Cigna to sell Medicare business for over $3B (NYSE:CI)

Update 10.01 AM EST: Adds comments from Cigna (NYSE:CI)

Health insurer Cigna (CI) has agreed to sell its Medicare business for $3.3B in cash to Health Care Service Corp. (HCSC), a large nonprofit health insurer, The Wall Street Journal reported Wednesday.

Per the terms, HCSC, the parent of Blue Cross Blue Shield plans in five states, including Texas, will acquire Cigna’s (CI) Medicare products, including Medicare Advantage plans and CareAllies, a CI unit focused on value-based care.

The deal is expected to close in early 2025. Cigna (CI) anticipates the divestment will help it deliver $400M in financial reserves, which it intends to retain or deploy for other purposes, and notes that, as a result, the transaction is effectively worth $3.7B.

In a subsequent statement, the company put the total transaction value at approximately $3.7B. It also reaffirmed its 2024 outlook of achieving a minimum of $28 per share for adj. income from operations. Cigna (CI) continues to expect its long-term adj. annual EPS growth to reach 10%–13% and deal with HCSC to improve its adjusted earnings per share in 2025.

CI, which focuses on commercial insurance, served about 600K members through its Medicare Advantage business. Those who benefited from its Medicare supplement plans and Medicare Part D drug plans reached 450K and 2.5M, respectively.

In 2022, the company generated $7.9B in premium revenue from its Medicare business, marking a ~6% drop from the prior year.

Early this month, the Journal first reported that the parties were in advanced negotiations to finalize the deal.