Cigna in 'exclusive' talks with HCSC to sell MA business: report

Updated at 1:52 p.m. on Jan. 3

Cigna is closing in on a deal to sell its Medicare Advantage business to Health Care Service Corp., according to a new report in the Wall Street Journal.

The insurers are in "exclusive talks" for the sale, which is expected to be between $3 billion and $4 billion, the outlet reported.

Cigna's MA arm included about 599,000 members and accounted for about $7.9 billion in revenue, the WSJ reported. And while these certainly aren't small numbers, they lag far behind industry leaders like UnitedHealthcare and Humana.

The insurer is also pressing on with its MA sale despite a rumored acquisition of Humana falling through last month. The two were reportedly in talks, but a mixed investor reaction soon soured the deal.

Scooping up Cigna's MA business would also mark a notable expansion for HCSC, which operates Blues plans in several states.

While its merger with Humana may have fallen through for now, Cigna is attracting plenty of interest for the rumored sale of its Medicare Advantage business, Bloomberg reported.

Sources close to the matter told the outlet that Health Care Service Corp. and Elevance Health are "competing" to scoop up the MA segment. Cigna is expecting that the final bids will be submitted next week, according to the report.

Cigna's Medicare Advantage unit could sell for more than $3 billion, according to Bloomberg. The article noted that talks with HCSC and Elevance Health may not ultimately lead to a sale.

That Cigna was shopping for a potential buyer for its MA business was first reported in early November by Reuters. That reported mentioned that Cigna could ultimately elect to hang on to the MA unit if it didn't find an appealing deal.

Cigna's stock was trading down by 2.84% at about 3:20 p.m. ET on Friday, and Elevance Health's stock was down by 2.64%.

The news comes on the heels of reports that a potential merger with Humana was iced amid concern from investors. The Wall Street Journal first reported on the potential merger at the end of November, and talks fell through by the beginning of this week.

Wall Street and industry analysts said that the deal could have made it through after a lengthy legal fight because it was more vertical than horizontal, given Humana's focus in Medicare Advantage. Cigna selling off its MA arm would have strengthened that case, according to experts.