Cigna Group Resumes Merger Talks with Humana

Cigna Group has reportedly rekindled discussions to merge with rival Humana, according to a Bloomberg News report on Friday, citing sources familiar with the matter. This marks a notable shift for Cigna, which had previously abandoned its pursuit of Humana late last year after failing to reach an agreement on pricing.

The two companies are said to have engaged in informal, preliminary talks regarding a potential merger. The renewed interest comes at a time when Humana’s market capitalization stands at approximately $32 billion, reflecting a recent surge of about 6% in after-hours trading on Friday. Meanwhile, Cigna’s shares experienced a dip of around 5%, with its valuation currently estimated at $94 billion, as reported by LSEG.

The talks follow Cigna’s previous decision to halt merger negotiations with Humana, as reported by Reuters last year. This pause occurred alongside Cigna’s announcement of a substantial $10 billion share buyback program.

Despite the renewed discussions, no formal decision has been made regarding the potential merger, and either company could choose to delay the negotiations into the new year or ultimately decide against pursuing a deal, Bloomberg noted.

Cigna, which primarily focuses on employer-sponsored healthcare plans, is currently divesting its Medicare Advantage (MA) business, a sector that manages government-supported health insurance for seniors. Earlier this year, the company reached a $3.3 billion agreement with Health Care Service Corp to sell this segment.

On the other hand, Humana has faced significant challenges, with its stock plummeting nearly 40% this year. The decline is attributed to a combination of factors, including reduced enrollments in its highly-rated Medicare plans, increased costs stemming from higher demand for medical services, and disappointing reimbursement rates from the government.

Even after negotiations ceased last year, sources had indicated to Reuters that there was still potential for a future collaboration between the two companies. As the healthcare market continues to evolve, analysts will be closely watching how these discussions develop and whether a merger will ultimately materialize.

Source: Reuters