March 8, 2018

Cigna to buy Express Scripts in $67B deal

HBJ file photo
HBJ file photo
Cigna President and CEO David M. Cordani

Bloomfield health insurer Cigna has announced plans to buy pharmacy-benefit manager Express Scripts in a cash-stock deal valued at $67 billion, including debt worth $15 billion.

The deal comes on the heels of a major reorganization and consolidation in the healthcare industry. Late last year, Hartford health insurer Aetna announced plans to be acquired by CVS Health in a $69 billion deal that hinted at big changes for the pharmacy giant's vast network of nearly 10,000 brick-and-mortar stores.

On a conference call Thursday morning, Cigna's President and CEO David Cordani and Express Scripts CEO Tim Wentworth said the combination would help make health care simpler and more affordable for their customers.

"From pre-diagnosis to treatment to cure, our businesses cover the entire spectrum of care," said Wentworth, whose company is based in St. Louis.

The deal is also expected to produce about $600 million in savings over time, largely from a consolidation of administrative functions, they said.

It wasn't immediately clear what impact the deal could have on the Cigna's Bloomfield employee base. The company had 4,400 Connecticut employees as of Oct. 2017, according to Hartford Business Journal's Book of Lists.

Cigna moved its corporate headquarters to Bloomfield, from Philadelphia, in 2011 after receiving millions of dollars in state aid.

While Cigna has had an internal pharmacy benefit management unit for some time, Cordani said his company sees value in the fact that Express Scripts offers over a billion "meaningful customer touch points" per year.

"Cigna's acquisition of Express Scripts brings together two complementary customer-centric services companies, well-positioned to drive greater quality and affordability for customers," Cordani said. "This combination accelerates Cigna's enterprise mission of improving the health, well-being and sense of security of those we serve, and in turn, expanding the breadth of services for our customers, partners, clients, health plans and communities."

Similar to the Aetna-CVS deal, Cigna and Express Scripts want to keep existing business relationships with health plans that pay for PBM services. In detailing the deals, executives at all four companies vowed to insurer customers that there would be "guardrails" or "firewalls" to ensure their data is kept private from competitors.

Express Scripts lost its biggest customer, Anthem, late last year, Bloomberg reported.

Cigna and Express Scripts said their combination is expected to increase 2021 annual earnings from $18 per share to a range of $20 to $21 per share.

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