Cigna Corp acquires HealthSpring in a $3.8 billion deal

Cigna Corp has signed an agreement to acquire HealthSpring Inc. in a deal worth $3.8 billion, expanding the managed-care company’s presence in the senior and Medicare segments.

HealthSpring shares were up 33% at $53.69 in early Monday trading, approaching the offer price of $55 a share, which marks a 37% premium to the stock’s Friday close.

Cigna, of Bloomfield, Conn., also raised its 2011 per-share earnings guidance to $5.05 to $5.30, from its increased August view for $4.95 to $5.25. The prediction excludes impacts from the HealthSpring acquisition, the company said in its filing with the Securities and Exchange Commission.

The increased outlook includes its third-quarter estimate of revenue growth of about 6.5% and adjusted operating income growth at a rate that slightly outpaced the revenue increase. Analysts polled by Thomson Reuters recently expected earnings growth of 10% to $1.24 and revenue growth of 4% to $5.46 billion.

Nashville, Tenn.-based HealthSpring focuses on Medicare Advantage, through which seniors can get Medicare provided through private companies and not the government. The program has seen concrete growth in recent years, and analysts generally expect that to continue.

HealthSpring’s Medicare Advantage business has about 340,000 Medicare Advantage members in 11 states and Washington, D.C., as well as a large, national stand-alone Medicare prescription drug business with more than 800,000 customers.

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