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Speaker 1: Global business news twenty four hours a day at Bloomberg

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Speaker 1: This is a Bloomberg Business Flash from Bloomberg World hand Quarters.

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Speaker 1: I'm Charlie Pelotondal the SMP NESDAC all advancing forty two

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Speaker 1: minutes to go ahead of the clothes. Let's head on

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Speaker 1: over to the First Word breaking news desk for today's

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Speaker 1: afternoon call. And here he is, Bill Maloney. Good afternoon, Charlie.

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Speaker 1: Big games for U S stocks today, with the DAL

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Speaker 1: currently hired by two and thirty four points, SESPS game

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Speaker 1: thirty and as ZAC rises ninety six, the SP five

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Speaker 1: traded back above it's fifty day moving average. Well, the

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Speaker 1: NAZDAC regain the two hundred day small cap six hundred's

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Speaker 1: hired by fourteen points. In the US ten yield at

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Speaker 1: one point eight six per cent, all ten SEV sectors

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Speaker 1: are higher, led by gains in technology, healthcare, and the financials.

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Speaker 1: Transports rise fifty two and that's about Texas jump fifty eight,

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Speaker 1: and the VIX is lower by eight percent. Deleator City

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Speaker 1: upside included Microsoft, Intel and Visa. Fractional losses for Boeing

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Speaker 1: until news Monsanto rejected Bears Bid is still open to

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Speaker 1: talks regarding earnings. This morning best Bifle as much as

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Speaker 1: eight point nine percent, and after the belt to night

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Speaker 1: look for earnings from into it Hewla Packard Enterprise and

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Speaker 1: Computer Sciences Live from the First Breaking News Desk on

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Speaker 1: Bill Maloney. Charlotte, all right, thank you very much. I've

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Speaker 1: got you covered. After the bell again, recapping stocks, surging

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Speaker 1: to hear live breaking news over your Bloombird time Squawk

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Speaker 1: SQ you a w K on your terminal. I'm Charlie

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Speaker 1: Plot that's a Bloomberg business flash you're listening to. Taking

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Speaker 1: stock with Kathleen Hayes and Pim Box on Bloomberg Radio.

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Speaker 1: A pending fifty four billion dollar merger of the health

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Speaker 1: insurers Anthem and Signa couldn't mean more squabbling with either

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Speaker 1: regulators or indeed between the management of Anthem and Signa.

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Speaker 1: Here to learn more is to help us learn more.

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Speaker 1: As Jason Gorman, he is an analyst on medical devices

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Speaker 1: and healthcare services for Bloomberg Intelligence. Jason, thanks very much

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Speaker 1: for being with us. Explain what is going on right

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Speaker 1: now at Anthem and Signa and this potential combination. Yeah,

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Speaker 1: and thank you for having me. So they the upshot

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Speaker 1: is that they're disagreeing about some of the timing of

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Speaker 1: the filing requirements for this deal to go through. Insignia

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Speaker 1: has had some uh some issues with Anthem uh suing

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Speaker 1: express scripts over some of its disputes and basically uh

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Speaker 1: distracting away from from the ongoing deal. So they've had

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Speaker 1: uh some tensions both now as well as when they

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Speaker 1: frankly first agreed to a deal back last summer. I've

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Speaker 1: had health insurance with both companies over the years. But

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Speaker 1: to me, a health insurance company is a health insurance company.

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Speaker 1: Explained to us, what what place in this industry each

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Speaker 1: of the companies occupies, How they're similar, how they're different. Sure,

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Speaker 1: so both Anthem Insignia are very large health and shares

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Speaker 1: in the commercial market. And what's in focus here is

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Speaker 1: plans for employer groups, which is the potential concern with

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Speaker 1: the Justice Department. So the difference being that if you

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Speaker 1: work for a large employer like Walmart uh and you

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Speaker 1: want to get your insurance UM. Now, what companies like

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Speaker 1: Anthem Insigna do is they really just manage the claims,

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Speaker 1: so it's more of a back end process. And they

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Speaker 1: charge a fee for doing that. So it's a little

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Speaker 1: bit different than the traditional insurance which we've heard a

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Speaker 1: little bit more about, which has gone to like the

