- Cigna's net income for the fourth quarter of 2020 was $4.1 billion, a huge increase from the $977 million in the fourth quarter of 2019, partly because of the $6.2 billion sale of its life insurance business, which was completed on Dec. 31.
- The payer's medical cost ratio in the fourth quarter was 85.8%, up from 82.3% the prior year because of COVID-19 treatment and testing costs and above Wall Street expectations. In a call with investors Thursday morning, CFO Brian Evanko said deferred care increased in the latter part of the quarter but was outweighed by COVID-19 costs.
- The payer beat analyst expectations for revenue of $41.7 billion but missed on earnings. Shares were down slightly in morning trading.
Cigna CEO David Cordani told investors he expects 2021 to be a "year of transition" as coronavirus vaccine rollouts will "continue to tax an already overburdened healthcare system." He predicted increased access to care as a result of greater emphasis on home care and telehealth, which he called a "significant opportunity" for the company in terms of benefit design.
Evanko said COVID-19 headwinds will likely be concentrated in the first quarter of this year and will primarily impact the U.S medical business.
Edwards Jones analyst Ashtyn Evans characterized the quarter as mixed but said "we believe COVID-19 impacts will decline throughout the year, and Cigna will be able to focus on continuing to integrate its diverse businesses." Jefferies' analysts called the earnings miss "uncharacteristic" and said the 2021 earnings outlook of at least $20 per share was a positive.
Cigna's total medical customer base for the year was 16.7 million, a slight decrease as a result of disenrollment caused by the COVID-19 recession but offset by robust growth in Medicare Advantage enrollment.
The payer expanded its MA footprint for this year, going into five new states and increasing the number of counties in which a plan is offered by 22%.
Executives said Thursday the company intends to expand its offering in the individual market as well this year.
Despite a turbulent year for the healthcare industry as a whole, revenue for 2020 was $160 billion, up 4% year over year and the company expects 2021 full-year revenue to be at least $165 billion. It reported net income of $8.5 billion for the full year, an increase from 2019's $5.1 billion.
Evernorth, Cigna's recently rebranded health services division, which includes pharmacy benefit manager Express Scripts, posted adjusted revenue of $30.5 billion for the quarter, up nearly 20% year over year. Executives credited the increase to strong organic growth.
Cigna will host its annual investor day on March 8.
Other insurers who have reported fourth quarter earnings have had varied results. Humana this week posted a Q4 loss as it saw a jump in COVID-19 care and testing. It was in the black for the full year of 2020, though. UnitedHealthcare said care volume had mostly returned to normal in its final quarter of last year and posted a revenue increase.