Two news items concerning Aetna today. Neither surprising.
First, The Wall Street Journal reports that Aetna is considering the sale of its pharmacy benefit management unit. After WellPoint sold its PBM for a hefty $4.7 billion, several industry observers (myself included) figured others would follow.
How much is the Aetna PBM unit worth? Lisa Gill of J.P. Morgan says Aetna could get anywhere from $1.6 billion to $1.8 billion for its PBM unit. Glen Santangelo of Credit Suisse puts the value at $2.4 billion. Both seem high to me, but the ultimate price-tag will depend on which assets Aetna sells and the terms of the PBM contract between Aetna and the acquiring entity.
Whatever you think of integration in managed care — i.e., the notion that a health plan can better manage overall medical costs by owning PBM, vision, dental and behavioral plans — Aetna’s PBM appears to lack a compelling offering in the eyes of the marketplace.
Plus, it’s pretty hard to make a case that owning a PBM helps with overall medical cost management when you keep reporting medical costs are rising faster than you predicted — which brings us to news item number two:
Aetna has — yet again — cut its 2009 earnings projections, this time to a range of $2.75 to $2.90 per share. The company — yet again — blamed higher than expected medical costs in its commercial health plans. I’ve written before (see prior post) about the potential bind Aetna was in concerning pricing, membership growth and profits. The only question now is whether the company finally has its pricing and costs in line. (Addition, July 28, 2009: Wall Street analysts believe the answer is yes, according to several research notes that passed our desk yesterday afternoon and this morning).
Shares in Aetna were down nearly 5% in midday trading on the revised 2009 forecast.