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Speaker 1: the Obamacare exchanges that we've talked about, So a little

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Speaker 1: bit different of a model. And because there's so few

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Speaker 1: that can compete on such a large scale, UH, it's

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Speaker 1: it's really gotten down to UH a very small compet

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Speaker 1: of environments, and you do have to compete with the

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Speaker 1: number of members that you have. What kind of breakup

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Speaker 1: fee are we talking about here? If they decide or

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Speaker 1: for whatever reason, they cannot go through with this combination. Yeah,

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Speaker 1: So for the Anthem would have to pay Signa about

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Speaker 1: one point nine billion dollars pretexts um for thing that

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Speaker 1: if the deal were to fall through, and UH would

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Speaker 1: have to pay Humana about a billion dollars. So um.

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Speaker 1: That's actually slightly below what some of the comfortable UH

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Speaker 1: fees have been another other deals, but still pretty sizeable

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Speaker 1: for the companies if they don't end up going through.

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Speaker 1: So if I'm the Justice Department, if I'm a consumer,

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Speaker 1: if I'm a big company who buys health insurance for

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Speaker 1: my employees through one of these big insurance companies. I'm saying,

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Speaker 1: why let them merge. That means they'll be fewer choices

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Speaker 1: and they can just turn the screws to me all

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Speaker 1: the more. Yeah, so they they're there are two separate

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Speaker 1: deals that are going on, the and then Humana focusing

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Speaker 1: more on medicare is a little less concerning because Medicare

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Speaker 1: prices are are relatively um kept in line, whereas from

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Speaker 1: a anthem perspective, they would argue that they can actually

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Speaker 1: use their sizable membership to negotiate more favorable rates. The

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Speaker 1: problem with that is then if a hospital has to

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Speaker 1: take that hit, well, then you could argue that the

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Speaker 1: quality of our health care would go down because of that.

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Speaker 1: Um So, I don't think that their argument holds as

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Speaker 1: much water as they're saying it does. What about the

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Speaker 1: Department of Justice and the antitrust clearance? Is this is

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Speaker 1: a sure thing for the anthem signa deal. Ever since

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Speaker 1: these deals were announced, the market has viewed them with

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Speaker 1: a large grain of salt. They've the actual value of

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Speaker 1: the deals has been at a between twenty two spread

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Speaker 1: versus where the boxer training today. Um So, there's a

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Speaker 1: big discount for what investors are looking at because of

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Speaker 1: that uh possibility that these deals get blocked one or both.

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Speaker 1: Uh And from what our work has shown, especially with

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Speaker 1: our anti trust attorney, it's it's there is the concern

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Speaker 1: that you have, as we've seen with other markets in telecom,

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Speaker 1: that if the Justice Spartman looks at it for a

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Speaker 1: national basis, well, then the risk goes up that the

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Speaker 1: Anthem signal deal gets blocked. And that's why the spread

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Speaker 1: on that deal um and investors minds is a little

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Speaker 1: bit higher. So in a nutshell, I just want to

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Speaker 1: quickly touch on the express Scripts lawsuit. What it is?

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Speaker 1: Is it something that maybe Anthem wishes it hadn't gotten

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Speaker 1: into now that wants to team up a SIGNA Yeah,

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Speaker 1: so they would argue that it's it's sizeable savings. They've

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Speaker 1: talked about up to fifteen billion dollars, but even you

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Speaker 1: know it's come down now to a couple of billion dollars.

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Speaker 1: It does seem to be a bit of a distraction.

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Speaker 1: Ultimately being in this space and being a large competitior

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Speaker 1: and commercial health insurances what's most important for them. But

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Speaker 1: I don't know what that means for for express Scripts. UH.

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Speaker 1: They're going to try and get something done, and maybe

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Speaker 1: that means that they settle on something um versus fighting

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Speaker 1: it out longer term. All right, Jason mcgorman, thank you

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Speaker 1: so much for joining us, saying in his latest b

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Speaker 1: I Bloomberg Intelligence piece that Anthony has few options if

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Speaker 1: this signet deal falls through Living Intelligence. Senior industry analyst

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Speaker 1: for managed Care, I'm Kathleen Hayes, along with pim Fox

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