Oct 21, 2024 - Business
Health insurance giants restart merger talks
Add Axios as your preferred source to
see more of our stories on Google.
Health insurance giants Cigna and Humana have rekindled merger talks that they had abandoned late last year, as first reported by Bloomberg and confirmed by Axios.
Why it matters: This would create a new titan in a health-care industry dominated by them, rivaling current insurance leaders UnitedHealth and Aetna.
- Cigna and Humana have a combined market cap of $125 billion, which is well below UnitedHealth ($525 billion) but well above Aetna owner CVS Health ($76 billion).
- Behind the scenes: It feels like this could be an investment bank's version of the so-called Trump Trade.
- When Cigna and Humana talked merger last year, it was like waving a red handkerchief in front of Biden's antitrust regulators. But if Trump tops Harris next month, expectation are for much more lax oversight of corporate consolidation.
Zoom out: This also comes as CVS is struggling, and Cigna may smell blood in the water.
- CVS last week ousted its CEO, and has seen its share price fall more than 25% in 2024. Breakup talk is rampant.
But, first: Cigna still needs to completed the $3.3 billion sale of its Medicare Advantage business to Health Care Services Corp.
- "The feds already are watching Cigna pretty closely as Congress gets its nails dirty with pharmacy benefits managers," writes Axios senior health care editor Adriel Bettelheim. "I don't think shedding Medicare Advantage would ease concerns about merging with Humana."
The bottom line: The two sides may again choose to walk away, but the talks' timing makes more sense now than it did a year ago.
