- Cigna's first quarter results exceeded Wall Street expectations and, amid the COVID-19 pandemic, the payer reaffirmed its 2020 earnings per share outlook to be between $18 and $18.60 per share.
- Adjusted income from operations grew 17% to nearly $1.8 billion on the back of 1.4% total revenue growth, which reached $38.4 billion compared to the prior-year quarter. Performance was driven by its two largest segments — integrated medical and health services, which includes pharmacy benefit arm Express Scripts.
- Overall, Cigna's base of medical customers grew to 17.2 million, largely driven by a 2.9 million increase in pharmacy customers compared with the first quarter of last year.
Despite the economic fallout from the outbreak of the novel coronavirus, Cigna does not expect the pandemic to alter its financial performance for the year. In fact, executives went as far as to say they expect to reach previously stated earnings per share targets for next year.
Executives said on the Thursday morning earnings call they believe the first quarter results, along with a diverse portfolio, will allow them to navigate the current economic environment.
Previously, amid its combination with Express Scripts, Cigna set an earnings per share target of $20 to $21 per share for 2021.
"We recognize, no doubt, that the current environment is highly disrupted, however, we believe the goal is both achievable and remains an appropriate target," Cigna CEO David Cordani said of that target, in response to an analyst question about why executives were confident in reiterating the 2021 outlook.
In addition to next year, the company told investors it expects to reach its EPS targets and revenue goals of $154 billion to $156 billion for 2020.
During the first quarter, its two largest segments outperformed analyst expectations.
Cigna's integrated medical business, which includes its commercial insurance and government plans, increased revenue by 7% to about $9.9 billion thanks to customer growth in Medicare Advantage and premium increases.
The segment delivered a medical loss ratio of 78.3%, better than the consensus on Wall Street and better than the MLR from last year's first quarter.
Cigna's health services segment, which largely includes its pharmacy business, increased revenue 21% to $27 billion because of greater prescription volumes. Cordani said the health services segment will be a "bit less disrupted" from a potential recession for a number of reasons.
First, the pharmacy segment serves a range of customers from health plans to corporate clients to government contracts. Plus, not everyone can opt to skip dosages like they would a procedure, he said.
"The pharmaceutical utilization, broadly speaking, that individuals need do not change dramatically as a result of a recession. It's not a deferrable event typically from that standpoint," Cordani said.