A planned merger between the Cigna Group and Humana has been called off following a disagreement over price and other financial terms, The Wall Street Journal reported Dec. 10.
Cigna said Dec. 10 it is planning an additional $10 billion of stock buybacks, raising its total planned repurchases to $11.3 billion, and considering "bolt-on acquisitions" and "value-enhancing divestitures."
"We believe Cigna's shares are significantly undervalued and repurchases represent a value-enhancing deployment of capital as we work to support high-quality care, improved affordability, and better health outcomes," Cigna CEO David Cordani said in a news release. "As we look at the broader landscape and the strategic opportunities before us, we will remain financially disciplined with a clear focus on executing against our strategy, delivering value for our shareholders, and investing in our future."
In November, WSJ reported that Cigna and Humana were "in talks" to merge through a stock-and-cash deal finalized by the end of 2023. The merger would have created one of the largest healthcare companies in the U.S., rivaling other health services giants such as UnitedHealth Group, Elevance Health and CVS. On Nov. 29, Cigna's market value was about $83 billion and Humana's was about $62 billion.
The WSJ report comes after Reuters reported Nov. 6 that Cigna was exploring a potential sale of its Medicare Advantage business.
According to Cigna's third-quarter earnings report, the company had 599,000 Medicare Advantage members as of Sept. 30, a fraction of Cigna's 19 million total insurance members. Humana is the second largest Medicare Advantage carrier in the country, with 5.9 million members as of Sept. 30. UnitedHealthcare is the largest, with 8.1 million.
Cigna's total revenue in the third quarter was $49 billion. The company projects year-end revenue of at least $192 billion. In the third quarter, net income was $1.4 billion. Cigna subsidiary Evernorth saw its revenue rise 8.1% in the third quarter to $38.6 billion. The insurance side of the business, Cigna Healthcare, reported third-quarter revenue of $12.8 billion.
Humana's total revenue in the third quarter was $26.4 billion, up 16% year over year. The company reported $832 million in net income and raised its 2023 individual Medicare Advantage membership growth expectations by 35,000, predicting to add around 860,000 members in 2023, or 19 percent more than in 2022.