CVS Health is making the case for its merger with Aetna to two very different audiences beginning June 3.

CVS held its annual investor day and issued a long-term strategic plan to “accelerate growth” ahead of the day’s proceedings, aimed at nervous investors concerned about its recent financial performance post-merger.

CVS warned that it would see lower revenues as a result of the deal.

CVS reaffirmed its 2019 financial projections, estimating between $251 billion and $254 billion in consolidated revenues and $15 billion to $15.2 billion in adjusted operating income for the year.

CVS projects the Aetna deal will produce $300 million to $350 million in synergies this year and an additional $800 million in synergies for 2020.

On the legal front, CVS was defending the deal in court: District of Columbia District Court. Judge Robert Leon has been conducting a Tunney Act review of the merger’s approval by the Department of Justice (DOJ), and beginning June 4 he heard testimony from its opponents.

Under the Tunney Act, a federal judge can take a second look at a DOJ antitrust decision to determine whether it was in the public interest. Leon’s review follows his concern that the deal was fast-tracked, and he did not receive adequate explanation on why he should approve it. Judge Leon said it felt as though the DOJ and CVS were treating him as a “rubber stamp” for the merger.

The American Medical Association (AMA), one of the most prominent voices of opposition, said in a statement that while CVS-Aetna is framed as a vertical merger, meaning it includes two distinct stops on the supply chain, the two do compete in some markets, making it take on elements of a horizontal merger.

“The AMA has long called for heightened scrutiny before proposed mergers take effect and markets are robbed of the intense competition that has benefited patients,” said Barbara McAneny, AMA’s president.

“The dynamic discussion during CVS-Aetna settlement hearing should prompt a renewed dialogue among regulators, policymakers, lawmakers and other about the need for a better, more open and competitive marketplace to benefit patients and the physicians who care for them,” she said.

CVS will also call three rebuttal witnesses of its own to defend the deal as part of the hearings. Judge Leon rejected a request from the DOJ to allow it to cross-examine both sets of witnesses.

Regulators have a framework they can use to determine consolidation that works from a high baseline for insurers, as there are relatively few to begin with in comparison to providers.

Big hospital deals may get less of a look because even in highly consolidated markets there is still competition. This is far less true in the payer space.

The judge has allowed CVS and Aetna to begin integration as he conducts the review, though some parts of the business remain separate for now. Aetna has sold its Medicare Part D business to WellCare, as the DOJ mandated in its approval.

If the judge overturns the deal, it is not clear what would happen. Both the DOJ and CVS have continued to argue that the merger is, indeed, in the public interest.  VTN