Shares of Cigna and Humana fell on Wednesday following a report that the two healthcare giants are in discussions to merge.
The companies are considering a stock-and-cash transaction that could be completed by the end of this year.
Such a merger would be significant. On Wednesday, Cigna had a market value of approximately $77 billion, and Humana’s was nearly $60 billion, making them two of the largest health insurers in the country.
Cigna’s shares closed 8% lower on Wednesday, while Humana’s stock fell more than 5%.
This speculation follows earlier reports indicating that Cigna was contemplating the sale of its Medicare Advantage business, which manages government health insurance for individuals aged 65 and older.
At that time, a Cigna spokesperson stated that the company does not comment on “rumors or speculation.”
Some analysts have suggested that a potential merger with Humana might be the reason behind Cigna’s consideration of selling its Medicare Advantage business.
Eliminating this business could help mitigate antitrust concerns related to the merger, according to Scott Fidel, a healthcare stock analyst at Stephens.
Fidel noted, “We would view this action as one aspect of a possible pursuit of Humana as an acquisition target, with the divestiture serving as a proactive measure to reduce antitrust risk.”
