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(Sharecast News) - The Cigna Group said on Wednesday that it has agreed to sell its Medicare business to Health Care Service Corporation (HCSC) for around $3.7bn.
As part of the deal, which is expected to close in the first quarter of next year, HCSC will buy Cigna's Medicare Advantage, Cigna Supplemental Benefits, Medicare Part D and CareAllies businesses.
Cigna and HCSC have agreed to enter into a four-year services agreement under which Evernorth Health Services, a subsidiary of Cigna, will continue to provide pharmacy benefit services to the Medicare businesses, effective on closing of the transaction.
David M. Cordani, chairman and chief executive of Cigna, said: "The agreement will enable The Cigna Group to drive meaningful value for all our stakeholders, providing an enhanced ability to accelerate investment and growth in our services platform, while further deepening our commitment to our existing health benefits platform.
"In tandem, the transaction will position our Medicare businesses and CareAllies for additional growth as they continue to serve the needs of their customers as part of HCSC."
The deal is expected to be accretive to Cigna's adjusted earnings per share in 2025.
Also on Thursday, Cigna reaffirmed its 2024 outlook targeting consolidated adjusted income from operations on a per share basis of at least $28 for full-year 2024, and its long-term annual adjusted earnings per share growth target of 10 to 13%.