Cigna nixes speculation of a Humana merger
The majority of proceeds from the sale of its Medicare businesses will be used for share repurchase, Cigna says.
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Cigna confirmed today it is not pursuing a combination with Humana.
The comments released in a statement affirming its capital priorities dismiss reports circulating earlier this fall that Cigna and Humana were in informal talks about a potential merger.
Cigna's stock gained 6.5% this morning on the news, while shares of Humana slid 7% premarket, according to Seeking Alpha.
Cigna Group officials expect to participate in meetings with investors and analysts over the next several weeks. During these meetings, Cigna expects to reaffirm projected full year 2024 consolidated adjusted income from operations of at least $28.40 per share and adjusted EPS growth of at least 10% in 2025, the company said.
"Additionally, in light of recent and persistent speculation, The Cigna Group expects to communicate that the company is not pursuing a combination with Humana Inc.," Cigna said in its statement. "The Cigna Group remains committed to its established M&A criteria and would only consider acquisitions that are strategically aligned, financially attractive and have a high probability to close."
WHY THIS MATTERS
Cigna will use its capital to drive shareholder value, the company said.
This includes actively repurchasing shares in the fourth quarter and in 2025. Year-to-date, the company has repurchased $6 billion of stock, including $1 billion so far in the fourth quarter.
The majority of proceeds from the sale of its Medicare businesses will be used for share repurchase, Cigna said. The sale is expected to close in the first quarter of 2025. Cigna said it has $5.3 billion remaining on its share repurchase authorization.
The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions, and alternate uses of capital, the company said.
THE LARGER TREND
In January, Cigna entered into a definitive agreement to sell its Medicare Advantage, Supplemental Benefits, Medicare Part D and CareAllies businesses to Health Care Service Corporation (HCSC) for about $3.7 billion.
At the end of 2023, Cigna and Humana reportedly ended previous talks to merge after failing to agree on a price.
The Cigna Group includes products and services marketed under Evernorth Health Services and Cigna Healthcare.
Email the writer: SMorse@himss.org
