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2 massive healthcare deals just got approved by the DOJ — and they will change healthcare as we know it

2 massive healthcare deals just got approved by the DOJ — and they will change healthcare as we know it

Cigna CEO David Cordani speaking at CNBC’s Healthy Returns conference on March 28.

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Cigna CEO David Cordani speaking at CNBC’s Healthy Returns conference on March 28.
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David Grogan / CNBC
  • The US Department of Justice has now cleared two healthcare megamergers, after CVS Health and Aetna’s $69 billion merger got the green light from the agency on Wednesday.
  • In September, the agency also cleared Cigna’s $67 billion merger with Express Scripts.
  • The acquisitions, once officially closed, will redraw the healthcare industry as we know it, giving health plans a lot more control over who’s paying for prescription drugs.

The US Department of Justice has now cleared two healthcare megamergers, after CVS Health and Aetna’s $69 billion merger got the green light from the agency on Wednesday.

In September, the agency also cleared Cigna’s $67 billion merger with Express Scripts.

The deals, once closed, will redraw the healthcare industry as we know it.

In CVS and Aetna’s case, the deal creates a new type of company that includes a health insurer, a retail pharmacy, and a company that negotiates prescription drug prices with drugmakers called a pharmacy benefits manager. As part of the agreement with the DOJ, CVS and Aetna have to divest Aetna’s Medicare Part D prescription drug plan business.

And in Cigna and Express Scripts’ case, the deal brings a health insurer and a PBM under the same roof and ends the days of the standalone PBM.

The move to go into other lines of business comes shortly after the DOJ blocked two health insurer mergers in 2016 that would have combined Aetna and Humana and Cigna and Anthem. The blocking of these so-called horizontal mergers suggested that big healthcare companies might need to look elsewhere for combinations.

Because vertical mergers, which combine different business all under one roof, don’t impact the size of the market in a way that’d make any one anti-competitive, they tend not to get challenged as frequently as horizontal mergers.

“Vertical mergers tend not to be a problem,” Andrea Agathoklis Murino, a partner with Goodwin’s Antitrust & Competition Law practice, told Business Insider. That is, unless there’s an instance in which prices go up because of the merger.

But there had been some pushback to the CVS-Aetna tie-up. The American Medical Association said on Wednesday it was disappointed with the DOJ’s decision.

“We are disappointed that the DOJ did not go further by blocking the CVS-Aetna merger,” AMA president Barbara L. McAneny said in an emailed statement. “The AMA worked tirelessly to oppose this merger and presented a wealth of expert empirical evidence to convince regulators that the merger would harm patients.”

To be sure, the deals aren’t set in stone just yet. The companies still need to get the OK from state insurance agencies, which both sets of companies say they’re still working on.

What this means for healthcare

The boundaries of the healthcare business are changing. Instead of growing by acquiring other companies in the same business, companies have started to move into new lines of business, with no two combinations looking exactly the same.

It’s part of a push by healthcare companies to both cut costs and gain more control over the patients in need of their services. It’s coming as large tech companies seek ways to disrupt the healthcare industry as it faces new medications that challenge the way we pay for treatments.

Should the deal go through, Cigna wouldn’t be alone in controlling both the insurer and PBM part of paying for prescriptions. UnitedHealthcare, for example, owns the PBM OptumRx, while Anthem, which owns a variety of Blue Cross Blue Shield health-insurance firms, will be launching its own PBM called IngenioRx. And with the CVS Health–Aetna deal, CVS Caremark, the PBM unit of CVS and Aetna will be under the same roof as well.

With both acquisitions, Cigna and CVS both will have more oversight into who’s paying for prescriptions.

Who pays for your medication pharma graphic

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Shayanne Gal/BI Graphics

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One of the largest health insurers in the US is launching a $250 million venture fund

One of the largest health insurers in the US is launching a $250 million venture fund

Cigna CEO David Cordani.

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Cigna CEO David Cordani.
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Business Insider
  • Cigna is launching a $250 million venture fund called Cigna Ventures.
  • Cigna Ventures will be tasked with finding startups and growth stage companies in healthcare, specifically with focuses on analytics, digital health, retail, and managing and delivering care.

  • The hope is to tap into companies at earlier stages who might have new ways to make healthcare more affordable and simpler.

Cigna, one of the largest health insurers in the US, is getting serious about venture capital.

