The Cigna Group has officially announced that they are not pursuing a merger with Humana, despite speculation in certain media outlets such as the Wall Street Journal. This decision comes as Cigna moves to divest its Medicare business, with plans to complete the sale to Health Care Service Corp. by early 2025.
Humana, known for its extensive Medicare operations, faces challenges with rising medical expenses from seniors enrolled in Medicare Advantage. In contrast, Cigna’s smaller Medicare business has helped the company avoid similar issues.
Cigna’s recent announcement was made ahead of investor and analyst meetings where they will reaffirm their financial projections for 2024 and 2025. The company remains committed to its M&A criteria, only considering acquisitions that are strategically aligned, financially attractive, and likely to close successfully.
As part of the deal with Health Care Service Corp., Cigna will sell its Medicare Advantage plans, supplemental benefits, Medicare Part D drug benefits, and CareAllies business. Health Care Service Corp., which operates Blue Cross and Blue Shield plans in several states, aims to expand its Medicare Advantage product offerings through this acquisition.
Cigna plans to use the proceeds from the sale of its Medicare businesses for share repurchases, with $5.3 billion remaining on its share repurchase authorization. The company, a major provider of commercial health insurance and employer-based coverage, also owns Express Scripts and other medical care provider businesses under its Evernorth Health Services umbrella.
“The Cigna Group continues to deliver shareholder value through focused execution against operational and financial targets, and disciplined capital deployment including dividends and share repurchases,” the company stated. Year-to-date, Cigna has repurchased $6 billion of stock, including $1 billion in the fourth quarter alone.
Overall, Cigna’s decision not to pursue a merger with Humana reflects their strategic focus on divesting the Medicare business and maintaining financial stability through disciplined capital deployment strategies.
