Cigna has announced a definitive agreement to dispose of parts of its businesses to Health Care Service Corporation (HCSC). The sale includes the Medicare Advantage, Cigna Supplemental Benefits, Medicare Part D, and CareAllies businesses and is valued at approximately USD 3.7 billion. The transaction is expected to close in Q1 2025, subject to regulatory approvals.

The businesses agreed to be sold are involved in a diverse range of health services, including supplemental benefits and medicare services. CareAllies offers various health management solutions.

Post-transaction, Cigna will focus on driving value for its stakeholders by investing and growing its services platform. The agreement also includes a four-year service contract, where Evernorth Health Services, a Cigna Group subsidiary, will continue to provide pharmacy benefit services to the sold Medicare businesses. Additionally, the sale proceeds will be primarily allocated to share repurchases.

Analyst Quicktake: Cigna previously attempted to merge with Humana Health to create an insurance giant worth USD 140 billion ; however, the deal collapsed reportedly due to the companies disagreeing on a merger price. Reports of Cigna looking to sell its Medicare Advantage businesses surfaced at the time, and analysts now believe that the sale of business parts to HCSC could help Cigna carry out the previously attempted merger with Humana with less regulatory scrutiny. In a corresponding move, Humana also recently announced it would exit the Employer Group Commercial Medical Products business, which could further assist a second attempt at the Cigna-Humana merger.