Cigna is considering whether to sell or outsource its pharmacy benefits division, a decision that could earn the insurer as much as $1.5 billion.
Although Cigna CEO David Cordani wouldn't explicitly disclose what options the company is considering, he told a Cowen healthcare conference that it "will remain open to structural alternatives that maximize shareholder value so long as they continue to enable me to deliver our promise to our clients and customers." He also noted that Cigna's pharmacy unit is "well performing based on a variety of measures," according to The Wall Street Journal.
Since acquiring Medicare Advantage plan HealthSpring for $3.8 billion last October, Cigna has added 650,000 additional members, Cigna spokesperson Matthew Asensio told Bloomberg.
"It is important for Cigna to continue to have pharmacy benefit capabilities as an integrated part of our offering to customers and clients," Asensio said. "We are considering a variety of structural solutions to best and most efficiently deliver that value going forward."
He added that "everything is on the table" for the pharmacy-benefits division, and "nothing has been ruled out."
J.P. Morgan analysts said that selling the pharmacy business would be the "best possible outcome" for Cigna's earnings, noted the WSJ. If it does decide to sell, Express Scripts, CVS Caremark and SXC Health Solutions would likely be interested in making bids, reported the St. Louis Business Journal.
In considering to sell its pharmacy benefits division, Cigna is following in the footsteps of WellPoint and Aetna, which sold and outsourced their own pharmacy units, respectively. WellPoint sold its pharmacy benefit manager, NextRx, to Express Scripts in 2009 for $4.7 billion. Aetna reached a deal in 2010 to have CVS Caremark administer its pharmacy business for 12 years.