Transaction Expected to be Accretive to
Adjusted EPS1 in 2025
The Cigna Group Reaffirms 2024 Outlook and
Long-Term Adjusted EPS1 Growth Target of 10-13%
BLOOMFIELD, Conn., Jan. 31,
2024 /PRNewswire/ -- Global health company The Cigna
Group (NYSE: CI) today announced that it has entered into a
definitive agreement whereby Health Care Service Corporation (HCSC)
will acquire The Cigna Group's Medicare Advantage, Cigna
Supplemental Benefits, Medicare Part D and CareAllies businesses,
for a total transaction value of approximately $3.7 billion. As part of the transaction, The
Cigna Group and HCSC have agreed to enter into a four-year services
agreement under which Evernorth Health Services, a subsidiary of
The Cigna Group, will continue to provide pharmacy
benefit services to the Medicare businesses, effective on
closing of the transaction.
The transaction is expected to close in the first quarter of
2025, subject to receipt of applicable regulatory approvals
and other customary closing conditions. There is no financing
condition.
"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,"
said David M. Cordani, Chairman and
Chief Executive Officer of The Cigna Group. "This decision is
aligned with our highly disciplined approach to managing our
portfolio and allocating resources toward growth opportunities in
our Evernorth Health Services and Cigna Healthcare portfolios.
While we continue to believe the overall Medicare space is an
attractive segment of the healthcare market, our Medicare
businesses require sustained investment, focus, and dedicated
resources disproportionate to their size within The Cigna
Group's portfolio. We continue to see significant,
meaningful growth opportunities for government services, including
Medicare, in our Evernorth Health Services portfolio of
businesses."
The transaction is expected to be accretive to The Cigna Group's
adjusted earnings per share1 in 2025. The Cigna
Group today also reaffirmed its 2024 outlook targeting consolidated
adjusted income from operations on a per share
basis1 of at least $28 for full-year 2024, and its long-term annual
adjusted earnings per share1 growth target of 10 to 13
percent, while maintaining an attractive dividend, and will
provide updated guidance with its fourth quarter earnings release
on February 2, 2024. Following the
completion of the sale, The Cigna Group will strategically use
proceeds from the transaction in alignment with its capital
deployment priorities, with the majority of the proceeds allocated
to share repurchases.
"HCSC is building on its commitment to lead and expand access to
quality affordable care for people in all phases of their lives,"
said Maurice Smith, HCSC's CEO,
President and Vice Chair. "This acquisition supplements our growth
strategy in the large and growing Medicare marketplace and will
bring many opportunities to HCSC and its members – including a
wider range of product offerings, robust clinical programs, and a
larger geographic reach. We look forward to offering our proven
member and provider engagement model to even more people, and we
are excited to welcome Cigna's Medicare and CareAllies teams with
their demonstrated talent and expertise."
Advisors
Centerview Partners LLC is acting as financial advisor to The
Cigna Group. Morgan Stanley & Co. LLC provided additional
financial advice. Wachtell, Lipton, Rosen & Katz is serving as
corporate legal counsel, and Rule Garza Howley LLP, Mintz, Levin,
Cohn, Ferris, Glovsky and Popeo, P.C., and Sidley Austin LLP are
serving as regulatory counsel.
Notes
1. Adjusted income (loss) from operations is a
principal financial measure of profitability used by The Cigna
Group's management because it presents the underlying results of
operations of The Cigna Group's businesses and permits analysis of
trends in underlying revenue, expenses and shareholders' net
income. Adjusted income from operations is defined as shareholders'
net income (or income before income taxes less pre-tax income
(loss) attributable to noncontrolling interests for the segment
metric) excluding net realized investment results, amortization of
acquired intangible assets and special items. The Cigna Group's
share of certain realized investment results of its joint ventures
reported in the Cigna Healthcare segment using the equity method of
accounting are also excluded. Special items are matters that
management believes are not representative of the underlying
results of operations due to their nature or size. Adjusted income
(loss) from operations is measured on an after-tax basis for
consolidated results and on a pre-tax basis for segment results.
Consolidated adjusted income (loss) from operations is not
determined in accordance with GAAP and should not be viewed as a
substitute for the most directly comparable GAAP measure,
shareholders' net income. See Exhibit 1 for a reconciliation of
consolidated adjusted income from operations to shareholders' net
income.
Management is not able to provide a reconciliation of adjusted
income from operations to shareholders' net income (loss) or
adjusted revenues to total revenues on a forward-looking basis
because it is unable to predict, without unreasonable effort,
certain components thereof including (i) future net realized
investment results (from equity method investments with respect to
adjusted revenues) and (ii) future special items. These items are
inherently uncertain and depend on various factors, many of which
are beyond The Cigna Group's control. As such, any associated
estimate and its impact on shareholders' net income could vary
materially.
