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Why Is Cigna (CI) Up 1.6% Since Last Earnings Report?
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It has been about a month since the last earnings report for Cigna (CI - Free Report) . Shares have added about 1.6% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Cigna due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Cigna Corp.’s third-quarter 2020 earnings of $4.41 per share surpassed the Zacks Consensus Estimate by 3.7% and also grew 5.8% year over year.
Results reflected a strong fundamental performance across its businesses as well as the return of the medical utilization to more typical levels and the COVID-19 related impacts.
Cigna’s revenues of $40.8 billion beat the Zacks Consensus Estimate by 4.3% and also increased 13.9% year over year, driven by a higher contribution from its businesses led by its Evernorth segment.
The company saw a decline of 89000 customers from the prior-year quarter in its medical enrollment customers to 16.892 million customers, attributable to lower commercial members.
Selling, general and administrative expense ratio was 8.1, which improved 110 basis points year over year on significant growth in revenues and cost-control measures.
Strong Segmental Performances
Evernorth Health Services: During the quarter, the company rebranded its Health Services segment under Evernorth. The same includes pharmacy benefit manager Express Scripts, specialty pharmacy Accredo and eviCore healthcare, which provides utilization management services for health plans or employer groups and outpatient diagnostic imaging service programs.
Adjusted revenues of $29.8 billion were up 19.9% year over year, driven by the insourcing of U.S. Medical pharmacy volumes and strong organic growth including growth in retail network and specialty pharmacy services.
Operating income of $1.44 billion increased 3.1% year over year, reflecting customer growth, higher adjusted pharmacy scripts volumes, benefits from the effective management of the supply chain and a continued strong performance in specialty pharmacy services, partially offset by higher operating expenses to support growth.
During the quarter, Evernorth fulfilled 381 million adjusted pharmacy, up 22% year over year, driven by the insourcing of U.S. Medical pharmacy volumes and strong organic growth.
U.S. Medical: Earlier called Integrated medical, this segment was renamed in this quarter and reported adjusted revenues of $9.63 billion, up 5.3% year over year, highlighting customer wins in Medicare Advantage as well as in the Select segment, besides premium growth.
Operating income of $757 million declined 20.6% year over year due to the impact of the return of medical utilization to more typical levels and direct COVID-19 costs as apart from the costs involving strategic actions taken by the company to support customers and providers. Additionally, decreased specialty contributions and lower net investment income induced this downside.
International Markets: Adjusted revenues of $1.44 billion were up 2.7% year over year, reflecting consistent business growth. Operating earnings of $208 million were up 7.2% year over year, boosted by a consistent operational efficiency, lower claim levels, driven by the effects of the COVID-19 pandemic, and business growth.
Group Disability and Other Operations: Adjusted revenues of $1.31 billion inched up 2.3% year over year. Operating earnings of $70 million were down 51% year over year, reflecting elevated claims in Cigna’s Life business, primarily related to the COVID-19 pandemic. This segment is on track to be sold to New York Life. Cigna expects the transaction to close in the fourth quarter of 2020.
Capital Position
Cigna’s debt-to-capitalization ratio improved to 42.8 as of Sep 30, 2020 from 45.2 as of Dec 31, 2019. Shareholders’ equity as of Sep 30, 2020 was $48 billion, up 7.5% year over year.
2020 Guidance
The company’s earlier-issued outlook for full-year revenues was raised to be nearly $158 billion, up from the prior view of $154-$156 billion. The lower end of the earlier-issued earnings projection was lifted to the $18.3-$18.6 per share from $18-$18.6 as envisaged earlier.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Cigna has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Cigna has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Cigna (CI) Up 1.6% Since Last Earnings Report?
It has been about a month since the last earnings report for Cigna (CI - Free Report) . Shares have added about 1.6% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Cigna due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Cigna Q3 Earnings & Revenues Beat Estimates, Grow Y/Y
Cigna Corp.’s third-quarter 2020 earnings of $4.41 per share surpassed the Zacks Consensus Estimate by 3.7% and also grew 5.8% year over year.
Results reflected a strong fundamental performance across its businesses as well as the return of the medical utilization to more typical levels and the COVID-19 related impacts.
Cigna’s revenues of $40.8 billion beat the Zacks Consensus Estimate by 4.3% and also increased 13.9% year over year, driven by a higher contribution from its businesses led by its Evernorth segment.
The company saw a decline of 89000 customers from the prior-year quarter in its medical enrollment customers to 16.892 million customers, attributable to lower commercial members.
Selling, general and administrative expense ratio was 8.1, which improved 110 basis points year over year on significant growth in revenues and cost-control measures.
Strong Segmental Performances
Evernorth Health Services: During the quarter, the company rebranded its Health Services segment under Evernorth. The same includes pharmacy benefit manager Express Scripts, specialty pharmacy Accredo and eviCore healthcare, which provides utilization management services for health plans or employer groups and outpatient diagnostic imaging service programs.
Adjusted revenues of $29.8 billion were up 19.9% year over year, driven by the insourcing of U.S. Medical pharmacy volumes and strong organic growth including growth in retail network and specialty pharmacy services.
Operating income of $1.44 billion increased 3.1% year over year, reflecting customer growth, higher adjusted pharmacy scripts volumes, benefits from the effective management of the supply chain and a continued strong performance in specialty pharmacy services, partially offset by higher operating expenses to support growth.
During the quarter, Evernorth fulfilled 381 million adjusted pharmacy, up 22% year over year, driven by the insourcing of U.S. Medical pharmacy volumes and strong organic growth.
U.S. Medical: Earlier called Integrated medical, this segment was renamed in this quarter and reported adjusted revenues of $9.63 billion, up 5.3% year over year, highlighting customer wins in Medicare Advantage as well as in the Select segment, besides premium growth.
Operating income of $757 million declined 20.6% year over year due to the impact of the return of medical utilization to more typical levels and direct COVID-19 costs as apart from the costs involving strategic actions taken by the company to support customers and providers. Additionally, decreased specialty contributions and lower net investment income induced this downside.
International Markets: Adjusted revenues of $1.44 billion were up 2.7% year over year, reflecting consistent business growth.
Operating earnings of $208 million were up 7.2% year over year, boosted by a consistent operational efficiency, lower claim levels, driven by the effects of the COVID-19 pandemic, and business growth.
Group Disability and Other Operations: Adjusted revenues of $1.31 billion inched up 2.3% year over year. Operating earnings of $70 million were down 51% year over year, reflecting elevated claims in Cigna’s Life business, primarily related to the COVID-19 pandemic. This segment is on track to be sold to New York Life. Cigna expects the transaction to close in the fourth quarter of 2020.
Capital Position
Cigna’s debt-to-capitalization ratio improved to 42.8 as of Sep 30, 2020 from 45.2 as of Dec 31, 2019.
Shareholders’ equity as of Sep 30, 2020 was $48 billion, up 7.5% year over year.
2020 Guidance
The company’s earlier-issued outlook for full-year revenues was raised to be nearly $158 billion, up from the prior view of $154-$156 billion.
The lower end of the earlier-issued earnings projection was lifted to the $18.3-$18.6 per share from $18-$18.6 as envisaged earlier.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Cigna has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Cigna has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.