- Cigna executives said Thursday that COVID-19-related costs were higher than expected in the second quarter, as was the amount of care not directly related to the virus as patients returned for services.
- Still, the payer reported a 10% year-over-year increase in revenue to $43.1 billion, beating Wall Street expectations. The growth was driven primarily by its health services segment, Evernorth, which CEO David Cordani said was "clearly a standout" on a Thursday morning call with investors.
- Use of behavioral health services among customers was up 40% in the quarter. Executives said on the call that they viewed this as a growth opportunity going forward as well, particularly for virtual visits considering Cigna's acquisition of MDLive in February.
Cigna is the latest insurer to report dual increases in costs from COVID-19 patients and an earlier than anticipated return of patients who put off care as the pandemic took hold in the U.S. last year. That drove the company's medical cost ratio to 85.4% for the quarter, up from 70.5% in the prior-year period.
Inpatient and outpatient surgery volume grew while emergency room visits remained below the pre-pandemic baseline. Meanwhile, more care shifted from inpatient settings to outpatient and from ERs to urgent care centers, both of which the payer viewed as positive changes.
Edward Jones analyst Ashtyn Evans said that despite the higher-than-expected results, she was "disappointed that the company did not raise guidance" as it did after the first-quarter results. Evans said this was likely related to uncertainty surrounding the delta variant.
"Overall, we believe Cigna has navigated the pandemic well, and long-term growth will be driven by Medicare Advantage growth," Evans wrote.
Investors seemed frustrated as well, driving shares down about 13% in Thursday morning trading.
Cigna's net income in the second quarter was $1.5 billion, down 16% from the prior-year period.
Executives pegged COVID-19's drag on quarterly earnings, which reached a peak in April, at $2.50 a share and said they expected that to decrease slightly in the back half of the year. They noted, however, that the spread of the highly contagious delta variants complicates predictions.
"At a macro level, the environment is marked by ongoing uncertainty for businesses, government, communities around the world," Cordani said on the call.
The CEO called out three primary trends driving change in the healthcare landscape: pharmacological innovation; recognition of the link between mental and physical health; and the rise of virtual care and other alternative care sites.
Pharmacy revenue and script volume were both up 13% for the quarter. About 9 million of the scripts filled were related to coronavirus vaccines, executives said.
Cigna saw growth in MA and individual market enrollment, but overall membership was mostly stable. Overall, the payer covers almost 17 million lives as of June 30.