The Cigna Group Monday confirmed “it is not pursuing a combination with Humana.”
Despite speculation in certain media outlets, including the Wall Street Journal, such a deal really made little sense to begin with, especially given Cigna’s move to get out of the Medicare business. Cigna is nearing the completion of the sale of its Medicare business to Health Care Service Corp. by early 2025.
Humana operates one of the nation’s largest Medicare operations, selling an array of products for seniors including Part D drug plans and Medicare Advantage plans that contract with the federal government to provide coverage available in traditional Medicare plus extra benefits and services to seniors, such as disease management and nurse help hotlines with some also offering vision, dental care and wellness programs.
While Humana and other health insurers including CVS Health and UnitedHealth Group are grappling with higher medical expenses from seniors enrolled in Medicare Advantage, Cigna’s smaller Medicare business has helped the company avoid some of these problems.
Cigna made its announcement about Humana speculation ahead of meetings with investors and analysts in a company announcement about affirming “capital priorities.”
“During these meetings, The Cigna Group expects to reaffirm projected full year 2024 consolidated adjusted income from operations of at least $28.40 per share and adjusted EPS growth of at least 10% in 2025,” Cigna said. “Additionally, in light of recent and persistent speculation, The Cigna Group expects to communicate that the company is not pursuing a combination with Humana Inc. The Cigna Group remains committed to its established M&A criteria and would only consider acquisitions that are strategically aligned, financially attractive, and have a high probability to close.”
Humana, which this year has Medicare Advantage and Medicare Advantage Prescription Drug plans in 2,907 counties in 49 states plus Washington, D.C. and Puerto Rico, will reduce its footprint to have Medicare Advantage and drug plans in 2,852 counties in 48 states plus Washington and Puerto Rico.
Meanwhile, terms of Cigna’s deal with Health Care Service call for the operater of five Blue Cross and Blue Shield plans in give states to acquire Cigna’s Medicare Advantage plans, Cigna supplemental benefits, Medicare Part D drug benefits and CareAllies, a business that helps medical care providers with various administrative services and contracting.
Chicago-based Health Care Service operates Blue Cross and Blue Shield health insurance plans in Illinois, Texas, Oklahoma and New Mexico, with more than 18 million health plan enrollees across the country, and is looking to grow its Medicare Advantage product offerings, which are minimal compared to other large health insurers.
Cigna Monday said it will use “the majority of proceeds from the sale of its Medicare businesses expected to close in the first quarter of 2025 for share repurchase and has $5.3 billion remaining on its share repurchase authorization.”
Cigna is a big provider of commercial health insurance and is one of the nation’s biggest providers of employer-based coverage. Cigna also operates the large manager of pharmacy benefits, Express Scripts, and houses it under the company’s Evernorth Health Services business which includes an expanding portfolio of medical care provider businesses,
“The Cigna Group continues to deliver shareholder value through focused execution against stated operational and financial targets, and via disciplined capital deployment including dividends and share repurchase,” the company said. “Specific to share repurchase, year-to-date the company has repurchased $6 billion of stock, including $1 billion thus far in the fourth quarter.”