Cautionary Note Regarding Forward-Looking Information
This press release, and oral statements made in connection with
this release, may contain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are based on The Cigna Group's current
expectations and projections about future trends, events and
uncertainties. These statements are not historical facts.
Forward-looking statements may include, among others, statements
concerning our targeted adjusted income from operations outlook for
2024 on a per share basis; statements concerning The Cigna Group's
long-term annual adjusted income from operations, per share, growth
target; statements regarding The Cigna Group's capital deployment
priorities and share repurchase plans; statements relating to the
impact of the sale of The Cigna Group's Medicare Advantage, Cigna
Supplemental Benefits, Medicare Part D and CareAllies businesses,
including, without limitation, the ultimate transaction value, the
projected impact of the transaction on The Cigna Group's adjusted
income from operations, per share (or earnings per share), the
expected closing date for the transaction, the expected use of
proceeds and the projected impact of the transaction on the
parties; and other statements regarding The Cigna Group's future
beliefs, expectations, plans, intentions, liquidity, cash flows,
financial condition or performance. You may identify
forward-looking statements by the use of words such as "believe,"
"expect," "project," "plan," "intend," "anticipate," "estimate,"
"predict," "potential," "may," "should," "will" or other words or
expressions of similar meaning, although not all forward-looking
statements contain such terms.
Forward-looking statements are subject to risks and
uncertainties, both known and unknown, that could cause actual
results to differ materially from those expressed or implied in
forward-looking statements. Such risks and uncertainties include,
but are not limited to: the ability to obtain the regulatory
approvals necessary for the transaction, on the anticipated timing
or at all; the ability to satisfy the closing conditions for the
transaction, on the anticipated timing or at all; changes in the
anticipated timing for closing the transaction; the occurrence of
any event, change or other circumstances that could give rise to
the termination of the definitive agreement; effects on the
business as a result of uncertainty surrounding the proposed
transaction; diversion of management time from ongoing business
operations due to the transaction; the risk of any unexpected costs
or expenses resulting from the transaction; the risk of litigation
and/or regulatory actions related to the transaction; our ability
to achieve our strategic and operational initiatives; our ability
to adapt to changes in an evolving and rapidly changing industry;
our ability to compete effectively, differentiate our products and
services from those of our competitors and maintain or increase
market share; price competition, inflation and other pressures that
could compress our margins or result in premiums that are
insufficient to cover the cost of services delivered to our
customers; the potential for actual claims to exceed our estimates
related to expected medical claims; our ability to develop and
maintain satisfactory relationships with physicians, hospitals,
other health service providers and with producers and consultants;
our ability to maintain relationships with one or more key
pharmaceutical manufacturers or if payments made or discounts
provided decline; changes in the pharmacy provider marketplace or
pharmacy networks; changes in drug pricing or industry pricing
benchmarks; our ability to invest in and properly maintain our
information technology and other business systems; our ability to
prevent or contain effects of a potential cyberattack or other
privacy or data security incident; political, legal, operational,
regulatory, economic and other risks that could affect our
multinational operations, including currency exchange rates; risks
related to strategic transactions and realization of the expected
benefits of such transactions, as well as integration or separation
difficulties or underperformance relative to expectations;
dependence on success of relationships with third parties; risk of
significant disruption within our operations or among key suppliers
or third parties; potential liability in connection with managing
medical practices and operating pharmacies, onsite clinics and
other types of medical facilities; the substantial level of
government regulation over our business and the potential effects
of new laws or regulations or changes in existing laws or
regulations; uncertainties surrounding participation in
government-sponsored programs such as Medicare; the outcome of
litigation, regulatory audits and investigations; compliance with
applicable privacy, security and data laws, regulations and
standards; potential failure of our prevention, detection and
control systems; unfavorable economic and market conditions, the
risk of a recession or other economic downturn and resulting impact
on employment metrics, stock market or changes in interest rates
and risks related to a downgrade in financial strength ratings of
our insurance subsidiaries; the impact of our significant
indebtedness and the potential for further indebtedness in the
future; credit risk related to our reinsurers; as well as more
specific risks and uncertainties discussed in our most recent
report on Form 10-K and subsequent reports on Forms 10-Q and 8-K
available through the Investor Relations section of
www.thecignagroup.com. You should not place undue reliance on
forward-looking statements, which speak only as of the date they
are made, are not guarantees of future performance or results, and
are subject to risks, uncertainties and assumptions that are
difficult to predict or quantify. The Cigna Group undertakes no
obligation to update or revise any forward-looking statement,
whether as a result of new information, future events or otherwise,
except as may be required by law.
INVESTOR RELATIONS CONTACT:
Ralph Giacobbe
860-787-7968
Ralph.Giacobbe@TheCignaGroup.com
MEDIA CONTACT:
Justine Sessions
860-810-6523
Justine.Sessions@Evernorth.com
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SOURCE The Cigna Group