After Dropping Humana Acquisition Attempt Cigna In Talks To Sell Medicare Advantage Business Amid Competition

Zinger Key Points
  • Cigna's Medicare Advantage business segment is projected to draw bids exceeding $3 billion.
  • Cigna boasts fewer than 600,000 Medicare Advantage enrollees as of March.

Health Care Service Corporation (HCSC) and Elevance Health Inc ELV are reportedly engaged in a competitive race to acquire the Medicare Advantage business segment from Cigna Group CI, aimed at catering to individuals aged 65 and above.

Cigna anticipates the culmination of the bidding process for its Medicare Advantage unit by the following week. The division in question is projected to draw bids exceeding $3 billion.

While recognized as a significant manager of pharmacy benefits in the U.S., Cigna also provides medical coverage, including offerings through private Medicare Advantage schemes tailored for individuals aged 65 and older.

Despite its presence in this market, Cigna boasts fewer than 600,000 Medicare Advantage enrollees as of March, indicating a relatively modest foothold compared to other industry players, Bloomberg notes, citing data from healthcare analyst KFF.

Insights shared with potential purchasers highlight that Cigna's Medicare Advantage sector is forecasted to undergo financial losses throughout the current year and the upcoming fiscal period. 

Additionally, they suggested the possibility of additional contenders emerging in the bidding process.

Monday, Cigna Group ended its attempt to negotiate an acquisition deal with rival Humana Inc HUM after the pair disagreed on price terms. In the short run, Cigna is shifting its attention to smaller acquisitions.

Instead, Cigna approved an aggregate increase of $10 billion in incremental share repurchase authorization, bringing the company's total share repurchase authority to $11.3 billion.

Price Action: ELV shares are down 2.77% at $ 466.51, and CI shares are down 2.94% at $ 289.87 on the last check Friday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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