On Wednesday, the $45 billion insurer said it had launched a $250 million venture fund, called Cigna Ventures.

Cigna Ventures will be tasked with finding startups and growth stage companies in healthcare, specifically with focuses on analytics, digital health, retail, and managing and delivering care.

Tom Richards, senior vice president and global lead, strategy and business development at Cigna, who will be leading Cigna Ventures told Business Insider that the hope is to tap into companies at earlier stages who might have new ways to make healthcare more affordable and simpler.

“It seems like the right time to partner with innovative companies and to invest and partner with them to deliver value,” Richards said.

Cigna’s been investing in startups for the past five years, Richards said, including leading a funding round for Omada Health, a startup in the diabetes space, and telehealth company MDLIVE.

Cigna isn’t alone in backing healthcare startups – other big insurers including UnitedHealth Group and Humana have venture funds as part of their businesses. According to Silicon Valley Bank, corporations made up about 31% of series A biopharma investments.

Cigna’s in the process of closing its acquisition with pharmacy benefit manager Express Scripts, a deal which is expect to pass regulatory scrutiny.

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The CEO of a company often called the future of healthcare reveals why medical care is moving into homes and out of hospitals

The CEO of a company often called the future of healthcare reveals why medical care is moving into homes and out of hospitals

Kaiser Permanente CEO Bernard J. Tyson speaks on a panel in 2015.

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Kaiser Permanente CEO Bernard J. Tyson speaks on a panel in 2015.
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Reuters
  • The lines around what defines a healthcare company have been changing drastically with a slew of mega-merger deals like CVS’s proposed combination with Aetna and Cigna’s deal with Express Scripts.
  • The bets CVS and others are making is that the future of healthcare won’t be in the hospital any more. It’ll be at pharmacies, or other places you frequent every day and then eventually, simply in your home.
  • The future of healthcare is the home, Kaiser Permanente CEO Bernard J. Tyson told Business Insider.

The boundaries of the healthcare business are changing.

Healthcare companies have started to move into new lines of business, with pharmacies buying health insurers, health insurers acquiring medical practices, and hospitals getting into the generic drug business. No two combinations look exactly the same.

It’s part of a push by healthcare companies to both cut costs and gain more control over patients. At the same time, large tech companies are eyeing ways to disrupt healthcare, and the industry faces new kinds of medications with high costs.

But for some companies, like Kaiser Permanente, they’ve encapsulated seemingly different aspects of the industry and had them under one roof for decades now. The nonprofit healthcare company has been around since the 1940s and has both a health plan and a hospital, and members see the doctors Kaiser Permanente employs in network. The company’s model is a favorite of Berkshire Hathaway vice chairman Charlie Munger and others who see it as the future of healthcare in the US.

Bernard J. Tyson, the CEO of Kaiser Permanente, sees these changes as moving toward a system where companies have more control over how healthcare gets paid for.

“Everyone is vying for what I call their piece of the dollar,” Tyson said. “As you start to see the integrations, vertical and horizontal, what you are seeing are the economics behind it saying, ‘I want to own more and more of that dollar, so then I can influence more and more of the health system around it.’”

As part of that, companies are getting creative to stay competitive.

“I think when you look at this inflection point that we’re at, you have some big bets or bold moves,” he said.

For example, the CVS-Aetna merger would combine a health-insurance business, retail pharmacies, and a pharmacy benefit manager, which negotiates prescription-drug prices with drugmakers. This gives CVS a lot more control over how people access and pay for healthcare, with the aim of making pharmacies the “new front doors of healthcare” instead of going to the doctor’s office or hospital.

Kaiser Permanente, for its part, has been running urgent care clinics out of Target locations in southern California, which its members can use.

“We know there’s some benefit to it,” Tyson said. “The difference with ours is that it’s connected to a whole healthcare system.”

Eventually, though, he sees it going further than the pharmacy and into the home itself.

“The future is the home, and the home of the future is going to be not just a place called a home. It’s also going to be a medical site,” Tyson said. “The whole shift thinking about what’s the ecosystem around individuals in their own setting is the significant difference that we are going to see over the next decade.”

For example, Kaiser’s managed to make a procedure like a hip replacement just a one night stay in a hospital, versus the one to four days you might typically see. But through Kaiser, patients get sent home after surgery with nurses and physical therapists.

