Cigna to increase venture spending on startups, digital technologies

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CIgna will direct another $450 million into its venture fund, Cigna Ventures, in a bid to increase spending on startup businesses and digital health, the company said this week.

In addition to injecting extra cash into the venture fund, the insurer plans an investment in innovations which includes $1.25 billion in capital expenditures, part of a bid to keep pace with other insurers who have made similar investments in technology.

The company said it intends to continue making strategic investments in innovation through targeted "bolt-on or tuck-in" acquisitions, along with establishing positions in earlier-stage companies through the venture capital arm. 

The $450 million going to Cigna Ventures will focus on maximizing impact across three key areas: insights and analytics; digital health and experience; and care delivery and enablement.

WHAT'S THE IMPACT

The insurer has made a number of investments in recent years, about 20 in all, that include startups and companies such as Ginger, Omada, Buoy, Cricket Health and BabyScripts, among others. 

"Cigna Ventures invests in areas of strategic interest to Cigna and where we can partner with an entrepreneur to help the start-up grow and also provide value to Cigna's customers, clients and providers," according to a company spokesperson.

Cigna expects to generate more than$12 billion of deployable capital in 2022, including $5.4 billion in after-tax proceeds from the previously announced sale of its international life, accident and supplemental benefits businesses in seven countries. 

This builds on the capital Cigna returned to shareholders in 2021, including $7.7 billion of share repurchase and $1.3 billion in dividends, the insurer said.

During Cigna's February Board of Directors meetings, directors approved an aggregate increase of $6 billion in incremental share repurchase authorization, bringing the company's total share repurchase authority to $10 billion. So far this year, Cigna has repurchased $1.2 billion of its shares. 

The company expects to deploy in excess of $7 billion for share repurchase this year, as the company said it is not currently contemplating any large-scale mergers or acquisitions.

"Our plans for significant share repurchase coupled with our recently increased dividend, reinforces the confidence we have in our long-term growth plans and the underlying earnings power of Cigna's business portfolio," said Cigna Chairman and CEO David M. Cordani. "This reflects continued and effective capital deployment for shareholders."

THE LARGER TREND

The insurer launched Cigna Ventures in 2018 with $250 million in capital to invest in early and growth stage startups. The investments were intended to go to emerging companies that are driving innovation in healthcare through the strategic areas of insights and analytics, digital health and retail, and care delivery and management.

Cigna Ventures is a wholly-owned indirect subsidiary of Cigna Corporation that includes subsidiary Cigna Health and Life Insurance Company.

Cigna has previously invested in venture activity, including collaborating with five venture capital partners and an equal number of existing direct investments. These include leading the C1 round of financing with Omada Health and investments in Prognos, Contessa Health, MD Live and Cricket Health.

UnitedHealth Group subsidiary Optum created a venture capital fund the year prior. 

Optum Ventures invests in companies that use data and insights to improve healthcare services. Its initial investments included Apervita, a cloud-based platform, Buoy Health's AI-powered digital health assistant, Mindstrong Health, which uses AI and machine learning for smartphone interactions and SHYFT Analytics, a cloud-based data and analytics platform.

ON THE RECORD

"We see meaningful value in Cigna's equity, and will prioritize share repurchase in 2022 over large-scale mergers or acquisitions," said Cigna Chief Financial Officer Brian Evanko. "Beyond our expectation to allocate a significant portion of deployable capital for share repurchase this year, our strong capital position and cash flow continues to give us financial flexibility and optionality for strategic investments and targeted bolt-on acquisitions."
 

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com