Cigna will sell off its Medicare business to Health Care Service Corporation in a deal valued at $3.7 billion, the company announced Wednesday.
HCSC will acquire Cigna's Medicare Advantage, Part D, supplemental benefits and CareAllies businesses, and the parties expect the deal to close in the first quarter of 2025. In addition, the Blues insurer has entered into a four-year arrangement with Cigna's Evernorth subsidiary, which will continue to provide pharmacy services to the Medicare plans should the sale close.
People close to the situation told Bloomberg earlier this month that Cigna and HCSC were in "exclusive" talks for the Medicare deal. Other interested buyers reportedly included Elevance Health, another Blues giant.
Cigna CEO David Cordani said that the sale will allow the company to focus on its growth targets.
""This decision is aligned with our highly disciplined approach to managing our portfolio and allocating resources toward growth opportunities in our Evernorth Health Services and Cigna Healthcare portfolios," Cordani said in the press release. "While we continue to believe the overall Medicare space is an attractive segment of the healthcare market, our Medicare businesses require sustained investment, focus, and dedicated resources disproportionate to their size within The Cigna Group's portfolio."
He added that Cigna sees more growth opportunities in Medicare through Evernorth, which includes Express Scripts, telehealth services through MDLive, data analytics and more.
It's been a busy few months for the Cigna team, as it explored the MA sale alongside a rumored merger with Humana that heated up in late November before fizzling within weeks. That Cigna was mulling a sale of its Medicare Advantage business was core to a Humana acquisition succeeding, analysts said.
HCSC CEO Maurice Smith said in the press release that scooping up Cigna's MA plans will allow it to continue to scale and evolve its product portfolio.
"HCSC is building on its commitment to lead and expand access to quality affordable care for people in all phases of their lives," said Smith. "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 programs, and a larger geographic reach."
Cigna said it expects the transaction to be "accretive" to its 2024 earnings, and reaffirmed its guidance. The company will report its Q4 results on Friday.