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CIgna will direct one other $450 million into its enterprise fund, Cigna Ventures, in a bid to extend spending on startup companies and digital well being, the corporate stated this week.
Along with injecting further money into the enterprise fund, the insurer plans an funding in improvements which incorporates $1.25 billion in capital expenditures, a part of a bid to maintain tempo with different insurers who’ve made related investments in know-how.
The corporate stated it intends to proceed making strategic investments in innovation by way of focused “bolt-on or tuck-in” acquisitions, together with establishing positions in earlier-stage corporations by way of the enterprise capital arm.
The $450 million going to Cigna Ventures will give attention to maximizing impression throughout three key areas: insights and analytics; digital well being and expertise; and care supply and enablement.
WHAT’S THE IMPACT
The insurer has made various investments lately, about 20 in all, that embrace startups and firms reminiscent of Ginger, Omada, Buoy, Cricket Well being and BabyScripts, amongst others.
“Cigna Ventures invests in areas of strategic curiosity to Cigna and the place we are able to associate with an entrepreneur to assist the start-up develop and likewise present worth to Cigna’s clients, shoppers and suppliers,” in accordance with an organization spokesperson.
Cigna expects to generate greater than$12 billion of deployable capital in 2022, together with $5.4 billion in after-tax proceeds from the beforehand introduced sale of its worldwide life, accident and supplemental advantages companies in seven international locations.
This builds on the capital Cigna returned to shareholders in 2021, together with $7.7 billion of share repurchase and $1.3 billion in dividends, the insurer stated.
Throughout Cigna’s February Board of Administrators conferences, administrators permitted an combination enhance of $6 billion in incremental share repurchase authorization, bringing the corporate’s whole share repurchase authority to $10 billion. Thus far this yr, Cigna has repurchased $1.2 billion of its shares.
The corporate expects to deploy in extra of $7 billion for share repurchase this yr, as the corporate stated it isn’t at the moment considering any large-scale mergers or acquisitions.
“Our plans for important share repurchase coupled with our not too long ago elevated dividend, reinforces the boldness we’ve got in our long-term progress plans and the underlying earnings energy of Cigna’s enterprise portfolio,” stated Cigna Chairman and CEO David M. Cordani. “This displays continued and efficient capital deployment for shareholders.”
THE LARGER TREND
The insurer launched Cigna Ventures in 2018 with $250 million in capital to put money into early and progress stage startups. The investments had been meant to go to rising corporations which are driving innovation in healthcare by way of the strategic areas of insights and analytics, digital well being and retail, and care supply and administration.
Cigna Ventures is a wholly-owned oblique subsidiary of Cigna Company that features subsidiary Cigna Well being and Life Insurance coverage Firm.
Cigna has beforehand invested in enterprise exercise, together with collaborating with 5 enterprise capital companions and an equal variety of present direct investments. These embrace main the C1 spherical of financing with Omada Well being and investments in Prognos, Contessa Well being, MD Stay and Cricket Well being.
UnitedHealth Group subsidiary Optum created a enterprise capital fund the yr prior.
Optum Ventures invests in corporations that use knowledge and insights to enhance healthcare companies. Its preliminary investments included Apervita, a cloud-based platform, Buoy Well being’s AI-powered digital well being assistant, Mindstrong Well being, which makes use of AI and machine studying for smartphone interactions and SHYFT Analytics, a cloud-based knowledge and analytics platform.
ON THE RECORD
“We see significant worth in Cigna’s fairness, and can prioritize share repurchase in 2022 over large-scale mergers or acquisitions,” stated Cigna Chief Monetary Officer Brian Evanko. “Past our expectation to allocate a good portion of deployable capital for share repurchase this yr, our robust capital place and money circulation continues to present us monetary flexibility and optionality for strategic investments and focused bolt-on acquisitions.”
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