Cigna’s statement comes after a Bloomberg report last month cited sources claiming that Cigna had revived its efforts to merge with Humana after walking away late last year.
Shares of Humana Inc. ($HUM) dipped by as much as 4%, while shares of Cigna Corp. ($CI) rose by over 7% as markets opened on Monday after the company confirmed it was not exploring a merger with Humana.
“The Cigna Group remains committed to its established M&A criteria and would only consider acquisitions that are strategically aligned, financially attractive, and have a high probability to close,” the company said in the press release addressing the “recent and persistent” speculation.
In its third-quarter earnings call on Oct. 31, Cigna CEO David Cordani made it clear that the company’s goal is to exit the Medicare business due to mounting challenges, a strategy that would make a merger with Humana counterproductive.
Humana, a top provider of Medicare Advantage plans, beat Wall Street estimates for third-quarter profit on Wednesday as it added higher-than-anticipated members under its government-backed Medicare Advantage insurance business for older adults.
The health insurer said it expects “at least $16” earnings per share for the full year, compared to its previous forecast of “approximately $16”.
Cigna also beat third-quarter estimates with revenue of $63.7 billion and earnings per share (EPS) of $7.51.
Cordani reiterated that Cigna would continue to use excess cash flow for share buybacks. The company has repurchased approximately $5.7 billion of its common stock year-to-date.
Retail sentiment around Cigna was ‘bearish’ (48/100) with an uptick in chatter to ‘high’ (73/100).
Cigna’s stock has gained 11% so far this year.
Retail sentiment around Humana remains ‘neutral’ (49/100) with some users on Stocktwits viewing the drop in share price as a buying opportunity.
In October, the company’s stock fell after the Centers for Medicare & Medicaid Services (CMS) downgraded the quality rating of one of its key Medicare Advantage plans from 4.5 stars to 3.5 stars.
That worsened the drop from earlier this year when Humana warned that rising medical costs and stricter regulations would impact profits.
In contrast to Cigna, Humana’s stock has lost 42% of its value so far this year.
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