Cigna Denies Pursuing Merger with Humana, Focuses on Shareholder Value
Cigna has officially announced that it is not moving forward with a potential merger with Humana, putting an end to recent speculation. In a statement released today, the company emphasized its capital priorities and commitment to driving shareholder value.
The news caused a surge in Cigna’s stock price, which gained 6.5% following the announcement, while shares of Humana declined by 7% premarket. Cigna’s leadership is set to engage with investors and analysts in the coming weeks to reiterate its financial projections for the future.
The company expects to achieve a consolidated adjusted income from operations of at least $28.40 per share by the end of 2024, with a projected adjusted EPS growth of at least 10% in 2025. Despite recent rumors, Cigna has clarified that it is not pursuing a merger with Humana at this time, citing the importance of strategic alignment and financial viability in any potential acquisitions.
One of Cigna’s key strategies for driving shareholder value is through share repurchases. The company has already repurchased $6 billion worth of stock year-to-date, including $1 billion in the fourth quarter alone. Proceeds from the sale of its Medicare businesses will also be used for share repurchases, with the sale expected to close in the first quarter of 2025. Cigna still has $5.3 billion remaining on its share repurchase authorization, and the timing and extent of future repurchases will depend on various factors.
This decision comes after Cigna entered into an agreement to sell its Medicare-related businesses to Health Care Service Corporation for approximately $3.7 billion earlier this year. Discussions of a potential merger between Cigna and Humana had reportedly taken place in the past, but the two companies could not reach an agreement on terms.
As a leading provider of healthcare products and services under the Evernorth Health Services and Cigna Healthcare brands, Cigna remains focused on delivering value to its shareholders while pursuing strategic growth opportunities. The company’s commitment to its M&A criteria underscores its dedication to sustainable and profitable expansion in the healthcare market.
In conclusion, Cigna’s decision to prioritize shareholder value and focus on strategic growth initiatives demonstrates its commitment to long-term success and sustainability in the ever-evolving healthcare industry.
