Cigna Group raised its full-year guidance for adjusted earnings per share, revenue and customer growth as it reported first-quarter results Friday, including total revenue up 6% year over year at $46.5 billion. The insurer’s net income, at $1.3 billion, increased from $1.2 billion in the year-ago period.
Cigna posted a medical loss ratio of 81.3%, down from 81.5% in the prior-year quarter and better than internal expectations. This was partly based on lower COVID-19 costs. Claims for COVID, flu and respiratory syncytial virus were lower than expected in the quarter while non-viral care needs were more normalized, executives said on a call with investors Friday.
SVB Securities analysts said in a note that Cigna had a “really good quarter with broad-based upside,” with the insurer’s health services arm Evernorth continuing to execute well. Evernorth’s revenue for the quarter was up 8% year over year, buoyed by organic growth in specialty pharmacy services as demand increased and new specialty drugs hit the market.
Evernorth is focused on increasing its value-based care arrangement, following its $2.5 billion investment in Walgreens-backed physician group VillageMD late last year.
Evernorth Care, the segment’s group practice division, “represents one of our most significant long-term growth opportunities given the growing needs in virtual care as well as, for example, neighborhood services,” Cigna CEO David Cordani said on the call.
Cigna posted growth in Affordable Care Act marketplace coverage as it entered three new states this year. CFO Brian Evanko told investors that the states contributing the most growth were Texas, Georgia and Florida.
Evanko said that while Cigna is “not yet seeing signs of economic pressure in our book,” it is assuming some elevated levels of overall disenrollment in the back half of the year.
In discussing pharmacy benefit management arm Express Scripts, executives said they are aware of public and political pressure to lower drug costs, but are prepared to adapt as needed. “We are confident in our ability to earn sustainable and attractive margins for our services under a variety of legislative scenarios,” Cordani said.