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Cigna Group will sell its Medicare business to another insurance company, Healthcare Services Corporation, for approximately $3.7 billion.
Cigna announced Wednesday that the deal includes Medicare Advantage insurance, supplemental benefits business and Medicare prescription drug coverage. A Medicare Advantage plan is a privately run version of the government’s Medicare program primarily intended for people over the age of 65.
Cigna CEO David Cordani said in a statement that the company still views Medicare as an attractive market, but that business has focus and resources “disproportionate to its size” within the company’s portfolio. said it was necessary.
Cigna’s Medicare business has 3.6 million customers, spokesman Justin Sessions said. That includes his 2.5 million people with Part D prescription drug coverage, about 600,000 people with Medicare Advantage plans, and more than 450,000 people with Medicare Supplement plans.
By comparison, market leaders Humana Inc. and UnitedHealth Group Inc. enroll more than 5 million people in their respective Medicare Advantage plans alone.
Privately held Chicago-based Health Care Services Corporation operates nonprofit Blue Cross Blue Shield Insurance in multiple states. These include Illinois, Texas, and New Mexico.
The companies expect the deal to close in the first quarter of next year. As part of the agreement, Evernorth Health Services, a Cigna subsidiary, will continue to manage pharmacy benefits for the Medicare business.
Cigna plans to use the proceeds from this transaction primarily to buy back its own shares.
Shares of Bloomfield, Conn.-based Cigna rose about 1% to $301.71 Wednesday afternoon, while the Standard & Poor’s 500 Index fell 1%.
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