Cigna is exiting the Affordable Care Act exchanges — and exploring a sale of its controversial claims review subsidiary — as the company continues to prune its portfolio to focus on pharmacy services and employer-sponsored plans.
The Connecticut-based insurer plans to sunset its ACA plans by the end of this year, leaving 369,000 Americans in 11 states searching for new coverage during a time of intense turmoil for the exchanges. ACA plans have become increasingly unaffordable after the Republican-led Congress allowed more generous subsidies for coverage to expire at the end of last year.
Cigna is also exploring strategic alternatives for EviCore, a business that contracts with insurers to take on their medical reviews, amid intensifying public scrutiny around care delays and denials.
Cigna, which covers 18 million people mostly in employer-sponsored plans and offers a range of pharmacy and clinical services, has a track record of getting out of businesses where it doesn’t see a path to the scale or profits that would make near-term pain worthwhile.
That ethos holds when the company is otherwise doing well. Cigna announced the exits on Thursday morning during a call with investors to discuss its first quarter results, which included $1.7 billion in profit, up 25% year over year.
Cigna underwent a fresh portfolio review in tandem with its chief executive switch — CEO David Cordani is leaving this summer after almost two decades at the company’s helm — and its ACA plans and EviCore fell short, COO Brian Evanko, who is succeeding Cordani as CEO, said on the call.
“Both of these actions reflect a deliberate strategy to sharpen our focus on our key platforms,” Evanko said.
Goodbye, ACA
Cigna is skedaddling out of the ACA exchanges largely for the same reasons it exited Medicare last year. Both federal insurance programs have been beset by rising medical utilization that’s outpaced insurers’ ability to get a handle on it, cutting into profits and even sending some payers into the red for those businesses.
Major payers have seen ACA margins improve in the first quarter after hiking premiums for their plans to cover higher utilization trends — and account for the expiration of the subsidies, which were expected to cause millions of Americans to exit the exchanges, leaving those remaining sicker and costlier to cover.
That’s largely borne out. The marketplace is smaller and sicker, according to consultants and insurance executives, with more consumers electing into cheap bronze plans that come with higher out of pocket costs. The historic turmoil in the ACA exchanges has led some major insurers to wipe their hands of the marketplaces altogother, including CVS Health’s Aetna, which exited the exchanges after 2025, and now Cigna, which plans to leave after 2026.
Cigna has already seen enrollment in its individual plans fall, dropping from 446,000 people in the first quarter last year to 369,000 people now, a pittance (about 2%) of its overall medical membership, according to the company’s first quarter financial documents.
That aligns with membership losses among other major insurers that have reported first quarter earnings, including Centene and UnitedHealthcare.
Cigna didn’t see a clear path forward for growing the ACA business to the size where it would justify the trouble, both in terms of company resources and management’s attention, Evanko said on the call. Sunsetting the business will likely generate some capital for Cigna, but that’s not what’s driving the decision to exit, according to the COO.
“This is a small business for us today and it’s been shrinking in recent years,” Evanko said. “So the decision will allow us to further intensify focus on our core growth platforms” — specialty and care services, pharmacy services and U.S. employer-sponsored plans.
A likely farewell to EviCore
Similarly, EviCore’s size relative to the rest of Cigna’s portfolio made the claims review business a challenge to scale, and meant the division consumes more management attention and time than it’s worth, Evanko said.
A potential sale of EviCore would allow Cigna to offload a business that’s found itself in hot water over reports that it makes money primarily by turning down providers’ requests for payments.
Lawmakers and regulators increasingly villianize insurers over how their claims review practices, such as prior authorizations, keep Americans from getting the medical care they need. The public scrutiny has spurred an industry reevaluation of its claims review processes, including a voluntary pledge secured by the Trump administration to reduce overly onerous red tape.
On the call, Cigna management said they support prior authorizations as a key tool for ensuring that proper care is delivered, but that they also support the recent reforms. In addition, all the attention around prior authorization could make EviCore more attractive for a potential buyer, according to Evanko.
The industry progress around standardizing and automating prior authorization processes could “open new doors for the EviCore business, which could potentially result in a partnership or a combination with our complementary industry participants,” the COO said.
Insurance profitability improves
News of the exits came after Cigna beat Wall Street expectations for profit and revenue in the first quarter, outperforming in both its health services and health insurance divisions. Cigna’s $1.7 billion in net income was on $68.5 billion in revenue, up 5% year over year.
The company raised its 2026 guidance on the back of the results. Cigna now expects full-year adjusted earnings per share of at least $30.35, up 10 cents from the prior guidance.
Management said the increase was mostly due to improving profits in insurance division Cigna Healthcare, which saw higher margins in both its employer and ACA businesses in the quarter.
Cigna Healthcare disclosed a medical loss ratio of 79.8%, well below analysts expectations and down from 82.2% in the prior year quarter.
Insurers try to keep their MLRs, which are calculated by dividing medical spending by total premium revenue, as low as possible while keeping them within regulatory bounds.
Cigna’s sale of its Medicare business to Chicago-based Health Care Services Corporation last year drove the improvement in its MLR.
Privatized Medicare Advantage plans have been hit with some of the worst mismatches between reimbursement and spending over the past few years, pressuring earnings for major carriers and driving Cigna’s decision to exit the federal program.
Cigna also benefited from lower flu volumes in the quarter, and members putting off care due to bad weather, according to CFO Ann Dennison.
In addition, the better MLR suggests that Cigna’s premium hikes for its ACA plans were enough to cover spending, commented TD Cowen Charles Rhyee in a note.
Cigna does have a higher proportion of ACA members enrolled in bronze plans than in 2025, and that did drive down the MLR in the first quarter, Dennison said. However, bronze members are expected to drive higher spending in the back half of the year, so the company’s financial outlook for the ACA business remains unchanged.
Express Scripts earnings fall amid model transition
Cigna’s revenue growth in the quarter was created mostly by Evernorth, which houses the company’s massive pharmacy benefit manager Express Scripts.
However, though Evernorth’s operating income was higher than expected, it was depressed by the PBM’s declining profitability in the quarter — the “one blemish” in Cigna’s first quarter results, according to TD Cowen’s Rhyee.
Adjusted operating income for pharmacy benefit services fell 28% year over year, which Cigna chalked up to lower contributions from large clients as the company transitions to a new PBM business model.
The model will change how Express Scripts gets paid in its most common offering to employers, by preventing the PBM from being compensated based on the size of savings it’s able to negotiate with drugmakers. Instead, Express Scripts will be paid a core administrative fee per-member, per-prescription that’s delinked from the price of a drug.
Cigna’s fully insured plans will be adopting the new model in 2027, and at least 50% of health services division Evernorth’s clients will adopt it by the end of 2028, Evanko said.
Though Cigna was already moving in the rebate-free direction, its transition to the new model has significant regulatory heft behind it: The company agreed to a settlement with the Federal Trade Commission earlier this year that included the reforms to Express Scripts’ business practices.
