Cigna to sell its Medicare businesses
Cigna has entered into a definitive agreement whereby Health Care Service Corporation will acquire The Cigna Group’s Medicare Advantage, Cigna Supplemental Benefits, Medicare Part D and CareAllies businesses, for a total transaction value of approximately $3.7 billion.
HCSC is a large nonprofit health insurer that is the parent of Blue Cross Blue Shield plans in five states including Texas and Illinois.
As part of the transaction, The Cigna Group and HCSC have agreed to enter into a four-year services agreement under which Evernorth Health Services, a subsidiary of The Cigna Group, will continue to provide pharmacy benefit services to the Medicare businesses, effective on closing of the transaction.
The transaction is expected to close in the first quarter of 2025, subject to receipt of applicable regulatory approvals and other customary closing conditions.
Cigna had ~599k Medicare Advantage members at the end of September 2023. The business had around $7.9 billion in revenue in 2022, representing ~4.4% of the company’s total revenue for the year.
In 2012, Cigna paid $3.8 billion to acquire Medicare Advantage provider HealthSpring.
“This decision is aligned with our highly disciplined approach to managing our portfolio and allocating resources toward growth opportunities in our Evernorth Health Services and Cigna Healthcare portfolios. While we continue to believe the overall Medicare space is an attractive segment of the healthcare market, our Medicare businesses require sustained investment, focus, and dedicated resources disproportionate to their size within The Cigna Group’s portfolio. We continue to see significant, meaningful growth opportunities for government services, including Medicare, in our Evernorth Health Services portfolio of businesses.” – David M. Cordani, chairman and CEO of The Cigna Group.
“HCSC is building on its commitment to lead and expand access to quality affordable care for people in all phases of their lives. This acquisition supplements our growth strategy in the large and growing Medicare marketplace and will bring many opportunities to HCSC and its members – including a wider range of product offerings, robust clinical programs, and a larger geographic reach. We look forward to offering our proven member and provider engagement model to even more people, and we are excited to welcome Cigna’s Medicare and CareAllies teams with their demonstrated talent and expertise.” – Maurice Smith, HCSC’s CEO, president and vice chair.
