CI - Cigna is close to a $4.0 billion deal to sell its Medicare Advantage unit

2024-01-03 14:07:26 ET

Cigna Group (NYSE: CI) is now in advanced talks to sell its Medicare Advantage unit to Healthcare Services Group Inc (NASDAQ: HCSG). Its shares are down more than 1.0% at writing.

Cigna-HCSG deal could be worth up to $4.0 billion

Anonymous sources told the Wall Street Journal on Wednesday that the two companies are in exclusive negotiations which could lead to a $3.0 billion to $4.0 billion deal.

Such an agreement, they added, will likely be announced in the coming days provided that discussions don’t fall apart. In December, Elevance Health Inc was also reported interested in buying Cigna’s Medicare Advantage business ( find out more ).

The news arrives about a month before Cigna Group is scheduled to report its financial results for the fourth quarter. Consensus is for it to earn $6.52 a share versus $4.96 per share a year ago.

Medicare isn’t a major revenue source for Cigna

Cigna had spent $3.8 billion on buying HealthSpring in 2011 to get into Medicate Advantage. It was first reported considering a sale of that business in November of 2023.

Note that Medicare Advantage unit contributed only 4.4% to the total revenue Cigna generated from external customers in 2022. Commercial and pharmacy benefits management divisions bring in most of its revenue.

In 2018, Cigna made a $52 billion acquisition of Express Scripts to further bolster its position in PBM.

Both Cigna and Healthcare Services Group Inc are yet to officially comment on the Wall Street Journal report. is also down slightly on Wednesday.

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