“Seeing other health systems doing things that we are doing or have done, or are starting to change, for us is a breath of fresh air for the entire industry,” Tyson said.

What’s keeping people from becoming Kaiser

Because Kaiser Permanente is both the insurer and the firm caring for those covered by that insurance, it’s organized to keep its members healthy. Members pay monthly premiums, which in turn cover their healthcare that they use within Kaiser Permanente’s network. The healthier its members stay, the less Kaiser Permanente has to ultimately spend on the more costly aspects of healthcare, like emergency room visits.

That’s not exactly the case with other parts of the health system. Along the way, it seems as if these integrations are trying to take cues from Kaiser Permanente. As Tyson sees it, there are a few hurdles that stand in their way.

The first: deep investment.

“We go deep, we’re not shallow,” Tyson said. “There are investments that we make in our communities around the country.”

The second is the network of doctors and caretakers that Kaiser Permanente employs. Tyson said the company gives them the freedom to practice medicine without having to abide by whatever a health plan will reimburse for. Pulling that team together isn’t easy.

“That’s not magic, that’s hard work to make that work together and make sure there’s great harmony going on, which we do,” Tyson said.

And lastly, Kaiser Permanente isn’t based on a fee-for-service model in which doctors are paid by health insurers based on how many visits they have. So unlike companies like health insurers or hospital providers, Kaiser Permanente doesn’t have to fundamentally change the way it’s structured.

“We don’t see where we have to flip the switch,” Tyson said. “We get paid to do what is in the best interest of the members who pay us to keep them as healthy as possible.”

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The $67 billion Cigna-Express Scripts merger just passed a key hurdle

The $67 billion Cigna-Express Scripts merger just passed a key hurdle

Cigna CEO David Cordani

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Cigna CEO David Cordani
source
Reuters
  • Cigna and Express Scripts shareholders have voted to approve the companies’ $67 billion merger.
  • The deal combines a health insurer and a company that helps negotiate lower prices for prescription drugs in the form of rebates on behalf of health plans.
  • The deal was in jeopardy for a week after billionaire Carl Icahn came out against the deal, saying it “may well rival the worst acquisitions in corporate history.” He ultimately reversed his course.
  • The deal now awaits the scrutiny of the Department of Justice.

Cigna and Express Scripts shareholders have voted in favor of the companies’ $67 billion merger.

Cigna, one of the US largest health insurers, announced the deal in March, offering $48.75 a share in cash for Express Scripts in a move aimed to cut soaring healthcare costs. The $54 billion price tag was a 31% premium to Express Scripts’ stock price at the time and includes about $15 billion worth of Express Scripts’ debt.

The deal combines a health insurer and a company that helps negotiate lower prices for prescription drugs in the form of rebates on behalf of health plans. Express Scripts, one of three massive pharmacy benefit managers in the industry and the only standalone one. Should the deal go through, it would end the days of a standalone PBM.

Read more:The lines around healthcare are being redrawn – and all eyes are on pharmacy giant Walgreens to make the next move

Earlier in August, the affirmative vote didn’t seem so certain.

Billionaire Carl Icahn took a stake in Cigna and wrote in a letter to shareholders that the deal “may well rival the worst acquisitions in corporate history.”

But a week later, after proxy advisory companies Glass Lewis & Co and Institutional Shareholder Services said they’d support the deal alongside Glenview Capital Management, Icahn reversed his course.

“The crossover was too big and given what the advisory firms said we realized there was no way we could win. Sometimes you have to be flexible. There’s no point in fighting just to fight. We won three proxy fights in a row which is really hard to do, so you lose one. It’s the way of life,” Icahn told CNBC.

While the vote puts the deal one step closer to being finalized, it needs to still pass the scrutiny of the Department of Justice. In April, the DOJ asked for an extension to gather more information from Cigna and Express Scripts. The 30-day waiting period needed for the deal to close will not begin until all the information has been obtained, and that process can take a while. A similar healthcare merger between pharmacy CVS Health and insurer Aetna has yet to close as well.

CARL ICAHN: The $67 billion Cigna-Express Scripts merger may ‘rival the worst acquisitions in corporate history’

CARL ICAHN: The $67 billion Cigna-Express Scripts merger may ‘rival the worst acquisitions in corporate history’

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REUTERS/Brendan McDermid
  • The billionaire investor Carl Icahn is not a fan of Cigna’s plan to purchase the pharmacy benefit manager Express Scripts, a $67 billion deal that was announced in March.
  • In a letter to Cigna stockholders sent Tuesday, Icahn said the deal “may well rival the worst acquisitions in corporate history.”
  • Icahn cited regulatory challenges facing the PBM model as well as competitive risk from Amazon.

