• July 28, 2021

Cigna’s MDLive acquisition will advance virtual-first plan growth, analysts say

Feb 27, 2021

Cigna introduced on Friday it is going to purchase telehealth supplier MDLive, as extra insurers launch plans that require members to schedule digital visits earlier than seeing their doctor in-person.

The corporate will fold the Miramar, Fla.-based startup into its Evernorth well being companies division, which it created throughout an organization reorganization final 12 months. The deal’s phrases weren’t disclosed, however the Bloomfield, Conn.-based insurer expects the acquisition to shut within the second quarter of 2021, pending regulatory approval. Cigna declined to touch upon the deal. The corporate stated the acquisition is not going to impression its earnings forecast of $20 adjusted earnings per share for 2021.

The acquisition might assist the insurer speed up growth of its inaugural virtual-first plan, which it has famous as a possible development space. MDLive has stated it plans to “double down” this 12 months on digital major care, a service it launched for well being plans and employers final 12 months.

Throughout its most up-to-date fourth-quarter earnings name on Feb. 4, Cigna CEO David Cordani stated the corporate anticipated to spend $1 billion on mergers and acquisitions in 2021.

“When it comes to M&A capabilities, we have talked about increasing our means to serve prospects, the place they’re, and the place they search to be served, whether or not that is expanded digital platforms or expanded in-home capabilities,” Cordani stated through the name.

In a analysis word, Cantor Fitzgerald analysts Steven Halper and Kyle Mikson known as the acquisition “constructive for Cigna from a strategic standpoint,” saying the deal bolts on the backend technological capabilities needed for growing a virtual-first providing.

“With the acquisition, Cigna, in our view, locks in these capabilities,” analysts wrote. “We consider MDLive’s capabilities will enhance Cigna’s level of differentiation within the highly-competitive business insurance coverage market.”

The bulk, or 85%, of Cigna’s business prospects are self-funded employers, and Cigna already depends on MDLive to energy a number of the telehealth visits for these prospects.

Moreover, the insurer’s enterprise arm can be a number one investor in MDLive, which has raised almost $199 million in funding, in line with Crunchbase. The corporate had teased that it’s going to go public someday this 12 months, following the strikes of rivals Teladoc and Amwell. MDLive referred questions on an IPO to Cigna, which declined to remark.

Evernorth CEO Tim Wentworth stated the deal will assist the insurer ship extra reasonably priced and personalised advantages for members, and comes as demand for telehealth rises amongst beneficiaries. In 2020, MDLive’s whole membership grew 57%, and the corporate recorded an 84% improve within the variety of visits throughout its supplier community. The startup counts greater than 2,000 practitioners as a part of its doctor group.

“Combining MDLive’s platform and robust community for digital suppliers with our complete care options, we will likely be higher positioned to optimize the care journey to enhance affordability and accessibility, and to ship superior assist to well being plans as they advance their very own care supply fashions for the longer term,” Wentworth stated in an announcement.

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