Profit at Cigna Corp. soared 29% in its fourth quarter and investors should expect continued growth this year, the insurer said.
Cigna's fourth-quarter net income was $467 million, compared with $361 million in the same period of 2013. Profit on the year increased 42% to $2.1 billion.
Higher premiums and moderate growth in medical claims drove the positive results, Cigna said. Its Medicare Advantage segment had a particularly strong quarter and year with more seniors enrolled in Cigna plans. Cigna expects Medicare Advantage enrollment will grow from 6% and 8% in the coming year as the company hunts for plans to acquire in specific regions, CEO David Cordani said during an investor call.
Full-year revenue topped $34.9 billion, up 8% from 2013. The lack of one-time charges and negative cost trends made for “one of the company's cleanest quarters in a long time,” said Josh Raskin, an analyst at Barclays Research.
Cigna predicted revenue will grow 8% to 10% this year. Medical-cost ratios will remain stable, the company said. That should lead to upward of $2.2 billion in adjusted net earnings, or up to $8.40 per share. However, those earnings actually came in below analysts' consensus forecasts of about $8.56 a share, Raskin said.
Cigna's earnings come a day after disclosing it agreed to terms with drugmaker Gilead Sciences to make Harvoni the preferred drug for its members who have hepatitis C.
Cigna was one of the last major insurers to announce a deal for hepatitis C treatments. Competitors Aetna, Anthem, Humana and UnitedHealth Group all previously said they struck similar agreements with Gilead. Terms of the deals have not been disclosed, but some analysts believe insurers are getting at least 40% discounts on the original price tag, which is around $94,500 for Harvoni.
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