Cigna shares jump on reports of abandoned Humana buyout, plans for $10 billion stock buyback

Cigna shares jump on reports of abandoned Humana buyout, plans for  billion stock buyback


Sopa Images | Lightrocket | Getty Images

Shares of Cigna jumped Monday following reports that the health-care giant has scrapped its plans to buy rival Humana due to disagreements on price, putting an early end to what would have been one of the largest deals of the decade.

Cigna late Sunday also announced plans to buy back $10 billion worth of shares, bringing its total planned repurchases to $11.3 billion. The company said in a release that it will consider smaller, “bolt-on” acquisitions in the near term, but did not confirm the reports about its abandoned pursuit of Humana.

Cigna’s stock popped about 17% Monday morning, while Humana’s stock was down more than 1%.  

Spokespeople for Cigna and Humana did not immediately respond to CNBC’s requests for comment on the called-off merger, which was first reported by The Wall Street Journal on Sunday. 

Cigna and Humana couldn’t agree on price and other financial terms of the deal, which would have created a health-care conglomerate with a value exceeding $140 billion, sources familiar with the matter told the Journal. 

That tie-up would have likely attracted fierce antitrust scrutiny. Shares of the companies fell sharply in late November after the Journal first reported that they were discussing a merger. 

But Cigna continues to believe in the merits of a tie-up with Humana, the Journal reported Sunday. The combined company would have been focused on improving access to care and lowering costs for consumers, sources told the Journal.

Jefferies analyst David Windley upgraded shares of Cigna to buy from hold in a Sunday research note, saying the abandoned Humana deal is a “short-term win” for Cigna investors. 

He added that “taking advantage of a negative reaction to deal reports” by announcing its stock buyback plan on Sunday is “music” to Cigna shareholders’ “value-sensitive ears.” 

Windley noted that shares of Cigna have been down sharply since Nov. 6, when reports emerged about the company exploring a sale of its Medicare Advantage business, which manages government health insurance for people age 65 and older. 

Investors interpreted that potential sale as a “step to reduce its antitrust exposure in a deal to acquire” Humana, Windley said.



Source

UnitedHealth says 2025 earnings will be worse than expected as high medical costs dog insurers
Health

UnitedHealth says 2025 earnings will be worse than expected as high medical costs dog insurers

UnitedHealthcare signage is displayed on an office building in Phoenix, Arizona, on July 19, 2023. Patrick T. Fallon | Afp | Getty Images UnitedHealth Group on Tuesday issued a 2025 outlook that fell short of Wall Street’s expectations, as the company’s insurance unit continues to grapple with higher medical costs. The company anticipates it will […]

Read More
UnitedHealth aims to reassure investors as profits plunge, DOJ investigates its Medicare business
Health

UnitedHealth aims to reassure investors as profits plunge, DOJ investigates its Medicare business

Omar Marques | Lightrocket | Getty Images UnitedHealth Group Chairman and CEO Stephen Hemsley will face the first real test Tuesday of his ability to regain investor confidence as the largest private U.S. insurer reports earnings. The Dow component has seen its share price cut nearly in half since mid-May, with the stock on pace […]

Read More
UnitedHealth says it is cooperating with DOJ investigation into Medicare billing practices
Health

UnitedHealth says it is cooperating with DOJ investigation into Medicare billing practices

The UnitedHealth logo on a laptop arranged in New York, US, on Friday, July 7, 2023. Gabby Jones | Bloomberg | Getty Images UnitedHealth Group revealed Thursday it is facing a Justice Department investigation over its Medicare billing practices, adding to a string of setbacks for a company that owns the nation’s largest and most […]

Read More