U.S. health insurer Cigna Group is exploring the sale of its Medicare Advantage business, which provides additional benefits to those covered by federal health insurance, a move that would mark a reversal of its expansion in the sector, according to people familiar with the matter.
Cigna, which got into the Medicare Advantage business with its $3.8 billion acquisition of HealthSpring in 2011, would be backing away at a time the U.S. government is tightening its purse strings in reimbursing health insurers for their services should it go through with the move.
Cigna is working with an investment bank to evaluate options for its Medicare Advantage business, which could fetch several billions of dollars in a potential divestment, the sources said.
The discussions with interested parties, including other companies and private equity firms, are at an early stage and Cigna may decide to keep the business, the sources added, requesting anonymity because the matter is confidential.
A Cigna spokesperson said the company does not comment "on rumors or speculation" as a matter of policy. Cigna shares rose as much as 1% to $314.06 after Reuters reported the talks, but gave back some of those gains and were up about 0.4% in midday trading.
Cigna generated 14% of its $135.7 billion revenue in 2022 from the Medicare Advantage business, which includes policies that supplement benefits provided by federal insurance as well as a prescription drug business. Those eligible must already be covered by Medicare, a government program that mainly applies to Americans age 65 and over, or those with some disabilities.
The Bloomfield, Connecticut-based company said last week on its quarterly earnings call that it has expanded the geographic footprint of the business from 20% of those eligible for Medicare Advantage coverage in 2019 to more than 40%. It also disclosed its customer base had increased 13% year-to-date.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.