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Cigna, Humana and the Anatomy of (the Coverage of) a Deal

Analysis  |  By Laura Beerman  
   December 07, 2023

While the industry prepares for an 18- to 24-month merger cycle, will watching the deal change the deal? A recap of key coverage and what's changed already.

Update 12/10/23: Humana Disbands Executive Committee, Cigna Disbands Deal

In quantum physics, which governs the smallest bodies, the act of observing an electron changes it. Could this also be true of the Cigna-Humana, two of the healthcare universe’s largest bodies? Will the act of looking at the deal — by media watchers, financial watchers, and anti-trust watchers — change the deal? 

It would appear yes. 

Last Thursday, news broke that Humana, Inc.'s boarded amended its bylaws to remove the requirement for an executive committee, which it then disbanded. But in breaking the potential Cigna-Humana merger on Nov. 29, the WSJ was careful to add “assuming the talks don’t fall apart.” It appears now they have. Cigna has called off the deal due to stockholder pushback and disagreement over financial terms in favor of a now-planned stock buyback and smaller acquisition targets.

Twenty-three days—plus eight years, give or take. That’s how long it took the headlines to change from “Cigna explores shedding Medicare Advantage (MA) business” to “Cigna, Humana in Talks for Blockbuster Merger.”

Twenty-three days because news like this travels fast. Eight years because "the current management [of Cigna] has wanted to own HUM for some time” (Yahoo! Finance) — since 2015, when the two agreed to a merger that the DOJ would ultimately block.

Will that happen again? Answer cloudy, ask again later. But is it worth trying? Apparently yes and for one significant reason: competing with the vertical size and strength of the industry’s largest player. “[T]he State of U.S. health insurance is UnitedHealthcare—all other insurance companies are just trying to keep up with them” (Healthcare Huddle).

Here’s what we know so far, and what we don’t, about how the merger-watching will evolve.

A Cigna MA sell off?

On Nov. 6, a Reuters exclusive announces that Cigna may be looking to sell its 600,000-member Medicare Advantage book of business. Bloomberg now reports that Health Care Service Corporation — an independent licensee of the Blue Cross Blue Shield Association — is eyeing Cigna’s MA portfolio.

The reality is Cigna has not captured MA market share and at desired margins like its competitors. Sometimes you have to break something to fix it. Or make it stronger.

Wait, maybe there’s more to this…

Just a week later, STAT asks if a “bigger move” is being planned, citing a Stephens healthcare stock analysis: ”We would see this action being one component of a potential pursuit of [Humana] as acquisition target, with the divestiture being a proactive move to reduce antitrust risk.”

While the STAT piece was one of the first to ask the question, it took another outlet to answer it . . .

WSJ breaks merger talks, world follows

On Nov. 29, The Wall Street Journal announces that a “cash-and-stock deal between [the] health-insurance giants could be struck by year-end.”

If a deal happens and the merger is approved, the entities will gain from what they’ve given. Cigna will have traded some 600,000 MA members for Humana’s 5 million. Likewise, Humana’s loss of 700,000 commercial lives would be more than offset by Cigna’s 16 million.

In its pro-merger analysis, Yahoo! Finance quotes Sachin Jain, CEO of SCAN Health Group and Plan, on this trade-off wisdom — noting that “while it might seem counterintuitive to dump the Medicare business, ‘these are very smart ppl running these companies. [Cigna CEO David] Cordani is a super strategic leader.’”

Which begs the question . . .

Who’s buying (and leading) who?

If Cigna and Humana strike a deal, Cigna's larger market cap and revenue ($83B, $181B) compared to Humana’s ($62, $93B) would make the latter the likely target. Executive leadership may move in the same direction. Bruce Broussard, Humana’s CEO since 2013, is stepping down in later 2024 as part of a “multi-year succession plan” that reads now like Merger 2.0 . David Cordani has been Cigna’s President and CEO since 2009.

A Cigna-Humana merger would be ... ?

Since the WSJ story, coverage has concluded that the deal would be:

  • Good: For the combined company, anyway. With a combined $140 billion+ market value, the new entity could leverage one another’s assets to better compete with United Health Group.
  • Bad: What is great for payers is rarely so for other players. The combined size and scale of a “Cigmana” would disadvantage provider contract negotiations and consumer choice.
  • Green-Lit: Regulators might be satisfied by the lack of commercial-MA overlap between the payer giants, but few analysts believe that these divestures will fully clear the merger decks.
  • Blocked: Axios and others continue to cite merger hurdles, including the current anti-trust environment and past unrequited deals (Cigna-Humana Cigna-Anthem).

But it’s the existing overlap of the two companies’ PBMs that is being raised most, with STAT noting: “Given how Lina Khan’s Federal Trade Commission already is scrutinizing PBM market power, it seems like that kind of deal would be an insta-block.”

Nearly a month since this assessment, not everyone agrees...

The observers and the observed

In addition to other outlets, HealthLeaders has also covered the merger, the characterization of which has ranged from making sense to making "some sense" (Forbes) to being a really bad idea for Humana (Jim Cramer, CNBC).

The market’s observation of a possible deal caused share prices to drop — 8% for Cigna, roughly 5.5% — the day the WSJ story appeared. After rebounding, Cigna stock dropped another 2% with Humana remaining flat as of Dec. 6.

Market temperature in turn impacts the leadership question. In its follow-up coverage noting the two companies' "limited cost and revenue strategies," Reuters notes: "The limited synergies will also add pressure on Cigna CEO David Cordani to deliver value by running Humana better than its current management."

And what about the government? Optics matter here too. Quoting one analyst on Cigna's proactive MA sale, Reuters adds: "It would be smart to do it even before announcing the deal" (Andre Barlow of Doyle, Barlow and Mazard PLLC).

On the will-it, won't-it be approved question, the WSJ's watchful David Wainer says it best: "A Cigna-Humana merger will be a headache for everyone involved and great business for the lawyers on both sides. But at the end of the day, it is too compelling for either side not to try" (Wall Street Journal).

Laura Beerman is a contributing writer for HealthLeaders.


“Cigmana?” A merger agreement between Cigna and Humana appears all but done in the watchful eyes of media, analysts and a nervous market.

23 days is all it took for news of an MA sale to become news of a merger and for the market and—well, everyone—to weigh in on the mother of all vertical integrations.

Nevertheless, the outcome will be in “choose your adventure” stage for quite some time.

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