Health insurance giants Cigna and Humana have resumed merger discussions that were previously halted late last year, as reported by Bloomberg and confirmed by Axios.
Significance: A merger would create a formidable entity within the healthcare sector, challenging existing leaders UnitedHealth and Aetna.
Cigna and Humana together hold a market capitalization of $125 billion, significantly less than UnitedHealth’s $525 billion but surpassing Aetna’s owner, CVS Health, valued at $76 billion.
Context: The renewed talks may reflect shifting dynamics in the regulatory landscape. Previously, discussions around a merger raised concerns among Biden’s antitrust regulators. However, if Trump were to win the upcoming election, expectations for relaxed oversight on corporate mergers could emerge.
This development coincides with CVS facing challenges, including the recent ousting of its CEO and a share price decline exceeding 25% in 2024, leading to speculation about a potential breakup.
However, before any merger can proceed, Cigna must finalize its $3.3 billion sale of its Medicare Advantage business to Health Care Services Corp.
Axios senior healthcare editor Adriel Bettelheim noted that the federal government is closely monitoring Cigna, particularly in light of Congressional scrutiny surrounding pharmacy benefits managers. He added that divesting the Medicare Advantage business may not alleviate concerns regarding a merger with Humana.
Conclusion: While the discussions could once again falter, the current timing of talks appears more favorable compared to a year ago.
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