify which assets were on the chopping block."
- Modern Healthcare Humana's stock craters further on fears of DOJ blocking Aetna deal
- Healthcare Dive Aetna talks divestitures with DOJ for Humana deal
- The Wall Street Journal Big Insurers Defend $34 Billion Merger
- Modern Healthcare The reasons behind Humana's messy, yet still profitable, 2015
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