Health Care Service Corporation has unveiled its acquisition of Cigna’s Medicare business in a significant deal valued at $3.7 billion. The purchase involves Health Care Service, recognized as the largest customer-owned health insurer in the country, gaining control of Cigna’s Medicare Advantage, Supplemental Benefits, Part D customers, and the CareAllies business, which collaborates with healthcare providers.
Cigna’s Medicare plans currently extend coverage to over 3.6 million individuals, encompassing 2.5 million enrolled in Medicare Part D plans, as detailed in a news release from Health Care Service. A noteworthy aspect of the agreement involves Chicago-based Health Care Service designating Cigna’s Evernorth Health Services unit to manage pharmacy benefits for a duration of four years.
Health Care Service Corporation CEO Maurice Smith emphasized the potential benefits resulting from the acquisition, stating that it opens doors to various opportunities for the company and its members. These include an expanded array of product offerings, robust clinical programs, and an increased geographic reach.
The acquisition is framed as an opportunity by Cigna to provide enhanced value to shareholders and improve customer service. Executives at Cigna, headquartered in Bloomfield, Connecticut, explained the sale as a strategic move due to the need for continuous investment, focus, and dedicated resources for their Medicare businesses, which are seen as disproportionate to their size within Cigna’s overall portfolio. David Cordani, Cigna’s Chairman and CEO, highlighted the demanding nature of sustaining Medicare operations and the need for specific resources to effectively manage them.
Reports from November 2024 indicated that Cigna had explored a cash-and-stock deal with Humana in an attempt to merge the two companies. However, the current deal with Health Care Service Corporation is expected to be finalized in the first quarter of 2025. Following the announcement, Cigna’s shares experienced a positive impact, closing up by 0.67% on the day.
The acquisition marks a significant development in the healthcare sector, showcasing the dynamics of strategic moves and partnerships within the industry. As Health Care Service Corporation takes the reins of Cigna’s Medicare business, both companies are set to navigate the transition in the coming months, with potential implications for the broader healthcare market.
In conclusion, Health Care Service Corporation’s acquisition of Cigna’s Medicare business reflects the ongoing evolution and strategic adjustments in the healthcare industry. The $3.7 billion deal not only signals a significant financial transaction but also underscores the changing landscape of healthcare service providers seeking synergies and optimizing their portfolios for improved operational efficiency and customer service.