Carl Icahn doesn’t want the health insurer Cigna’s $67 billion deal with Express Scripts.

Icahn, who recently took a stake in Cigna, wrote in a letter to Cigna shareholders Tuesday that the deal “may well rival the worst acquisitions in corporate history.” Icahn disclosed that he was also short Express Scripts.

Cigna, one of the US largest health insurers, announced the deal in March, offering $48.75 a share in cash for Express Scripts in a move aimed to cut soaring healthcare costs. The $54 billion price tag was a 31% premium to Express Scripts’ stock price at the time and includes about $15 billion worth of Express Scripts’ debt.

In his letter, Icahn highlighted regulatory challenges facing the pharmacy-benefit-manager business that Express Scripts is in. Drug companies and the Trump administration have been calling for the end of the rebate, which is negotiated through middlemen like Express Scripts and passed along to health plans as a way to discount the price of a prescription drug.

Icahn also noted the threat posed by companies like Amazon, which has gotten more involved in healthcare this year, calling it an “existential threat” to PBMs like Express Scripts.

“Purchasing Express Scripts may well become one of the worst blunders in corporate history, ranking up there with the Time Warner/AOL fiasco and General Electric’s long-running string of value destruction,” Icahn said in the letter.

Instead, Icahn argued, Cigna would be better off partnering with PBMs like Express Scripts so the health insurer could develop or acquire a PBM when it’s clear what is best suited for the changing healthcare business.

In April, the Department of Justice asked for an extension to gather more information from Cigna and Express Scripts. The 30-day waiting period needed for the deal to close will not begin until all the information has been obtained, and that process can take a while. Cigna’s shareholders are set to vote on August 24 on the deal.

Here’s the full letter:

WHY CIGNA’S INVESTMENT IN EXPRESS SCRIPTS MAY WELL RIVAL THE WORST ACQUISITIONS IN CORPORATE HISTORY

When Cigna entered into this agreement several months ago I believed a $60 billion purchase price made no sense, but there were at least arguments that could be made by management to try to persuade us into thinking that it was not completely ridiculous. These arguments now disappear in light of certain material events of the last month, such as Amazon’s almost certain entrance as a competitor to Express Scripts and the government’s direct challenge to the highly flawed rebate system. As a result, Express Scripts’ earnings will almost certainly be seriously diminished, but even more importantly, Express Scripts will be existentially challenged, i.e., their very existence might well come into question over the next few years. Even if they do survive, exposing Cigna, a thriving company, to these risks by acquiring Express Scripts now is inexplicably ridiculous. Purchasing Express Scripts may well become one of the worst blunders in corporate history, ranking up there with the Time Warner/AOL fiasco and General Electric’s long-running string of value destruction.

It is imperative that every Cigna shareholder vote against this transaction. Today there is only one possible reason that certain Cigna shareholders might vote to purchase Express Scripts – because they want to see it saved and are willing to sacrifice the value of their investment in Cigna to achieve this end.

Cigna is, in my opinion, undervalued because of the fear that this transaction may be approved by shareholders. It is patently ridiculous to pay $60 billion for a company with the problems Express Scripts now faces. I rarely discuss my current market activity but, for the sake of full disclosure, I am currently long Cigna and short Express Scripts stock. I have made this investment because I believe in the rationality of Cigna’s investors. I also hope and believe that many of the Cigna investors that had also owned Express Scripts have already sold much of their Express Scripts stock knowing the pitfalls that company faces if Cigna does not save them.

I believe that Cigna’s management, whose operating skill I respect, would never have paid anywhere near $60 billion for Express Scripts if they had known about the recent events of the last months. Before these events, Cigna had a definitive agreement with Express Scripts stating that the board would support this transaction or pay to Express Scripts a “break-up fee” of $1.6 billion. The only way to end this terrible transaction and not pay the “break-up” fee is for shareholders to vote down the purchase.

We believe that the proposed Express Scripts acquisition exposes the Cigna shareholders to a number of significant risks that management and the board have chosen to recklessly disregard. It is also important to note that these risks have dramatically worsened since the deal was announced.

