Medical insurance supplier Cigna Group is in unique discussions to divest its Medicare Benefit enterprise to Well being Care Service (HCSC) in a deal valued between $3bn and $4bn, the Wall Road Journal reported, citing sources aware about the event.
The potential deal is because of be introduced shortly until negotiations falter.
If materialised, the transaction would signify a strategic pivot for Cigna, which has traditionally derived the majority of its income from its business operations and pharmacy advantages administration, in response to Reuters.
Cigna strengthened these operations by way of the acquisition of Categorical Scripts in 2018 for $52bn. The Medicare Benefit phase, which caters to people aged 65 years and above with authorities medical insurance, has been part of Cigna’s portfolio since its $3.8bn acquisition of HealthSpring in 2011.
Nevertheless, with the US Authorities lowering reimbursement charges for well being insurers early final yr, Cigna seems to be reassessing its involvement on this area, the media publication famous.
In 2022, the Medicare Benefit unit of Cigna contributed 4.4% to its $179.4bn income from exterior prospects.
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The corporate has roughly 599,000 Medicare Benefit members and generated $7.9bn in income from this phase in 2022.
It had beforehand engaged in a pursuit for rival Humana, a Medicare-focused insurer however deserted the acquisition plan after failing to agree on monetary phrases.
Because the finish of November final yr, the US medical insurance giants have been in talks to signal a merger deal that will have resulted in an business behemoth with a mixed worth of almost $140bn.
The tepid response from buyers to the potential Humana acquisition prompted Cigna to rethink its technique. It’s now planning an extra $10bn in inventory buybacks and aiming for smaller, extra manageable acquisitions.
Cigna and Well being Care Service didn’t reply to Reuters’ requests for touch upon the matter.
The corporate introduced plans to broaden its Medicare Benefit presence to 4 new counties within the US in October final yr.
Cigna intends to supply varied plans with $0 premiums and extra advantages akin to a dental incentives, listening to and imaginative and prescient advantages in addition to monetary wellness advantages.
These plans will probably be provided to eligible prospects beneath Medicare in Avery, Madison, Mitchell and Yancey counties.
