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Cigna (CI) Earnings Surpass Estimates in Q2, Improve Y/Y

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Cigna Corp.’s (CI - Free Report) second-quarter 2020 earnings of $5.81 per share surpassed the Zacks Consensus Estimate by 15% and also grew 35% year over year.

Results reflected revenue and earnings growth owing to a strong fundamental performance and lower medical costs from deferred care following the COVID-19 pandemic.

Cigna’s revenues of $39.3 billion beat the Zacks Consensus Estimate by 4.2% and also increased 13.9% year over year mirroring solid contributions from each of the company's ongoing businesses.

The company’s medical enrollment grew by 86,000 lives from the prior-year quarter to 17.083 million customers, attributable to membership gains in the Government and International markets.

Selling, general and administrative expense ratio was 8.4, improved 60 basis points year over year on significant growth in revenues and cost-control measures.

Cigna Corporation Price, Consensus and EPS Surprise Cigna Corporation Price, Consensus and EPS Surprise

Strong Segmental Performances

Health Services: Adjusted revenues of $28.6 billion were up 21.5% year over year, driven by insourcing of Integrated Medical pharmacy volumes and a sturdy performance in specialty pharmacy services, partly offset by a decline in retail script volumes.

Operating income of $1.25 billion increased 7% year over year, representing customer growth, higher adjusted pharmacy scripts volumes, benefits from effective management of the supply chain and a steady performance in specialty pharmacy services, partially offset by an increase in operating expenses to support growth

Integrated Medical: Adjusted revenues of $9.23 billion were up 3% year over year, highlighting customer wins in Medicare Advantage and in the Select segment, as well as premium growth. However, this upside was partially offset by premium relief programs for clients that were carried out in response to the COVID-19 pandemic. 

Operating income of $1.52 billion surged 53.83% year over year on significantly lower medical utilization in both the Commercial and Government segments compared with the historic patterns. However, this uptrend was partially offset by premium relief programs for clients and cost share waivers for customers.

International Markets: Adjusted revenues of $1.43 billion were up 3.1% year over year, reflecting consistent business growth, partially offset by an adverse foreign currency movement.

Operating earnings of $319 million soared 54.1% year over year, driven by lower claim levels amid the COVID-19 pandemic, constant business gains and operational efficiency.

Group Disability and Other Operations

Adjusted revenues of $1.33 billion inched up 1.5% year over year. Operating earnings of $132 million were down 11.4% year over year due to elevated claims in Cigna’s Life business, primarily related to the COVID-19 pandemic. However, this downside was partially mitigated by a favorable performance within the Disability business.

Capital Position

Cigna’s debt-to-capitalization ratio improved to 43.5 as of Jun 30, 2020 from 45.2 as of Dec 31, 2019.

Shareholders’ equity as of Jun 30, 2020 was $47.4 billion, up 8.1% year over year.

Share Buyback

Year to date through Jul 29, 2020, the company repurchased 8.3 million shares of common stock for $1.5 billion.

2020 Guidance

The company’s earlier-issued guidance for the full year was intact, indicating earnings per share to remain in the range of $18-$18.6 while adjusted revenues in the $154-$156 billion band.

Zacks Rank and Other Releases

Cigna carries a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other insurers that have released results so far, earnings of both UnitedHealth Group Inc. (UNH - Free Report) and Anthem Inc. (ANTM - Free Report) surpassed the Zacks Consensus Estimate by 1.94% and 4.9%, respectively, while Centene Corp.’s (CNC - Free Report) bottom line missed estimates by 0.41%.

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