Cigna Resumes Merger Talks with Humana

(Reuters) – U.S. health insurer Cigna (NYSE:CI) Group has revived efforts to merge with smaller rival Humana (NYSE:HUM) after abandoning the pursuit late last year, Bloomberg News reported on Friday, citing sources familiar with the matter.

The companies have held informal, early discussions recently about a potential deal, the report said.

Shares of Humana, which has a market capitalization of about $32 billion, were up approximately 6% in after-hours trading on Friday, while those of Cigna were down about 5%. Cigna was valued at roughly $94 billion, according to data compiled by LSEG.

Both Cigna and Humana declined to comment on the situation.

Last year, Reuters reported that Cigna ended its attempt to negotiate an acquisition of Humana after the companies failed to agree on a price, subsequently announcing a $10 billion share buyback.

No decision has been made so far, with Cigna or Humana possibly opting to delay any deal until after the new year or deciding against pursuing one altogether, according to the Bloomberg report.

Cigna, which primarily deals in employer-sponsored healthcare plans, is currently in the process of selling its Medicare Advantage (MA) business that manages government-backed health insurance for those aged 65 and older. Earlier this year, Cigna struck a $3.3 billion deal to sell its MA business to Health Care Service Corp.

Humana has experienced a nearly 40% decline in value this year, grappling with several challenges, including falling enrollments in its top-rated Medicare plans, increased costs due to higher demand for medical care, and lower-than-expected reimbursement rates from the government.

Despite the halted negotiations, sources indicated that there might still be opportunities for a tie-up in the future.

Additionally, there was significant antitrust scrutiny looming at the time due to potential consolidation within the U.S. health insurance sector.