Cigna and Humana may ink a merger deal before the end of the year, the Wall Street Journal reported Wednesday.
The two companies, which offer health insurance, pharmacy benefit management and health services, are weighing a stock-and-cash transaction that would create the third-largest player in the sector by market capitalization, behind UnitedHealth Group and Elevance Health.
Cigna and Humana did not immediately respond to requests for comment. The Wall Street Journal cited unnamed sources familiar with the matter, who emphasized the talks may not come to fruition.
A Reuters report earlier this month that Cigna is considering a sale of its Medicare Advantage business triggered speculation that a bigger deal is in the offing. Financial analysts from Stephens and Wells Fargo reported the possibility that Cigna would seek a big merger or acquisition.
A plan to combine these two companies would likely provoke antitrust concerns. Cigna jettisoning its Medicare Advantage business before joining forces with the second-biggest Medicare Advantage carrier by membership could partially address those, and Humana already announced it would exit the commercial health insurance market, which is one of Cigna's strengths.
But Cigna and Humana overlap in other areas, especially pharmacy benefit management. Cigna is the parent company of Express Scripts and Humana operates Humana Pharmacy Services. According to the Drug Channels Institute, these respectively were the second- and fourth-largest PBMs by market share last year. Both companies also have health services arms: Evernorth at Cigna and CenterWell at Humana.
Cigna shares on the New York Stock Exchange closed at $262.87 Wednesday, down 7.2% from the opening price. Humana stock declined 2.7% to $482.41.