Regulatory risk – the current administration is particularly focused on bringing down prescription drug prices for consumers and has specifically targeted PBMs as the part of the supply chain that is overearning relative to the value they produce. There is a strongly held belief that the rebate system, which Express Scripts relies on heavily, is a rigged game with conflicting incentives that might actually be pushing up drug prices. The recent proposed rule to remove the safe harbor protection for rebate payments is a clear shot across the bow for the PBM industry and occurred after the signing of the Cigna/Express Scripts merger agreement.

Alex Azar, HHS Secretary, said on May 11th: “The evidence suggests that many companies in the supply chain may actually contribute to, or even encourage, high drug prices, drug price increases and rising consumer costs.” “Some stakeholders-particularly PBMs-suggest that rebates and discounts lower the cost of drugs for Medicare beneficiaries because these concessions drive down the price paid for a medication. However, rebate arrangements may allow PBMs and plan sponsors to benefit from high list prices if rebates are based on a drug’s WAC. To this point, manufacturers contend that rebates encourage them to set higher list prices to account for price concessions down the road.”

We believe this is the start of a concentrated effort to reform drug pricing and eliminate the highly flawed rebate system. Obviously, neither we nor Cigna can know where the ultimate legislation may end up, but the recent moves by the Trump administration have raised the risk level and, by definition, further impaired the value of Express Scripts since the deal was announced. It is our belief that the PBM industry will move to an entirely fee-based model over time, which already exists for some customer groups. Since rebate customers are among the highest margin for PBMs, this shift is very likely to result in significant margin compression.

Analysts Ross Muken and Michael Newshel of ISI Evercore commented – “HHS appears to be following through with its threat to disrupt the drug rebate system – and faster than we had expected….the scope and details are unknown at this point, but the heightened risk and uncertainty should renew pressure on shares of PBMs, distributors and pharmacies, whose economics are driven off of gross price”

Competitive Disruption – the PBM model is ripe for disruption from large scale competitors who may seek to cut them out of the supply chain and lower consumer prices. During the weeks leading up to the deal (when Cigna was busy bidding against itself), Amazon, Berkshire Hathaway and JP Morgan formed a partnership to create a lower cost, more efficient technology-enabled healthcare solution for their employees and eventually 3rd parties as well. With the scale and size of their potential future constituent populations, there is little reason to believe they wouldn’t seek a significant amount of savings from the sourcing of prescription drugs. Although their full plans are not clear yet, this development further increases the risk to the economics of the PBM business model. Even after this announcement, Cigna management seemed unconcerned and repeatedly raised their bid for Express Scripts. To make matters worse, it is important to note that after the acquisition of Express Scripts was disclosed, Amazon announced its acquisition of online pharmacy PillPack which will immediately put it in competition with Express Scripts’ mail order pharmacy business. With their 100 million prime members, Amazon has become one of the toughest competitors in history (feel free to ask the retail industry), while their ultimate healthcare plans are not revealed yet, it is almost certain the first step of a much larger play in the pharma distribution space. Make no mistake, Express Scripts is no Apple and breaking into the PBM ecosystem is not that difficult for a company that already has the systems, the network and the scale that Amazon does. Knowing this, it is absurd for Cigna to now walk into the minefield that Express Scripts might well become.

Post-Anthem margins and customer retention – It’s well documented that Express Scripts will be losing Anthem as a 30% customer in 2020, one which they were clearly overearning on. Management has attempted to quantify the profit impact and pro-forma post-Anthem margins, but we are skeptical that anyone can accurately forecast the impact of losing such a large customer. In addition to the loss of revenues and profits, there are likely to be significant stranded costs and unabsorbed overhead that will have to be addressed over time. Additionally, Express will go from being the 2nd largest PBM by number of scripts to the 4th largest. It’s impossible to forecast what effect this loss of scale will have. Furthermore, Express Scripts most likely gets some benefit from being the last big independent PBM. We see it as likely that, over time, Express Scripts’ customer retention will decline from current levels, particularly as its soon-to-be larger competitors further strengthen and expand their captive PBM offerings. Additionally, if Express Scripts is part of Cigna, a number of customers that Express Scripts now has might well not be willing to deal with a company that is owned by one of their competitors.

