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Why is it Advisable to Hold on to Cigna (CI) Stock Now?

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Cigna Corp. (CI - Free Report) is restructuring its business to closely concentrate on healthcare and strengthen its capital composition by reducing its heavy dependence on debt. The company’s focus on streamlining its operations makes it a reliable stock, which investors should consider holding on to for the medium term.

The company’s current focus is to grow upon its four platforms, namely Evernorth, U.S. Commercial, U.S. Government and International.
    
Its Evernorth segment was formed last September, which was basically a rebranding of its health services portfolio and included the pharmacy benefit manager Express Scripts, specialty pharmacy Accredo and eviCore healthcare, which provide utilization management services for health plans or employer groups and outpatient diagnostic imaging service programs.

Separately forming this segment points to the company’s special attention to growing its health services business. It reflects the company’s business model expansion to a broader healthcare market than that of its health insurance.

In the U.S. Commercial line of business, the company is looking to expand in the Select and Middle Markets, penetrate key geographies It sustains its competitive position in the industry pertaining to this business line by maintaining a low medical cost trend.

In the U.S. Government line of business, the company is seeking to expand geographically, grow its Medicare Advantage Preferred Provider Organization  PPO product.  In its MA business, it expects 10-15% average annual customer growth through 2025. In its international business, the company looks to expand in the existing geographies, innovate solutions and enter new markets. It is present in more than 30 countries serving above 13 million customers.  Its global presence is wider than its peers, namely Humana Inc. (HUM - Free Report) , Anthem Inc. (ANTM - Free Report) , Centene Corp. (CNC - Free Report) among others.

Recently, Cigna completed the divestiture of its group life and disability insurance business to New York Life. The company intends to make debt repayments and buy back shares as previously planned with the proceeds from this divestment.

The manner in which Cigna is rationalizing its business portfolio will enable it to create a highly integrated healthcare company, which in turn, will likely to unlock a strong value for investors holding on to it.

Over the past six months, the stock has gained 29.1% compared with its  industry’s growth of 12.7%.


 

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