Health Care Service Corporation (HCSC) has completed its acquisition of Cigna's Medicare Advantage, Medicare Supplemental Benefits, Medicare Part D and CareAllies businesses, in a deal that was originally announced over a year ago.
At the time the sale was announced, the transaction was estimated to be worth about $3.7 billion.
HCSC CEO, President and Vice Chair Maurice Smith said the transaction will enable the company to expand its geographic presence across the United States.
"We recognize that the health and wellness needs for older Americans are growing, and we plan to have an important role in helping seniors live healthier, fuller lives," said Smith by statement. "We are excited to welcome our new Medicare members and the employees who will continue to help them achieve their best health."
WHAT'S THE IMPACT
The Cigna Group will continue to provide pharmacy benefit services and other solutions to Medicare members through Evernorth Health Services as part of services agreements for an agreed period post-closing, HCSC said.
With the closing of the deal, HCSC now serves 26.5 million people, including 4.3 million Medicare members across the U.S.
HCSC said the transaction is not expected to disrupt service for customers, clients, providers and brokers of the Medicare or CareAllies businesses. Coverage continues and remains unchanged. Medicare members with questions about their coverage should contact the number on their member ID card.
The transaction is expected to be accretive to the Cigna Group's adjusted earnings per share in 2025. With the sale completed, the Cigna Group will strategically use proceeds from the transaction in alignment with its capital deployment priorities, with the majority of the proceeds allocated to share repurchases.
THE LARGER TREND
Exploring the sale of its Medicare Advantage business is one of the reasons Cigna had sought to merge with Humana – a merger that was called off in December 2023.
A combination would have created a company with a value exceeding $140 billion, based on their market values.
ON THE RECORD
"We are proud of the positive impact we have made in people's lives and the unique value provided through our Medicare businesses and are confident that HCSC will continue the meaningful work that we have done for these customers," said David Cordani, chairman and CEO of The Cigna Group. "We remain committed to serving Medicare populations through the portfolio of products and services we offer through Evernorth Health Services."
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.