CIGNA: Cigna Completes Combination with Express Scripts, Establishing a Blueprint to Transform the Health Care System

Cigna issued the following announcement on Dec. 20.

Cigna Corporation (NYSE: CI), a leading global health service company, has successfully completed its combination with Express Scripts Holding Company (“Express Scripts”) effective December 20, 2018. Consistent with its commitment to support local communities and improve societal health, Cigna also announced an incremental investment of $200 million to its charitable foundation and communities and is launching Healthier Kids for Our Future, a community engagement program focused on addressing the well-being of children globally.

“Today’s closing represents a major milestone in Cigna’s drive to transform our health care system for our customers, clients, partners and communities. Together, we are establishing a blueprint for personalized, whole person health care, further enhancing our ability to put the customer at the center of all we do by creating a flexible, open and connected model that improves affordability, choice and predictability. By approaching each individual as a whole person – body and mind as one – we are empowering and supporting customers to take control of their total health and well-being,” said David M. Cordani, President and Chief Executive Officer of Cigna. “As a combined company, we are also going deeper into our local communities to help close gaps in care, and our $200 million investment will be a key driver of transforming health care at the societal and local levels.”

The combination of Cigna with Express Scripts integrates two complementary health care service companies, each with industry-leading cost trend capabilities, that together, are positioned to deliver better care, expanded choice and drive down health care costs. With Express Scripts, Cigna can dramatically accelerate the number and breadth of value-based relationships. This model of partnership aligns incentives to clinical outcomes, not just consumption of the medication or health care services, adding to Cigna's rapidly expanding collaborative care network. These relationships will be further strengthened by our comprehensive analytics platform, which is based on insights from one billion annual customer touchpoints, and is designed to drive transparency and engagement with clients and customers.

Healthier Kids for Our Future Initiative

As part of the $200 million investment and to mark the combined company’s first day of business, Cigna is launching Healthier Kids for Our Future. Through a five-year $25 million investment, this new initiative will address the health and well-being needs of children around the world. In 2019, it will focus on putting children on a healthier path by eradicating childhood hunger and improving nutrition. Research has shown that food insecurity can significantly affect a child’s short- and long-term health and may lead to poorer health outcomes later in life.

“To fundamentally shape the future of societal health, we need to make our communities healthier and more vibrant for the next generation. Cigna is targeting childhood hunger with Healthier Kids for Our Future to make a meaningful – and early – impact on the health and well-being of children and drive measurable outcomes in the communities where we live, work and play,” said Cordani. “Community engagement and support are at the core of both Cigna and Express Scripts, and we are building on that heritage with this new initiative.”

Cigna's 74,000 employees will have opportunities to engage in the local efforts through coordinated volunteerism and philanthropy in their respective communities.

“As we launch our combined company, we have a highly-accomplished and experienced enterprise leadership team in place to guide our team around the world,” said Cordani. “We are excited about the opportunities to transform the health care system and improve societal health through our combination.”

Financial Details of Closing

Cigna expects the combination to deliver sustained attractive return for shareholders. As previously communicated, Cigna expects to deliver 2021 adjusted income from operations per share in the range of $20-21.

“We believe that this combination will also deliver sustained attractive return for shareholders in a highly dynamic health care market. We are significantly expanding our distribution reach and addressable markets, firmly positioning Cigna for future revenue and earnings growth. We expect continued strong margins and free cash flows, which will enable us to rapidly reduce our debt levels and reinvest in our business, while having additional capital available for deployment. We are confident in our ability to create significant shareholder value and further distinguish Cigna as the undisputed partner of choice,” Cordani concluded.

Shares of Cigna and Express Scripts ceased trading on the New York Stock Exchange (NYSE) and NASDAQ, respectively, on December 20, 2018. Beginning tomorrow morning, shares of the new combined Cigna (“New Cigna”) will start trading on the NYSE under the stock ticker symbol “CI.”

At the closing of the transaction, each outstanding share of Cigna common stock (other than certain excluded shares) was converted into one share of New Cigna common stock, and each outstanding share of Express Scripts common stock (other than certain excluded shares) was converted into (1) 0.2434 of a share of New Cigna common stock and (2) the right to receive $48.75 in cash, without interest, subject to applicable withholding taxes. Immediately following the closing of the transaction, former Cigna stockholders own approximately 64 percent and former Express Scripts stockholders own approximately 36 percent of the shares of New Cigna common stock outstanding.

Cigna will provide full year 2019 guidance for the combined company on our fourth quarter earnings call on Friday, February 1, 2019 at 8:30 a.m. ET.

Morgan Stanley & Co. LLC was the sole financial advisor and provided a fairness opinion to the Cigna Board of Directors, Wachtell, Lipton, Rosen & Katz served as legal counsel and Paul, Weiss, Rifkind, Wharton & Garrison LLP and Sidley Austin LLP acted as regulatory counsel to Cigna. Centerview Partners LLC and Lazard Frères & Co. LLC were Express Scripts’ financial advisors, with Skadden, Arps, Slate, Meagher & Flom LLP serving as legal counsel and Holland & Knight LLP acting as regulatory counsel.

Original source can be found here.

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