Cigna Starts $250 Million Venture Fund to Make Health-Care Bets

(Bloomberg) -- Cigna Corp. is launching a venture fund to invest in health-care startups, committing $250 million of its own capital.

Health insurers have been starting venture-capital arms to find new ideas to improve their businesses and generate financial returns. UnitedHealth Group Inc., the biggest health insurer, said in November that its Optum unit was creating a venture arm with $250 million in funds. Humana Inc., Kaiser Permanente, and a group of Blue Cross and Blue Shield insurers all have venture units.

Tom Richards, a Cigna business development executive who will lead the fund, said it will partner with companies like Omada Health Inc. and Contessa Health Inc., part of a focus on care delivery and digital health. Richards said that he expects to hire a team to vet future investments.

Richards said in an interview that there’s a lot of money going into health-care ventures but that Cigna Ventures has “very deep expertise in the health-care services space itself.”

Investment in health-care startups has increased this year. According to the MoneyTree Report from PricewaterhouseCoopers and CB Insights, $10.6 billion was invested in health-care deals in the first half of this year. Two of the seven largest venture-capital rounds in the second quarter involved health-care firms, the report shows.

Cigna is among the biggest U.S. health insurers. The company in March agreed to buy pharmacy-benefits manager Express Scripts Holding Co. in a $54 billion deal to gain more control over the health-care supply chain.

The stock has declined 9 percent this year to $184.87, giving Cigna a market value of about $45 billion.

To contact the reporter on this story: Blake Dodge in New York at bdodge4@bloomberg.net

To contact the editors responsible for this story: Drew Armstrong at darmstrong17@bloomberg.net, Timothy Annett, Mark Schoifet

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