Dive Brief:
- Cigna boosted its 2026 financial outlook for the third time this year on Thursday, buoyed by blossoming profits in its health insurance and specialty pharmacy divisions.
- Overall, Cigna reported net income of $1.4 billion on revenue of $73.7 billion in the quarter, above analyst expectations. Income was actually down from $1.9 billion in the same time last year, though Cigna’s adjusted earnings per share and adjusted operating income — figures that executives say are more representative of the company’s actual profitability — both increased.
- Executives provided some early color on 2027 during a Thursday morning call, arguing Cigna is well positioned for profitable growth next year. Cigna’s stock rose 3% following the results.
Dive Insight:
The third quarter — CEO Brian Evanko’s first full quarter as chief executive, after David Cordani retired in July — was solid, analysts said.
Cigna Healthcare, the company’s health insurance business that covers 18.5 million people, drove the bulk of the upside, as medical costs remained elevated but were more than covered by premium hikes Cigna secured coming into this year.
The division reported a medical loss ratio, an important marker of spending on patient care, of 85% — slightly better than analysts expected, though a sliver higher than the 84.8% Cigna notched in the same quarter last year. Lower is better for MLR.
Still, Cigna Healthcare reported adjusted operating income of $1.2 billion, up 15% year over year, thanks to improved operational efficiencies and higher investment income.
“The work we’ve done over several years to deliberately shape our portfolio is delivering results,” Evanko said.
Meanwhile, Evernorth — Cigna’s massive health services division, which includes pharmacy benefit manager Express Scripts and specialty pharmacy Accredo — reported $1.8 billion in adjusted operating income, down 4% year over year.
Earnings in Cigna’s specialty segment — one of its fastest-growing businesses — were up 15% year over year, despite revenue only increasing 1%, thanks to stronger adoption of cheaper biosimilar and specialty generic drugs. On the call, Evanko called out Revlimid, a widely used drug that treats several types of blood cancers and bone marrow disorders. Revlimid’s penetration rate is now around 90%, the CEO said.
Meanwhile, Express Scripts, one of the largest PBMs in the U.S., actually dampened Evernorth’s profits. Express Scripts’ adjusted operating income was down 22% year over year, as the PBM spends heavily to transition to a new pharmacy benefits model.
The model, called Signature, is meant to be more transparent, responding to regulator and client concerns about opaque PBM contracts. But it’s squeezing Express Scripts’ margins, as the company works to educate its broker, drugmaker and pharmacy partners about the model and drum up interest among clients before Signature becomes available in 2028, executives noted.
“This business is in a period of transition,” CFO Ann Dennison said.
Growing scrutiny on PBMs has led to efforts at the state and federal level to reform the industry, with some calling for vertically consolidated behemoths in the space to be broken up. CVS Health said this week it plans to separate its retail pharmacy business from its PBM and health insurer arms.
PBMs are also absorbing new transparency policies, including from a sweeping Department of Labor rule finalized late last month. The PBM industry lobbied heavily against the rule. Evanko took a jab at the regulation during Thursday’s call, arguing it’s redundant and in some places contradictory with PBM reform put in place by Congress earlier this year.
“We think it’s very unlikely that this rule will result in lower prescription drug spending,” the CEO said. Though, “we will of course comply with the requirements.”
Following the third quarter, Cigna raised its 2026 outlook for adjusted income from operations to at least $30.60 per share. That’s up from its previous guidance of at least $30.45 per share.
The company also gave investors an early peek into its posture heading into 2027. Cigna expects to benefit from improving stop-loss margins, strong sales and its productivity initiative next year.
But Express Scripts will have to contend with financial pressure related to the industrywide shift away from rebates and shrinking employer coverage of GLP-1s for weight loss. Cigna’s specialty division is facing down a more limited pipeline for biosimilar and specialty generic launches, executives said.
Cigna’s impending exit from the Affordable Care Act exchanges will also remove the contribution from that business.
Overall, Cigna is the latest insurer to report rosy results, after a difficult two years wherein medical spending outpaced revenue and drove down profits. Cigna follows peers UnitedHealth, CVS, Centene and Elevance in posting a beat-and-raise in the third quarter. Molina was the lone outlier, outperforming Wall Street’s expectations but holding guidance flat.
Humana is set to report third quarter results on Friday.
