JPM20: Cigna's Cordani says insurer's cash flow has helped ease investor fears over 'Medicare for All'

SAN FRANCISCO—Cigna CEO David Cordani said he isn’t concerned about any impact “Medicare for All” could have on his company’s stock price because of how the company is positioned.

Cordani said at the annual J.P. Morgan Healthcare Conference on Tuesday that Cigna deliberately configured its portfolio to convert a significant amount of earnings into operating cash flow. He told CNBC in a separate interview Tuesday that the ability to generate cash flow has helped assuage investors skittish about the prospect of “Medicare for All,” which is being touted by progressive presidential candidate Sen. Bernie Sanders, I-Vermont.

“A lot of our capital is not encumbered in a hardened way,” Cordani told CNBC. “It is fluid and dynamic. We will produce in excess of $8.5 billion in operating cash flow in 2021.”

He added that Cigna has a diversified portfolio with not just insurance business but also services offered to physicians and hospitals.

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“There are many business models that generate earnings but don’t offer deployable cash flow,” said Cordani, in response to a question on whether there will be large consolidation among health insurers. “We believe cash flow is a strategic asset and should be highly valuable from an investor standpoint.”

Cordani added that the company’s priorities for strategic mergers and acquisitions are to further its global footprint, enhance care coordination and look at the company’s analytical capabilities.

“We are pleased with the configuration of assets we have in our portfolio,” he said.

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He also gave details on why Cigna decided to team up with Oscar Health, a technology-based insurer that primarily offers plans in the individual market.

Cordani said Cigna has historically not participated in the small employer group market, which is comprised of about 15 million members in small group insurance plans. He added that Cigna and Oscar hope to stand up plan offerings before the end of this year.

“We will innovate new small employer offerings to the market that pay for outcomes,” Cordani said.