By Sneha S K and Kunal Das
Nov 5 (Reuters) – Cigna on Thursday raised its annual profit forecast after beating third-quarter estimates, as the health insurer benefits from gains in its specialty-pharmacy and health-services businesses.
The company also said it expects its adjusted profit to grow at least 10% in 2027, sending its shares up 2.4% in morning trading.
“We have a clear strategic growth framework for creating long-term value and will continue to execute with discipline,” said CEO Brian Evanko, adding the company is encouraged by improvement in how it coordinates care for patients with complex health needs.
Evernorth Health Services, which includes Cigna’s pharmacy-benefit, specialty-pharmacy and care-services businesses, posted adjusted revenue of $63.77 billion in the third quarter, up about 6% from a year earlier.
The company in September announced a new program that aims to deliver about $3 billion in cost savings by 2030. The program will focus on streamlining workflows with AI-enabled insights and tools.
Cigna has also reduced exposure to high-cost government-backed plans, and shifted focus to its core traditional employer-sponsored healthcare business and the pharmacy benefits management unit.
It exited its Medicare Advantage business last year, and said it will end Affordable Care Act plan coverage at the end of 2026.
The company said it expects a boost to customer growth and margin improvement in certain employer-backed plans next year, despite a host of challenges, including those arising from its exit from the Obamacare market, lower drug rebates, reduced employer coverage of weight-loss drugs and fewer launches of lower-cost versions of specialty medicines.
Julie Utterback, an analyst at Morningstar, said costs associated with Cigna’s transition to a fee-based model for its pharmacy benefit business are largely being incurred this year, which could help profit growth pick up in 2027.
The company said it is actively transitioning contracts with drugmakers and network pharmacies from a rebate-based model to a fee-based model.
Medical loss ratio, or the percentage of premiums spent on patient care, rose to 85% in the third quarter from 84.8% a year earlier, due to changes in its US-employer insurance business.
Analysts had expected a medical cost ratio of 85.18%, as per data compiled by LSEG.
Cigna now expects 2026 adjusted profit of at least $30.60 per share, 15 cents higher than its previous forecast and above analysts’ expectations of $30.51.
Its quarterly adjusted revenue of $73.79 billion beat analysts’ estimates of $72.72 billion, while adjusted profit of $7.98 per share exceeded market consensus of $7.50.
(Reporting by Kunal Das and Sneha S K in Bengaluru; Reporting by Amina Niasse in New York; Editing by Shinjini Ganguli)
Comments