Mad Money

Cigna CEO on Express Scripts deal: More than a pharmacy acquisition, 'this is a broadening of capabilities'

Key Points
  • "Mad Money" host Jim Cramer sits down with Cigna CEO David Cordani to hear the story behind Cigna buying pharmacy benefits manager Express Scripts.
  • Cordani defends the acquisition despite Wall Street's somewhat skeptical response.
Cigna CEO: Express Scripts deal 'a broadening of capabilities'
Cigna CEO: Express Scripts deal 'a broadening of capabilities'

Cigna's $67 billion deal to buy pharmacy benefits manager Express Scripts is less of a routine acquisition than an expansion of what Cigna can already do, Cigna CEO David Cordani told CNBC.

When asked why Cigna, a massive health services provider, agreed to buy Express Scripts while developing its own pharmacy benefits management service, Cordani defended the decision.

"This is not the acquisition of a pharmacy benefit management company, it's a broadening of capabilities," Cordani told "Mad Money" host Jim Cramer in a Monday interview.

The CEO went on to highlight the benefits of the takeover. First, Cigna would get 80 million more customers and a growing order book from Express Scripts, the largest pharmacy benefits company in the United States.

"Secondly, the ability to further accelerate the affordability equation, so lowering health care costs," Cordani continued. "Cigna's delivered the lowest medical cost trend every year for the last five years. Express Scripts delivered the lowest pharmacy trend last year. And then, lastly, expanding distribution — you know how important distribution is — selling to more clients, more health plans and more governmental entities."

"So capabilities, reach, quality, affordability, that's what this is about," the CEO added.

Cordani also pushed back against the notion that Express Scripts' business was in secular decline after the loss of one of its biggest corporate customers, health insurer Anthem.

"We don't see it that way," he told Cramer. "Even including the transitioning client, this combination will be accretive in the teens in the first year."

Calling the combination of Cigna and Express Scripts "a high-intimacy play with the customer and health care professional," Cordani also argued that it would narrow the gap in health care service quality in the United States.

With pharmacy costs now accounting for 20 percent of total health care costs, Cordani said that the No. 1 cause of quality gaps in U.S. health care services is typically tied to pharmaceuticals, whether consumers are getting the wrong drug, wrong dose or being told to take it for the wrong duration.

This takeover could help stem those gaps given Cigna's network of professional medical partners, accessibility and focus on quality, Cordani suggested.

"It all starts with having the right products and services for individuals that are affordable, are of high quality and help people live better lives," he said. "Cigna's been doing that for many years and with the combination of Express Scripts, we'll be able to do that for even more lives and with broader capabilities to keep health care more affordable, have higher quality and connect better with health care professionals."

And when it comes to prospective competitors like the proposed joint venture between Amazon, J.P. Morgan and Berkshire Hathaway, Cordani was more confident than concerned.

"If that joint venture has legs and takes off, they're going to need a service partner and a service provider of choice," the CEO said. "We'll be really well-positioned."

Watch David Cordani's full interview here:

Cigna CEO on Express Scripts deal: More than a pharmacy acquisition, 'this is a broadening of capabilities'
Cigna CEO on Express Scripts deal: More than a pharmacy acquisition, 'this is a broadening of capabilities'

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