Cigna To Sell Medicare Businesses And CareAllies In $3.7 Bln Deal; Backs FY24 View

(RTTNews) - Global health company Cigna Group (CI) announced Wednesday its definitive agreement to sell Medicare Advantage, Cigna Supplemental Benefits, Medicare Part D and CareAllies businesses to Health Care Service Corp. in around $3.7 billion deal.

Further, Cigna reaffirmed its fiscal 2024 outlook and long-term adjusted earnings per share growth target of 10% to 13%.

The sale of Medicare Businesses and CareAllies is expected to be accretive to Cigna's adjusted earnings per share in 2025.

The transaction is expected to close in the first quarter of 2025, subject to receipt of applicable regulatory approvals and other customary closing conditions. There is no financing condition.

Cigna and HCSC have also agreed to enter into a four-year services agreement, under which Cigna unit Evernorth Health Services will continue to provide pharmacy benefit services to the Medicare businesses, effective on closing of the transaction.

Following the completion of the sale, Cigna will strategically use proceeds in alignment with its capital deployment priorities, with the majority of the proceeds allocated to share repurchases.

David Cordani, Chairman and Chief Executive Officer of Cigna said, "In tandem, the transaction will position our Medicare businesses and CareAllies for additional growth as they continue to serve the needs of their customers as part of HCSC. This decision is aligned with our highly disciplined approach to managing our portfolio and allocating resources toward growth opportunities in our Evernorth Health Services and Cigna Healthcare portfolios."

For fiscal 2024, the company continues to expect adjusted income from operations on a per share basis of at least $28. The firm still expects long-term annual adjusted earnings per share growth target of 10 to 13 percent.

The company plans to provide updated guidance with its fourth quarter earnings release on February 2.