Cigna, Humana Merger Scrapped

Cigna has called off its plans to form what would have been a "blockbuster" partnership with Humana, The Wall Street Journal reported Dec. 10, citing a cool reception to the plan from Cigna stockholders and the two health insurers' inability to agree on financial terms.

Cigna's Express Scripts manages prescription drug plans and offers commercial insurance. Humana is the second-biggest player in the fast-growing Medicare Advantage plans market, behind United Healthcare. Under Medicare Advantage, private insurers are paid a set rate to manage health care for people 65 and older or who have disabilities.

Humana, based in Louisville, Ky., looms large in the "fast-growing Medicare segment, something Cigna has long sought," the WSJ reported. And Reuters reported in June that Humana had warned "of a jump in medical costs" for non-urgent surgeries such as hip and knee replacements that older adults had postponed during the pandemic. Humana expected the "elevated demand … to spill into [2024] and hurt its profit growth."

The potential merger was expected to attract antitrust scrutiny from the federal government.

Anthem, now Elevance Health, planned to purchase Cigna in 2016, and Aetna was looking at acquiring Humana that year as well, Reuters reported. The Justice Department filed lawsuits against both mergers on the same day and won the court battle.

However, in an earlier report, the WSJ noted that while a combination of the two health insurers would face government scrutiny, that didn't mean it wouldn't have a good argument in court.

SHRM Online has collected articles on the abandoned merger. 

Cigna Calls Off Humana Pursuit, Plans Big Stock Buyback

Health insurance providers couldn't agree on financial terms for a deal that would have created a $140 billion giant.
(The Wall Street Journal) 

Cigna Shares Jump on Reports of Abandoned Humana Buyout, Plans for $10B Stock Buyback

Shares of Cigna jumped Monday following reports that the health care giant has scrapped its plans to buy rival Humana due to disagreements on price, putting an early end to what would have been one of the largest deals of the decade.
(CNBC)

Reports of Cigna Merger Turn Attention to Health Care Costs

Health insurer Cigna has abandoned plans to merge with rival Humana, but the potential for such a blockbuster merger heaped fresh worries on concerns that have been steadily growing for years that industry consolidation is systematically whittling away at health care options and making them more expensive.
(Hartford Courant) 

Consolidation in U.S. Health Insurance Industry

The U.S. Department of Justice, citing the prospect of higher prices, in 2016 successfully sued to stop two proposed megamergers: Anthem-now Elevance Health-planned a $54 billion purchase of Cigna, and Aetna proposed a $34 billion acquisition of Humana. The companies said those proposed deals were triggered by the Affordable Care Act, which was fully implemented in 2014. Here is what has happened in deals involving health insurers since the law went into effect.
(Reuters)