Managed-care provider Cigna Group has recently made a significant announcement regarding a stock buyback, while also revealing that it has abandoned its bid to purchase competitor Humana Inc.

According to sources familiar with the matter, Cigna and Humana were unable to reach an agreement on the financial terms of the deal. As a result, Cigna has decided to redirect its efforts towards pursuing a smaller acquisition.

The news of a potential acquisition of Humana, first reported in late November, had initially caused a drop of approximately 10% in Cigna's shares as investors expressed doubt about the feasibility of the transaction.

In a statement, Cigna expressed its intention to allocate the majority of its discretionary cash flow towards share repurchases in the upcoming year. The company plans to buy back at least $5 billion of its stock by the end of the first half of 2024.

CEO David M. Cordani emphasized the undervalued nature of Cigna's shares and stated that the repurchases would contribute to enhancing value. Cordani also highlighted Cigna's commitment to supporting high-quality care, improved affordability, and better health outcomes.

Additionally, Cigna reaffirmed its full-year 2023 outlook, with a minimum projected earnings per share of $24.75. Looking further ahead, the company aims for at least $28 per share for full-year 2024.

As of now, Cigna's shares have experienced a decline of around 22% since the beginning of the year. In comparison, Humana's stock has seen a decrease of approximately 6%. Meanwhile, the S&P 500 has demonstrated growth of about 20% in 2023.

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