The Cigna Group is planning a $10 billion increase in its share repurchase authority, a major stock buyback that will take place instead of an acquisition of Humana, another large health insurance company.
Cigna announced Sunday that its Board of Directors has approved an aggregate increase of $10 billion in incremental share repurchase authorization, bringing the company’s total share repurchase authority to $11.3 billion.
“We believe Cigna’s shares are significantly undervalued and repurchases represent a value-enhancing deployment of capital as we work to support high-quality care, improved affordability, and better health outcomes,” The Cigna Group chairman and chief executive officer David Cordani said Sunday in a statement. “As we look at the broader landscape and the strategic opportunities before us, we will remain financially disciplined with a clear focus on executing against our strategy, delivering value for our shareholders, and investing in our future. In light of the current environment, we will consider bolt-on acquisitions aligned with our strategy, as well as value-enhancing divestitures.”
The “bolt-on acquisitions” won’t face nearly the regulatory scrutiny of a massive merger of Cigna and Humana, which both have significant reach in government-subsidized health insurance as well as commercial coverage.
Reports emerged last month that Humana and Cigna were discussing a blockbuster deal that come together by the end of the year, according to the Wall Street Journal. The Humana-Cigna merger has been one that has rumored for years and – once again – hasn’t come together.
Humana, which is one of the nation’s largest operators of Medicare Advantage health insurance plans, isn’t strong in commercial and employer coverage, which is a strength of Cigna’s. In addition, Cigna has a fast-growing business selling individual coverage under the Affordable Care Act, also known as Obamacare, and Humana does not.
Cigna Sunday said the “company intends to use the majority of its discretionary cash flow for share repurchase in 2024.”
“The company expects this to include repurchase of at least $5 billion of common stock between now and the end of the first half of 2024, with a portion of this repurchase to be executed via an accelerated share repurchase program conducted in the first quarter of 2024,” Cigna added.
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