Cigna's Medicare Business Sale: Health Care Service Could Scoop The Business

Cigna Group CI is reportedly in advanced negotiations to divest its Medicare Advantage division and is presently in discussions to sell it to Health Care Service Corp for around $3 billion-$4 billion.

This potential agreement signifies a substantial stride for HCSC, a nonprofit health insurer recognized as the parent company of Blue Cross Blue Shield plans in multiple states, the Wall Street Journal reported. 

The deal would significantly bolster Health Care Service's Medicare business and broaden its geographical reach. Cigna presently offers Medicare plans across 29 states for the year 2024.

In December, the WSJ reported that Health Care Service and Elevance Health Inc ELV competed to acquire Cigna's Medicare Advantage business segment.

Cigna's pursuit of this sale follows the breakdown of its discussions to acquire Humana Inc HUM, a Medicare-focused insurer, as investors responded tepidly to the proposed mega-deal. 

Additionally, Cigna has announced plans for an additional $10 billion in stock repurchases and anticipates concentrating on smaller, incremental acquisitions termed "bolt-on" acquisitions in industry parlance.

While Cigna has been expanding its Medicare Advantage footprint—boasting approximately 599,000 members as of September, it still trails behind industry leaders like UnitedHealth Group Inc UNH, with around 7.6 million, and Humana, which counts 5.9 million Price members as of the same period. 

Price Action: CI shares are down 1.20% at $306.38 on the last check Wednesday.

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