Cigna to acquire Express Scripts for $67 billion

Credit: Cigna

Cigna is acquiring Express Scripts for $67 billion, according to an announcement from both companies today.

The latest consolidation would allow Cigna to more effectively control costs and expand its reach of health services for employers, health plans and government agencies, Cigna said.

The merger enhances the revenue and earnings growth for Cigna, which last year was part of the failed $54 billion takeover by Anthem.

Express Scripts was the pharmacy benefit manager for Anthem until last year when the insurer partnered with CVS Health to launch its own PBM.

CVS Health has proposed its own $69 billion deal to acquire Aetna.

[Also: CVS Health to acquire Aetna for $69 billion]

Controlling the cost of prescription drugs has become the focus of the healthcare industry and the government. PBMs help to negotiate discounts with drugmakers.

Cigna CEO David Cordani said he has been in negotiations with Express Scripts since late last year, looking at the deal as a way to broaden Cigna's offerings and reach.

All of the recent merger deals seek to provide more cost-effective care and may also be a hedge against Amazon's healthcare plans with JPMorgan Chase and Berkshire Hathaway.

[Also: What the Amazon, Berkshire Hathaway, JPMorgan deal means for payers]

The transaction is expected to close by December 31. Until the closing, Cigna and Express Scripts will continue to operate as independent companies.

After the closing, the combined company will be led by Cordani as CEO and president. Express Scripts CEO and President Tim Wentworth will assume the role of president, Express Scripts. 

The transaction is valued at $67 billion when including Cigna's assumption of approximately $15 billion in Express Scripts debt. 

"Cigna's acquisition of Express Scripts brings together two complementary customer-centric services companies, well-positioned to drive greater quality and affordability for customers," Cordani said. "Together, we will create an expanded portfolio of health services, delivering greater consumer choice, closer alignment between the customer and healthcare provider and more personalized value." 

"Adding our company's leadership in pharmacy and medical benefit management, technology-powered clinical solutions, and specialized patient care model to Cigna's track record of delivering value through innovation, we are positioned to transform healthcare," Wentworth said. "We will continue to have a distinct focus at Express Scripts and eviCore on partnering with health plans, and together, build tailored solutions for health plans and their members."

Upon closing, Cigna shareholders will own approximately 64 percent of the combined company and Express Scripts shareholders will own approximately 36 percent. 

The combined company will be named Cigna. Cigna's headquarters in Bloomfield, Connecticut, will become the headquarters for the combined company and Express Scripts will be headquartered in St. Louis, Missouri. 

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com