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For three of the nation's largest health insurers, the big question this earnings season is: now what? Nearly two years after pursuing megamergers to compete in the era of Obamacare, Aetna and Humana's $34 billion deal has been blocked by the court, and a ruling on Anthem's $54 billion dealt acquire Cigna is pending. But now Congress and the White House are poised to dismantle the Affordable Care Act, and the timeline and details of how they'll do it are very much up in the air. As the companies report their earnings, analysts will be looking for insight into how the insurers plan to deal with uncertainty. "Sales for the health insurers have grown rapidly because of the ACA," driven in part by the expansion of Medicaid under Obamacare, said Jeff Loo, a health care equity analyst with CFRA Research.

While many of the health insurers faced losses on Obamacare exchange plans, overall, over the last five years, the group experienced the biggest earnings growth within the , with a compounded annual growth rate of 23.1 percent over the last five years, according to CFRA Research.

"We expect increased volatility as Trump and the Republicans reveal their replacement plans for the ACA.," Loo said.





Will Aetna have to abandon the deal?

Aetna and Humana said they are exploring next steps, after a federal judge blocked their merger last week. Judge John Bates of the U.S. District Court for the District of Columbia ruled that the deal would lessen competition in the Medicare Advantage and individual Obamacare markets, rejecting the companies' claim that the savings from merger synergies would result in better prices for consumers. For analysts, a big question is whether Aetna will be able to keep Humana from looking for a higher price from a new bidder. "We see low probability of a successful appeal given the decisiveness of the opinion," wrote Evercore ISI analyst Michael Newshel in a note to clients, adding that Humana now becomes a more attractive acquisition target for other insurers with less overlap in the Medicare market.

Aetna will have to pay Humana a $1.85 billion break-up fee, under the terms of the deal if the merger is not approved by Feb. 15, which could pose a risk to the Hartford-based insurer's full year earnings outlook.

When Aetna reports Tuesday, the company is expected to report earnings of $1.44 per share for the fourth quarter on $15.84 billion in revenue, according to the Thomson Reuters estimates. For the full year 2017, the company is expected to report earnings per share of $8.79 on revenue of $62.8 billion.



Will Cigna vie for Humana?

U.S. District Judge Amy Jackson Berman is expected to issue a decision on Anthem and Cigna's merger before month's end. Analysts and industry experts also expect that deal to be blocked, but in this case the two firms are seen parting ways. Analysts have speculated that Anthem and/or Cigna could make a bid for Humana once the pair's deal is terminated.

Cigna CEO David Cordani told investors he would be ready to make an acquisition if the judge rejected the company's proposed deal with Anthem, during a session at the JP Morgan Health Care Conference earlier this month.

"If we're in a situation where our deal is not allowed to go forward, we will have in excess of $5 billion of deployable cash," Cordani said. He added that they could raise up to $9 billion more "to the extent that we wanted to use our capacity for more M & A."

Anthem faces paying Cigna a $1.85 billion break-up fee under the terms of the agreement, which would represent roughly 5 percent of its projected revenue of $86.7 billion for 2017, according to Thomson Reuters analyst estimates.

Anthem reports on Wednesday, and is expected to earn $1.61 per share for the quarter on $20.92 billion in revenue. Cigna reports results the day after, and is expected to earn $1.74 per share in its latest quarter, on $9.9 billion in revenue.





What will a ACA replacement look like?