Health insurer Cigna Group is in exclusive talks to sell its Medicare Advantage business to Health Care Service Corp (HCSC) in a deal that could value the unit between $3 billion and $4 billion, a source familiar with the matter said on Wednesday.
Health insurer HCSC, a Blue Cross Blue Shield licensee in five U.S. states, said it does not comment on “rumor or speculation”.
Shares of Cigna fell about 2% on the news and the company did not immediately respond to a request for comment.
The deal is expected to be announced in the coming days, if the talks do not fall apart, according to the source.
A sale could mark a change in Cigna’s strategy for the Medicare Advantage segment, through which it manages government health insurance for people aged 65 and older.
Reuters had reported in November that the company was exploring a sale of the business. Cigna, which got into the Medicare Advantage business with an $3.8-billion acquisition of HealthSpring in 2011, would be backing away at a time when the U.S. government is tightening its purse strings – it cut the reimbursement rate for health insurers in early 2023.
A vast majority of Cigna’s revenue comes from its commercial business and pharmacy benefits division, which it bolstered with a $52-billion purchase of Express Scripts in 2018.
Cigna’s Medicare Advantage business generated 4.4% of the company’s $179.4-billion revenue from external customers in 2022.
The Wall Street Journal first reported on Wednesday that Cigna was nearing a deal with Health Care Service Corp.
Health Care Service Corp and Elevance Health were competing to acquire Cigna’s business, according to a recent Bloomberg report.
