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Express Scripts Acquired in Blockbuster Deal

Cigna's purchase of the pharmacy benefit manager underscores the value and critical nature of the PBM business model to the healthcare market.

On March 8,

Operationally, we believe the new entity will be a formidable force in healthcare, able to wield significant pricing power and leverage top-tier scale advantages. Because we expect the deal to close, we are increasing our $89 fair value estimate for Express to the $92 purchase price. We may increase our $123 fair value estimate for Cigna, given that the MCO will ultimately be able to leverage the wide-moat nature of the PBM model without major dilution. We are leaving our wide moat rating for Express and no-moat rating for Cigna unchanged for now, but we plan to take a fresh look at the competitive positioning for a new Cigna-Express entity after factoring all variables into our overall analysis.

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About the Author

Vishnu Lekraj

Senior Equity Analyst
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Vishnu Lekraj is a senior equity analyst for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He covers the healthcare services industry.

Lekraj joined Morningstar in 2008 after receiving a master’s degree in business administration from the University of Florida’s Hough Graduate School of Business. Before business school, he was a financial analyst for HSBC bank.

Lekraj holds a bachelor’s degree in finance from the Warrington College of Business Administration at the University of Florida, where he graduated summa cum laude. He is also a member of the Beta Gamma Sigma international honor society. In 2012, Lekraj ranked first in the professional services industry in the StarMine Analyst Awards, presented by the Financial Times.

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