Cigna plans to invest $450M in venture arm for digital health, analytics

Cigna plans to give its venture capital arm a $450 million boost as part of its strategy to increase the company's shareholder value and deliver long-term growth.

The company is eyeing targeted bolt-on or tuck-in acquisitions along with investments in earlier-stage companies through Cigna Ventures. The company's board authorized an additional $450 million to invest in its venture capital arm with a focus on contributing to early-stage companies in the areas of insights and analytics, digital health and experience and care delivery and enablement, according to an announcement.

"Cigna continues to successfully execute against our strategic growth plan and is committed to improved shareholder returns as we deliver health care that is affordable, predictable, and simple for our customers and clients around the world," said David Cordani, chairman and CEO at Cigna, in a statement.

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In 2018, Cigna committed $250 million to Cigna Ventures. The company's venture arm now has seven venture capital partners and 15 existing direct investments, according to Cigna's 2021 Securities and Exchange Commission report (PDF).

Cigna Ventures' investments to date include Arcadia, Babyscripts, Cricket Health, Ginger, Omada and RecoveryOne.

The company also plans to spend $1.25 billion in capital expenditures to fund industry innovations.

During Cigna's February board of directors meetings, directors approved an aggregate increase of $6 billion in incremental share repurchase authorization, bringing the company's total share repurchase authority to $10 billion. Year-to-date, Cigna has repurchased $1.2 billion of its shares. The company expects to deploy in excess of $7 billion for share repurchase this year.

RELATED: Cigna Ventures leads $23M funding round in precision medicine company GNS Healthcare

The company expects to generate over $12 billion of deployable capital in 2022, including $5.4 billion in after-tax proceeds from the previously announced sale of its international life, accident, and supplemental benefits businesses in seven countries. These priorities build on the capital Cigna returned to shareholders in 2021, including $7.7 billion of share repurchase and $1.3 billion in dividends, the company said.

"We see meaningful value in Cigna's equity, and will prioritize share repurchase in 2022 over large-scale mergers or acquisitions," said Brian Evanko, chief financial officer at Cigna, in a statement. "Beyond our expectation to allocate a significant portion of deployable capital for share repurchase this year, our strong capital position and cash flow continues to give us financial flexibility and optionality for strategic investments and targeted bolt-on acquisitions."