Cigna’s healthcare business helped spur a 10 percent growth in revenue for the three months through June, the company said on Thursday after reports surfaced that a top activist investor is set to disapprove of the health insurer’s merger with Express Scripts.
Revenue grew to $11.5 billion, while profits in the quarter dipped slightly to $806 million. At the end of June, Cigna insured 16.2 million individuals, a 329,000 increase over last year.
Cigna is awaiting federal approval for its attempted acquisition of Express Scripts, one of a handful of mergers that seeks to combine a health insurer with a pharmacy benefit manager. The combined entity would be expected to have more control over, among other things, negotiations on drug prices with pharmaceutical companies.
“Our strong second quarter results once again reflect the consistent effective execution of our global strategy, which will be further enhanced through our pending combination with Express Scripts,” Chief Executive Officer David M. Cordani said in a statement.
The insurer expects to comply with a second request for information from the Department of Justice in August, after which the government will have 90 days to complete its review of the transaction, Cordani told investors.
But opposition from Carl Icahn could complicate the merger. The activist investor, who has a less than 5 percent stake in the insurer, reportedly believes Cigna is paying too much to acquire Express Scripts, the Wall Street Journal reported on Wednesday. The two companies are set to vote on the merger on Aug. 24, and Icahn is reportedly considering trying to convince other shareholders to vote against it.
While a combined Cigna-Express Scripts would have greater control over drug prices discussions, those advantages could be hamstrung by the Trump administration. Top officials have been critical of the lucrative drug rebates that insurers and PBMs often receive from drug manufacturers that they argue ultimately help lower treatment prices for the consumer.
Cordani defended the rebates and indicated the insurer would continue to pursue the practice should its merger with Express Scripts close.
“We stepped into this combination expecting and projecting a very dynamic environment,” he told investors on the company’s earnings call. “Clients want a variety of different mechanisms to work for them.”
President Trump and congressional leaders have also targeted the middlemen model that PBMs employ. Top Republicans on the House Energy and Commerce Committee previously urged the Federal Trade Commission to retrospectively review how prior mergers with PBMs may have affected drug costs.
