Health Care Service Corporation announced Wednesday that it will buy Cigna's Medicare business.

The $3.7 billion sale will see Health Care Service, the country's largest customer-owned health insurer, take control of Cigna's Medicare Advantage, Supplemental Benefits and Part D customers, as well as the CareAllies business that works with healthcare providers.

Cigna's Medicare plans cover over 3.6 million people, with 2.5 million of those on Medicare Part D plans, according to a Health Care Service news release.

As part of the deal, Chicago-based Health Care Service agreed to have Cigna's Evernorth Health Services unit provide pharmacy benefits for four years.

"The acquisition will bring many opportunities to (Health Care Service) and its members − including a wider range of product offerings, robust clinical programs and a larger geographic reach," company CEO Maurice Smith said in a statement.

Medicare customers need 'dedicated resources'

Executives with Cigna − based in Bloomfield, Connecticut − framed the sale as a way to provide value to shareholders and better service to customers.

"While we continue to believe the overall Medicare space is an attractive segment of the healthcare market, our Medicare businesses require sustained investment, focus, and dedicated resources disproportionate to their size within The Cigna Group's portfolio," David Cordani, Cigna chairman and CEO, said in a statement.

The Wall Street Journal reported in November that Cigna attempted a cash-and-stock deal with Humana to combine the companies.

The deal with Health Care Service is expected to close in the first quarter of 2025. Cigna shares closed up .67% on the day.

Cigna stock price