Healthcare industry giants Cigna (CI) and Humana (HUM) have reportedly rekindled merger talks, according to a recent Bloomberg report. Julie Utterback, Morningstar's senior equity analyst specializing in medical technology and services, joins Market Domination to provide insights on this potential industry-shaking development.

Utterback emphasizes that the success of this partnership hinges on gaining approval from antitrust regulators, which she describes as "a big if." However, she notes the complementary nature of the two companies' strengths: Cigna is a powerhouse in the pharmacy benefit management (PBM) space, while Humana focuses more on government insurance plans. If the two were to join forces, they would be "very complementary and have very little overlap," Utterback explains.

Despite the potential synergies, Utterback highlights a key concern: Humana's position as the fourth-largest PBM could draw intense scrutiny from antitrust regulators. She warns that this merger "could actually increase the concentration materially of the PBM industry."

Nevertheless, Utterback sees potential benefits for both companies. "If they do go through with this merger deal, [Cigna] could be throwing a lifeline to Humana here in the near term," she states. She adds, "We think in the long run, both of these companies have very good prospects in the next few years."

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This post was written by Angel Smith