Cigna starts $250 million venture fund to make health-care bets

Cigna Corp. on Wednesday said it 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, including Independence Health Group in Philadelphia, all have venture units.

Cigna, headquartered in Norwalk, Conn., employs more than 1,000 in Philadelphia.

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.