- Cigna beat Wall Street expectations on revenue and earnings for its second quarter — driven largely by its health services category, which includes pharmacy benefit manager Express Scripts and accounts for about 50% of its earnings.
- The health services sector rebounded after its first quarter performance, when analysts characterized it as a the "weak link," according to the financials results released Thursday morning.
- The company has upped its guidance for the full year thanks to its pharmacy business, which is now expected to fill between 1.2 billion and 1.23 billion prescriptions this year.
After the first quarter was heavily scrutinized by investors, mainly focusing on Express Scripts' performance, the company said the PBM is expected to retain at least 97% of its customers for 2020 and is expected to add 25 million to 35 million filled prescriptions in 2020.
"Overall, the update should calm nerves on stability of the PBM business," analysts at Jefferies said in a note. Cigna completed its $67 billion acquisition of Express Scripts in December 2018.
Cigna reported adjusted income of $1.64 billion, or $4.30 per share, after generating adjusted revenue of $34.4 billion for the quarter.
The payer raised its full-year guidance, expecting income to be between $6.34 billion and $6.46 billion and revenue to be between $136 billion and $137 billion.
The company's other segments also performed well. Its international markets segment grew both revenue and income.
Cigna's integrated medical segment, which includes its health insurance business in the U.S., reported a 10% increase in adjusted revenue thanks to growth within its commercial business and higher premiums. Adjusted income for the segment increased to $990 million from $915 million in the prior-year period.
The insurer reported a medical care ratio of 81.6%, which was higher compared with the second quarter of 2018, due in part to the inclusion of Express Scripts' Medicare Part D business and a higher cost ratio in its individual medical business.