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Cigna (CI) Q1 Earnings Beat Mark, Rise Y/Y on Revenue Gains

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Cigna Corp.(CI - Free Report) first-quarter 2021 earnings of $4.73 per share beat the Zacks Consensus Estimate by 7% and also inched up 0.85% year over year. Results gained from higher pharmacy revenues, and fees and other income.

Revenues of $41 billion beat the Zacks Consensus Estimate by 0.8% and also grew 6.5% year over year, driven by a higher contribution from its businesses, led by the Evernorth segment.

The company saw a decline of 515000 customers from the prior-year quarter in its medical enrollment to 16.703 million, attributable to lower commercial members.

The selling, general and administrative expense ratio was 8.0, which improved 50 basis points year over year, driven by revenue growth, continued expense efficiency and the revocation of the health insurance industry tax.

Cigna Corporation Price, Consensus and EPS Surprise

Cigna Corporation Price, Consensus and EPS Surprise

Cigna Corporation price-consensus-eps-surprise-chart | Cigna Corporation Quote

Strong Segmental Performances

Evernorth Health Services: Adjusted revenues of $30.6 billion were up 13% year over year on strong organic growth including growth in retail network and specialty pharmacy services.

Operating income of $1.22 billion increased 13% year over year, aided by benefits from the effective management of the supply chain, business growth and a strong performance in specialty pharmacy services.

During the quarter, Evernorth fulfilled 393 million adjusted pharmacy, up 9% year over year, driven by strong organic growth.

U.S. Medical: Earlier called Integrated medical, this segment was renamed in the fourth quarter and reported adjusted revenues of $10.36 billion, up 5% year over year, highlighting customer wins in Medicare Advantage and Select segment. Also, premium increases and favorable net investment income boosted the segment’s results.

Operating income of $987 million declined 14.5% year over year due to COVID-induced negativity and the net impact of non-recurring items.

International Markets: Adjusted revenues of $1.57 billion were up 7% year over year, reflecting consistent business growth and favorable foreign currency movements.

Operating earnings of $262 million were down 7.1% year over year amid higher claim cost.

Capital Position

Cigna’s debt-to-capitalization ratio was 39.9 as of Mar 31, 2021 compared with 39 as of Dec 31, 2020.

Shareholders’ equity as of Mar 31 2021 was $48.15 billion, up 6.8% year over year.

Through the end of the first quarter, the company repurchased 12.7 million shares of common stock for $2.8 billion


The company expects adjusted revenues of at least $1.66 billion (up from the prior estimate of minimum $1.65 billion) and earnings per share of $20.20 (up from $20 expected earlier).

The company expects total medical customer growth of at least 3,50,000 (up from the earlier projection of minimum 325000).

Our Take

Cigna’s revenues have been increasing consistently since the last several years. Its acquisition of Express Scripts bodes well for the long haul. It divested its Group Life and Disability insurance business, which will reduce its debt level and streamline its operations. Its expanding international business provides diversification. Operating profitability achieved by controlling medical care cost along with managing other operating costs is contributing to the company’s bottom line. Higher membership is another boon. A strong capital position coupled with solid cash-generation abilities leads to investment in business.

Cigna carries a Zacks Rank #3 (Hold), currently.  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other players in the health insurance industry with the likes of UnitedHealth Group Inc. (UNH - Free Report) , Humana Inc. (HUM - Free Report) and Anthem Inc. (ANTM - Free Report) beat on their respective first-quarter earnings by 20.14%, 6.38% and 2.19%.

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