“The math now works for a [Cigna and Humana] fusion,” Jeffries analyst David Windley wrote April 22. Since the two companies abandoned a proposed merger in December, Cigna’s stock prices have risen by 37% and Humana is down 31%, according to Bloomberg.
Cigna could strike a deal to acquire Humana for around $420 per share, Mr. Windley wrote in a note to clients. An acquisition would add to Cigna’s growth if it does not pay more than $470 per share for the company, according to Jeffries.
The two insurers called off a proposed merger in December after failing to reach an agreement on a price.
In January, Cigna reached a deal to sell its Medicare Advantage business to Health Care Service Corp. for $3.3 billion. Analysts said a sale could make a merger with Humana, a major Medicare Advantage player, more palatable to regulators.
In the months since the called-off merger, insurers have raised alarms over rising medical costs in the Medicare Advantage population. Humana reported a $541 million loss in the fourth quarter of 2023, due to “unprecedented” medical cost increases.
Humana’s executives could make a collective $75 million if the company changes control.
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