Health Care Service Corporation (HCSC) has entered into a definitive agreement to acquire the Medicare business of global health company Cigna.
The deal, worth approximately $3.7bn, includes Cigna’s Medicare Advantage, Cigna Supplemental Benefits, Medicare Part D and CareAllies businesses.
Go deeper with GlobalData
Cigna’s Medicare business manages state-backed health insurance for people who are 65 years and above.
Cigna’s decision to sell its Medicare lines represents a strategic shift from the direction it took in 2011 when it acquired HealthSpring for $3.8bn.
HCSC, which provides Blue Cross Blue Shield insurance plans in five US states, has a workforce of more than 27,000 and serves 18.6 million members.
Cigna’s commercial business and pharmacy benefits division, which was strengthened with the $52bn acquisition of Express Scripts in 2018, contribute the bulk of its revenue.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataIn 2022, the Medicare Advantage business accounted for 4.4% of Cigna’s $179.4bn revenue from external customers, serving 3.6 million Medicare members.
The transaction is due to be finalised in the first quarter of 2025, pending regulatory approvals and other standard closing conditions.
It has been noted that there is no financing condition attached to the deal.
Upon finalising the sale, the Cigna Group plans to strategically allocate the proceeds in line with its capital deployment priorities, with a significant portion directed towards share repurchases.
Centerview Partners is providing financial advisory services to the Cigna Group, with additional financial advice from Morgan Stanley.
Wachtell, Lipton, Rosen & Katz is acting as corporate legal counsel, while Rule Garza Howley, Mintz Levin Cohn Ferris Glovsky and Popeo, and Sidley Austin are providing regulatory counsel.
HCSC CEO, president and vice-chair Maurice Smith said: “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 programmes 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.”
Cigna Group chairman and CEO David M. Cordani said: “The agreement will enable the Cigna Group to drive meaningful value for all our stakeholders, providing an enhanced ability to accelerate investment and growth in our services platform, while further deepening our commitment to our existing health benefits platform.
“In tandem, the transaction will position our Medicare businesses and CareAllies for additional growth as they continue to serve the needs of their customers as part of HCSC.”
