Cigna posts better-than-expected Q3

Although Cigna Corp.'s third-quarter profit dropped from the same period in 2013, the health insurer still beat analysts' predictions on its adjusted earnings per share.

Cigna consequently raised its financial expectations for the year, a move that UnitedHealth Group, Aetna, Centene Corp. and WellPoint have already made. The company said its adjusted earnings per share will be between $7.25 and $7.45 for the full year, up from its most recent guidance of $7.20 to $7.40.

“We remain focused and continue to execute well in our target markets,” Cigna CEO David Cordani said on a call with investors Thursday.

Third-quarter profit declined 3.4% to $534 million. However, earnings per share totaled $2.01 versus $1.95 in the year-ago period. When adjusted for special items, Cigna's earnings per share were $1.95, compared with $1.89 last year. That beat Wall Street's consensus by about $0.13. Revenue rose 8% to $8.8 billion in the third quarter.

Cigna added 208,000 members to its health insurance plans year over year and now covers medical benefits for more than 14.3 million people. Most of Cigna's business is in the employer commercial and Medicare Advantage markets. However, it has tested the public exchanges in five states this year and plans to offer health plans in three more states next year.

Executives were vague on the call about the company's performance on the exchanges. Some analysts have estimated Cigna could lose $100 million on exchange products this year, but Cordani said there was some improvement in medical claims in the third quarter and losses are likely to be smaller than that.

“We didn't expect this portfolio would make money,” Cordani said.

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