- Cigna raised its earnings and revenue guidance for 2019 after beating analysts' expectations for those measures during the third quarter of this year.
- The payer generated adjusted revenue of $35.8 billion for the quarter, more than three times the revenue produced during the third quarter of 2018, thanks to the $67 billion acquisition of Express Scripts completed in December.
- Cigna CEO David Cordani said during an investor call Thursday morning the quarter reflects strong retention of customers and expansion of customer relationships.
The tie-up with Express Scripts continues to hit key milestones as integration efforts are tracking well, Cigna executives said during the call with investors.
Strong performance in health services, largely comprised of Express Scripts' business, and Cigna's commercial health insurance business drove third quarter results, Cordani said.
The health services units filled adjusted prescriptions of 312 million during the third quarter, an increase of 18 million from the second quarter of 2019. Come 2020, adjusted prescriptions are expected to grow between 25 million and 35 million prescriptions.
The integrated medical unit, which includes Cigna's commercial and government health insurance business, delivered a 12% increase in revenue to $9.1 billion compared with the prior-year period, thanks in part to commercial customer growth and premium increases.
Similar to its peers, Cigna saw an increase in its medical cost ratio (80.5%) for the third quarter due in part to a higher MCR in its individual business and the suspension of the health insurance tax.
Cordani did provide some color on expectations for 2020.
A handful of headwinds, including the return of the health insurance tax, will pose a 50 cent drag on earnings, he said.
Still, "we expect to grow earnings per share 10 to 13% over this amount in line with our long-term EPS growth expectations," Cordani said.
That growth will be driven by multiple factors, including sustained organic growth and additional administrative expense synergies. Overall, Cigna is on track to achieve its strategic goal of $20 to $21 earnings per share in 2021, he said.