Cigna, Express Script Deal To Continue Healthcare Reshuffle
Zacks Investment Research | Mar 07, 2018 08:41PM ET
Cigna Corp. (NYSE:CI) has announced that it will buy Express Scripts Holding Co., (NASDAQ:ESRX) a pharmacy benefits provider and other medical servcies.
The deal, valued $67 billion, will be financed by a mix of cash and debt. It will be one of the biggest deals for Cigna.
What’s in the Offing for Cigna?
The deal is expected to be mutually beneficial, given that it would lead to a solid combination of Cigna’s strong position and expertise in the health benefits space with Express Scripts’ leading position in the pharmacy benefits market (PBM).
This combined entity would create a mammoth healthcare set-up with wide-ranging operations from sale of drugs to insurance cover.
The deal will add to Cigna’s scale and size and equip it to negotiate with drug manufacturers and pharmacies better. This would lower the cost of acquiring prescription drugs, enabling the company to share the savings in with its consumers by way of more customer-friendly insurance plans like enhanced frills or lower premium, thus ultimately leading to market-share gains.
Odds of the deals getting a clearance from regulators seem high, as it will be a vertical integration. Last year, Cigna’s merger with Anthem Inc. (NYSE:ANTM) was blocked by regulators last year, on concerns that the combination would stifle competition in the healthcare industry since both companies had overlapping businesses.
In a year’s time shares of the company have gained 28% compared with the Zacks Investment Research
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