- Cigna delivered a better-than-expected first quarter thanks to the inclusion of PBM giant Express Scripts in its first full quarter as a combined company. The payer beat Wall Street profit and revenue expectations.
- Still, investors were less than impressed, and shares fell 4% in late morning trade, while analysts sought more details on the PBM business on an investor call.
- Adjusted revenues ticked in at $33.4 billion, more than double revenue from the first quarter of 2018. Adjusted net income from operations was $1.5 billion, or $3.90 per share, compared with $1 billion, or $4.11 per share, during the prior-year period.
Despite beating Wall Street estimates, some analysts wanted more detail on Express Scripts' performance. Cigna has tucked the PBM operations into what is called the "health services" category, which includes elements of Cigna, making it harder to compare Express Scripts' year-over-year performance.
"When I look at the PBM — and all I can do is match it up to what Express Scripts did last year — but it actually looks like it was probably down year over year," Justin Lake of Wolfe Research said during the question and answer session on Thursday's call with investors.
"Maybe stated another way, was there actually growth at Express Scripts, or the health services business year over year?" Lake asked.
Cigna executives didn't directly answer the question but said the performance was in line with expectations.
Cigna's health services segment filled 292 million adjusted prescriptions during the first quarter.
Express Scripts as a separate company reported total adjusted prescriptions of 340 million during the first quarter of 2018. When factoring in clients transitioning from Express Scripts services, the company filled 284 million prescriptions during that same period.
For the first quarter, the health services segment, which includes Express Scripts, reported adjusted revenue of $22.5 billion, representing 67% of the company's overall revenue.
The integrated medical unit, or what encompasses the traditional health insurance coverage, reported adjusted revenue of nearly $9.2 billion during the first quarter, a 13% increase year-over-year, driven by commercial customer growth and premium increases, the company said.
Cigna now boasts 168 million members thanks to the addition of Express Scripts. Overall membership includes 17 million medical and 75 million pharmacy members.
The company is raising its annual guidance and now expects an additional $1 billion in revenue and adjusted income from operations to be between $6.24 billion and $6.4 billion.
Many of the nation's payers also beat expectations for the quarter, boosted by membership growth. Anthem reported net income jumped 18% to about $1.6 billion and also raised its guidance for the year. CVS saw its recent acquisition of Aetna boost the quarter, with revenue climbing nearly 40%.