https://mailchi.mp/79ecc69aca80/the-weekly-gist-december-15-2023?e=d1e747d2d8

Following rumors of a potential merger reported last month by the Wall Street Journal, the paper shared this week that Bloomfield, CT-based Cigna is no longer pursuing an acquisition of Louisville, KY-based Humana.

According to insiders, the $140B merger was scuttled when the two health insurance giants couldn’t agree on price and other terms.

Instead, Cigna announced that it will be focusing on smaller, bolt-on acquisitions, and is reportedly still considering divesting its Medicare Advantage business.

Cigna also announced $10B of stock buybacks to assuage shareholders, who reacted negatively to the rumored deal, dropping the company’s stock price by nearly 10 percent since merger rumors surfaced. 

The Gist: While there are several reasons why this deal may have been called off—Wall Street’s adverse reaction, antitrust concerns, leaking of the talks before the parties were ready—this likely isn’t the end of either payer’s pursuit of greater scale, as both stand in UnitedHealth Group’s giant shadow. 

Given Cigna and Humana have each had potential mergers with other payers blocked by the courts, and federal antitrust scrutiny is only increasing, we’re wondering if each may be also looking at nontraditional partners (as Humana explored with Walmart in 2018), though the universe of companies with an interest in a vertically-integrated insurance and care business—and deep enough pockets—is small.