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The Cigna Group headquarters in Bloomfield, Connecticut, US, on Friday, Oct. 27, 2023. The Cigna Group is scheduled to release earnings figures on November 2. Photographer: Joe Buglewicz/Bloomberg

Life Health > Health Insurance > Medicare Planning

Wells Fargo Analysts See Antitrust Obstacles for Cigna-Humana Deal

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Federal regulators could block any efforts by Cigna to combine with Humana, even though the companies appear to have little obvious operational overlap, according to Wells Fargo securities analysts.

Humana has an 18% share of enrollment in the Medicare Advantage market, and Cigna has just a 2% share in that market, according to KFF.

But Stephen Baxter and other Wells Fargo analysts note that Cigna has focused on building a large share of the market in the states where it does offer Medicare Advantage plans: It has a 25% share in Texas, a 15% share in Tennessee and a 10% share in Arizona.

“Recent antitrust enforcement has been quite vigorous, and we would likely expect a relatively drawn-out process,” the analysts write.

What it means: Cigna and Humana could make a big deal, but they might not. If they do, and you’re in Texas or Tennessee, it’s possible that any clients with Cigna Medicare Advantage plan coverage will end up with a new coverage provider because of divestitures Cigna would have to make to get antitrust regulator approval for the deal.

The source: The Wall Street Journal on Wednesday reported news of the talks in an exclusive article.

The companies could announce a stock-and-cash deal by the end of the year, the paper reported, citing “people familiar with the matter.”

The companies: Cigna is a Bloomfield, Connecticut-based company that’s a big player in the corporate health plan, health care services, dental plan, pharmacy benefits management and Medicare Part D prescription drug coverage markets.

It reported $1.8 billion in net income for the third quarter on $49 billion in revenue.

It provides or administers major medical coverage for 20 million people, including about 600,000 Medicare Advantage plan enrollees.

It also provides or administers dental coverage for 19 million people and has 2.5 million Medicare Part D drug plan enrollees.

Humana is a Louisville, Kentucky-based company that has been a big player in the commercial health insurance market but has been pulling away from the market in recent years.

It reported $830 million in net income for the third quarter on $26 billion in revenue.

It provides or administers major medical coverage for 17 million people, including 5.9 million people with Medicare Advantage coverage and 299,400 people with Medicare supplement insurance.

It also has about 2.6 million dental plan enrollees and 2.9 million Medicare Part D drug plan enrollees.

Like Cigna, Humana has been building a health care services delivery business.

The company may have hinted at its openness to making a deal in October, when it announced that Bruce Broussard, its CEO, plans to retire from that post in 2024. Conventional wisdom is that companies may have an easier time making deals when one of the companies’ CEOs is leaving.

The history: Cigna and Humana previously tried to combine their companies in 2015. When that deal fell apart, Humana tried to combine with Aetna. Eventually, when the Aetna-Humana talks ended, Aetna agreed to be acquired by CVS.

Cigna tried to combine with Anthem, the company now known as Elevance, in a deal that fell apart in 2017.

Humana was involved in an unsuccessful effort to combine with UnitedHealth in 1998. Since then, it has been rumored to be in deal talks with other suitors, including Walmart and Walgreens.

Cigna’s headquarters in Bloomfield, Connecticut. Photo: Joe Buglewicz/Bloomberg


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