The Cigna Group and Health Care Services Corporation (HCSC) have announced a deal which would send Cigna’s Medicare Advantage, Supplemental Benefits, Medicare Part D and CareAllies business to HCSC, pending regulatory approval.
In addition to the sale value, Cigna said the deal will enable it to free up around $400 million in capital it can redeploy, effectively putting the transaction worth closer to $3.7 billion for the company, according to the Wall Street Journal.
David Cordani, Cigna’s Chairman and CEO, said the decision was in step with the company’s strategy to focus resources and growth in its Evernorth Health and Cigna Healthcare portfolios. “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,” said Cordani.
As part of the deal, Cigna and HCSC would enter into a four-year services agreement under which Cigna’s Evernorth Health Services would continue to provide pharmacy benefit services to the Medicare businesses, effective on closing of the transaction, which is anticipated in Q1 2025. The deal is subject to regulatory approval, but there is no financing condition.
“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,” said Maurice Smith, HCSC’s CEO, president and vice chair.
Cigna’s Medicare plans currently serve a total of 3.6 million Medicare members. Cigna’s Medicare Advantage business had roughly $7.9 billion in revenue in 2022, according to the Wall Street Journal. Last fall, the company agreed to pay $172 million to resolve False Claim Act allegations related to its Medicare Advantage plans.
Evan joined TriMed in 2011, writing primarily for Health Imaging. Prior to diving into medical journalism, Evan worked for the Nine Network of Public Media in St. Louis. He also has worked in public relations and education. Evan studied journalism at the University of Missouri, with an emphasis on broadcast media.