Dive Transient:
- Cigna beat investor expectations on earnings and income within the second quarter because the insurer reported sturdy development in its Evernorth well being providers arm.
- The corporate reported income of $57.8 billion for Evernorth within the second quarter, up 17% 12 months over 12 months. Adjusted revenue from operations within the unit was $1.7 billion, rising 5% from final 12 months, based on Cigna’s second-quarter earnings launched Thursday.
- In the meantime, Cigna’s medical insurance phase is performing inside expectations, even because the insurer has seen “persistently elevated medical prices all year long,” COO Brian Evanko mentioned throughout an earnings name Thursday.
Dive Perception:
Many insurers have struggled with heightened medical prices within the second quarter, significantly these providing well being plans on the Inexpensive Care Act exchanges in addition to in Medicare and Medicaid.
However Cigna is probably going extra insulated from these challenges, given the corporate’s deal with employer-sponsored well being plans. The insurer additionally closed the sale of its Medicare enterprise to Well being Care Service Company this spring.
“We’ve got deliberately positioned our Cigna Healthcare portfolio with a product combine that has confirmed favorable within the present surroundings, as now we have no publicity to Medicaid or Medicare,” Evanko mentioned on the decision Thursday morning.
Cigna’s healthcare insurance coverage unit reported $10.8 billion in adjusted income, down 18% 12 months over 12 months, largely on account of divesting the Medicare enterprise.
Adjusted revenue from operations was $1.1 billion, reducing 9% from the earlier 12 months linked to the next medical loss ratio — a key marker of spending on affected person care.
Cigna’s MLR was $83.2% within the second quarter, up from $82.3% in 2024 as the corporate grappled with increased prices in stop-loss insurance coverage.
The medical insurance unit additionally confronted heightened utilization in particular person plans as medical prices elevated throughout the ACA market, CFO Ann Dennison mentioned.
“Nevertheless, this stress was manageable because of the smaller relative dimension of our ACA guide, aided by our disciplined pricing actions over the previous two years,” she mentioned.
On the Evernorth aspect of the enterprise, adjusted revenue for pharmacy profit providers was up 2% to $833 million. Adjusted income for pharmacy profit providers was up 20%.
The optimistic outcomes for Cigna’s pharmacy profit supervisor Categorical Scripts — one of many nation’s largest PBMs — comes because the pharmacy middlemen have confronted elevated scrutiny from regulators and lawmakers for driving up drug prices.
Arkansas lately handed a regulation that might pressure PBMs to divest pharmacies, however it was placed on maintain by a federal decide earlier this week.
CEO David Cordani mentioned the corporate is “fairly happy” with the choice, arguing that whereas the regulation is doubtlessly well-intended, it constrains entry to care and restrains affected person selection.
However “we imagine that the trade will proceed to function in an lively legislative and regulatory surroundings” on the subject of PBMs, he mentioned.
General, Cigna reported income of $67.2 billion, rising 11% from $60.5 billion throughout the identical interval final 12 months. Web revenue was $1.5 billion, comparatively flat 12 months over 12 months.
The corporate reaffirmed its outlook on adjusted revenue from operations of at the very least $29.60 per share.