Ross Muken from ISI Evercore echoed similar thoughts shortly after the deal announcement – “ESRX’s income primarily comes from mail order pharmacy, which is secularly challenged, and specialty pharmacy, which is increasingly competitive and likely to see gross margin degradation. Further, the two other large PBM competitors have described target PBM margins of 3-5%, so it seems that ESRX’s current core EBIT margins near 6% may be unsustainable”

Deal Price – Each of these risks is significant enough on its own to seriously impair the business and ultimately the value of Express Scripts to the Cigna shareholder. Put together, we cannot fathom how Cigna’s management and board saw fit to pay an all-time high price for Express Scripts with so many unknown risks lying dead ahead. This amounts to nothing more than a huge bail-out for the Express Scripts shareholders at the expense of Cigna’s. The fact that Cigna offered a 30% premium for Express after a 30% run up in the share price indicates Cigna management’s desperation to do a large deal at any price after being blamed for not being willing to fight for the Anthem deal. According to the proxy, amazingly Cigna repeatedly raised their offer against no competition for Express Scripts until, ultimately, they were paying a 60% premium versus where the stock was only 3 months prior. To believe that they can create significant value above this price to the Cigna shareholder is the height of arrogance in my opinion. The modest amount of synergies that flow to the bottom line benefit of the Cigna shareholders do not nearly compensate for the risks we are taking on or the inevitable multiple contraction of the combined company. We do not accept the comparison of the United Health/Optum multiple as a reliable justification for this deal. Optum is only 20% of United Health’s total profits, has much lower external customer mix and does not rely on rebates and mail order nearly as much. It is our opinion that the combined company will likely trade poorly for a prolonged period due to both the challenge and disruption of integrating two large companies and as the threats mentioned above continue to worsen.

Cigna and Express Scripts Standalone Value – As mentioned above we believe that Express Scripts is a company with major problems whose business could well fall off a cliff. Given the significant worsening of several major risks since the deal announcement, we are confident in saying that Express Scripts on a standalone basis would likely be worth less than $60. Though there is a not another standalone PBM to compare Express Scripts to, we note that drug distributors McKesson and Amerisource Bergen are down 17% and 16% respectively since the announcement of the Cigna/Express Scripts deal and that the risks are likely greater in the case of Express Scripts. Applying the 9x P/E multiple that pharmacies and drug distributors currently trade at to Express Scripts’ 2019E ex-Anthem earnings of $6.50 would result in a $58.50 standalone stock price. We find it unconscionable to pay over $90 for a company that today would likely be worth less than $60.

We believe that completing this merger will result in much lower value for the Cigna shareholder than continuing standalone and investing in its own business and PBM capabilities. Since March 7th, the day before the deal was announced to July 31st, Cigna’s stock price is down 7.6% while its non-deal competitors (United Health, Anthem and Humana) are up an average of almost 12% for a total underperformance of almost 20%. If Cigna had simply performed in-line with it comp group, the stock would likely be $215 per share. We believe that if Cigna shareholders vote down the deal and the cash merger consideration and free cash flow were used to repurchase shares, the stock could be worth up to $250 in a reasonable time frame.

We strongly disagree with the idea that Cigna’s only route to offering a more integrated solution is to make a $60 billion leveraged bet on a company with as many challenges as Express Scripts. For example, Anthem formed a five-year partnership with CVS/Caremark to offer a full suite of PBM services while Anthem builds up their own PBM offering, IngenioRx. According to the merger proxy, Cigna and Express Scripts did start discussing a close partnership with a white-label solution. We fail to see how this wouldn’t be a logical first step in increasing the breadth and depth of Cigna’s PBM capabilities at much lower risk, especially while the regulatory and competitive landscapes are in flux. We suspect this option was quickly disregarded because it didn’t serve management’s sub rosa goal of running a much larger company.

The existential threats to the PBM business model over the next few years are undeniable and largely can’t be analyzed with any certainty. Both the pharmaceutical rebate and mail order pharmacy businesses are facing regulatory and competitive challenges that could change both forever. Despite this, Cigna management is offering to pay an all-time high price for a company that, as a result of secular changes, is currently standing on very dangerous ground.

For these reasons, among others, your vote at the special meeting of Cigna shareholders called to consider and act on the Merger Agreement Proposal (as defined in our proxy statement) is very important to the future success of your investment in Cigna. I hope you will join with us in opposing this transaction for the reasons set forth above.

Sincerely yours,

Carl C. Icahn

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