Cigna Group reported second-quarter earnings that exceeded analysts’ expectations, driven by growth in its health services division.
Adjusted income from operations was $6.72 a share, ahead of the average of analyst estimates compiled by Bloomberg. The healthcare giant affirmed its forecast for adjusted 2024 earnings of at least $28.40 a share.
Revenue in the quarter also exceeded analysts’ expectations, reflecting large client wins in the company’s Evernorth Health Services business, Cigna said in a statement Thursday. The shares were little changed in premarket trading.
US health insurers have faced a rocky first half of the year with unexpected medical costs, scrutiny from regulators, and skepticism from investors. Cigna joined its rivals in holding guidance steady midway through 2024, signaling a conservative stance to cushion for risks ahead.
Cigna is less exposed to the Medicare and Medicaid insurance segments where there’s been the most turmoil. Its stock has gained 16% so far in 2024 through Wednesday’s close, on par with the S&P 500 Index and ahead of its largest rivals.
The company’s medical-loss ratio, an important gauge of how much premium revenue is paid out for care, was above analysts’ forecasts. Cigna said the figure was driven up primarily because of Medicare Advantage risk adjustment changes from the prior year.
Cigna’s business encompasses a health benefits arm, Cigna Healthcare, and a services division called Evernorth that houses its pharmacy benefits manager and specialty pharmacy.
Evernorth is where the growth is. Pharmacy customers jumped 24% as Cigna took on a major contract to serve health insurer Centene Corp. at the start of the year. Quarterly revenue at Evernorth grew by 30% from the same period in 2023.
In contrast, sales in the health benefits business increased just 3% from last year, and medical membership declined slightly as the company raised premiums in certain markets.
(Updates with premarket share moves in the third paragraph.)
© 2024 Bloomberg L.P.
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