Cigna CEO David Cordani faced analysts’ questions Thursday about whether the company is falling behind in the frenzy of merger and acquisition activity among its competitors.
“Do you not see this as an arms race?” Bank of America Merill Lynch Analyst Kevin Fischbeck asked executives during Cigna’s third-quarter earnings call Thursday.
Without naming the companies, Fischbeck said some competitors are “constantly buying things and adding capabilities” while others focus on share repurchases and selective smaller acquisitions.
Cigna said Thursday it has repurchased $5.8 billion worth of shares.
“Do you feel ... that potentially ... not pursuing M&A will be a disadvantage over the next three to five years if you're not doing deals today?” Fischbeck asked.
Cordani said the marketplace’s demand for “value creation” from health insurers will remain aggressive. Cordani said the first focus will be to continue to invest in organic opportunities and lean on partnerships to innovate.
“We remain quite open to M&A, we do not deem it to be a silver bullet,” Cordani said.
Recently, insurers have inked sizable M&A deals with a focus on care at home and primary care.
Humana purchased the remaining stake of Kindred at Home, the nation’s largest home health provider, in a multibillion-dollar deal last year.
CVS Health, which operates Aetna, said it inked an $8 billion deal to acquire Signify Health, which focuses on primary care and home visits.
UnitedHealth Group, parent company of the insurer UnitedHealthcare, closed its $13 billion acquisition of health technology company Change Healthcare in October after surviving a challenge from the Department of Justice.
As the demand for telehealth has grown, Cigna’s health services arm purchased MDLive last year, expanding the payer’s telemedicine offerings.
Cigna’s last blockbuster acquisition deal was in 2018 when it acquired standalone pharmacy benefit manager Express Scripts for $67 billion, furthering the trend of insurers bringing PBMs in house.
The insurer reported a $2.8 billion profit for the third quarter, a 70% increase over the prior-year period thanks to the sale of its international life, accident and supplement benefits business to Chubb. Revenue increased 2% to $45.3 billion on higher enrollment and lower medical costs.