(Reuters) -Insurer Health Care Service Corp said on Wednesday it would buy Cigna (NYSE:CI)'s Medicare business that manages government-backed health insurance for people aged 65 and older for $3.3 billion in cash.
The sale consists of Cigna's Medicare lines, including Medicare Advantage, Medicare supplement and Medicare drug plans, as well as a unit called CareAllies that works with physician groups and other healthcare providers.
The divestiture marks a change in Cigna's strategy for the sector it had entered with its $3.8-billion acquisition of HealthSpring in 2011.
Health Care Service holds a license to provide Blue Cross Blue Shield insurance plans in five U.S. states. It employs more than 27,000 people and 18.6 million members.
The vast majority of Cigna's revenue comes from its commercial business and pharmacy benefits division, which it bolstered with the $52-billion purchase of Express Scripts in 2018.
Cigna's Medicare Advantage business generated 4.4% of the company's $179.4 billion revenue from external customers in 2022. Its plans currently serve 3.6 million Medicare members.
The deal is expected to close in early 2025, Health Care Service said.