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Cigna (CI) Q2 Earnings Beat Estimates, Hikes '22 EPS View

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Cigna Corporation (CI - Free Report) reported second-quarter 2022 adjusted earnings of $6.22 per share, which outpaced the Zacks Consensus Estimate by 14.3%. The bottom line climbed 18.7% year over year.

Adjusted revenues of $45.4 billion rose 5.4% year over year. The top line beat the consensus mark by 2.7%.

Shares of Cigna gained 3.9% in the pre-market trading session, courtesy of its better-than-expected second-quarter results.

The quarterly results of Cigna benefited from solid contributions from its businesses and strong membership growth. However, the upside was partly offset by higher benefits and expenses.

The total medical customer base of Cigna was 17.8 million as of Jun 30, 2022, which improved 5.2% year over year on the back of strong U.S. Commercial fee-based client relationships.

Total benefits and expenses increased 5% year over year to $43.1 billion, mainly due to higher pharmacy and other service costs plus selling, general and administrative (SG&A) expenses, excluding special items. Adjusted SG&A expense ratio of 7.1% deteriorated 20 basis points (bps) year over year in the quarter under review.

Cigna Corporation Price, Consensus and EPS Surprise

Cigna Corporation Price, Consensus and EPS Surprise

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

Segmental Performances

Evernorth: Adjusted revenues of the segment rose 7% year over year to $34.9 billion in the second quarter, attributable to robust organic growth in specialty pharmacy services. The figure was higher than the Zacks Consensus Estimate of $33.9 billion.

Adjusted operating income on a pre-tax basis came in at $1.5 billion, which grew 4% year over year. The improvement came on the back of steady affordability improvements coupled with solid specialty pharmacy and specialty distribution businesses.

Cigna Healthcare: The segment reported adjusted revenues of $11.3 billion, which increased 4% year over year in the quarter under review. Higher specialty contributions, increase in premiums aimed to make up for underlying cost trends and a growing U.S. Commercial customer base contributed to the growth.

On a pre-tax basis, adjusted operating income climbed 18% year over year to $1.2 billion, thanks to a lower medical care ratio (“MCR”) and improved specialty contributions.

MCR came in at 80.7% at the end of the second quarter, which improved 370 basis points (bps) year over year on the back of reduced direct COVID-19 costs and prudent execution of pricing and affordability initiatives within the U.S. Commercial business of Cigna.

Financial Position (as of Jun 30, 2022)

Cigna exited the second quarter with cash and cash equivalents of $4.4 billion, which plunged 13% from the 2021-end level. Total assets of $152.6 billion slid 1.5% from the level at the 2021-end.

Long-term debt dipped 0.5% from the 2021-end figure to $31 billion. Short-term debt amounted to $2.4 billion.

Shareholders’ equity of $45.9 billion fell 2.6% from the figure as of Dec 31, 2021.

During the six months ended Jun 30, 2022, net cash provided by operating activities increased more than four-fold from the prior-year comparable period to $3.3 billion.

Debt-to-capitalization ratio of 42.1% deteriorated 160 bps year over year in the quarter under review.

Share Repurchase Update

Cigna bought back 9.7 million shares of common stock worth around $2.3 billion till Jun 30, 2022. As part of the $3.5 billion Accelerated Share Repurchase Agreements announced this June, Cigna received 10.4 million shares of common stock as an initial delivery in July.

2022 Guidance Revised

Concurrent with the second-quarter results, Cigna updated the full-year outlook for some of its metrics.

Adjusted revenues are projected to be at a minimum of $178 billion, higher than the earlier projection of “at least $177 billion.” The revised guidance indicates growth of at least 2.2% from the 2021 reported figure.

Adjusted earnings per share (EPS) is currently predicted to be a minimum of $22.90, up from the previous outlook of “at least $22.60.” The updated guidance suggests a minimum growth of 11.9% from the 2021 reported figure.

CI estimates total medical customer growth of at least 8,00,000, while the prior view called for the metric to be “at least 7,25,000.”

MCR is anticipated within 81.5-82.5% for 2022, indicating an improvement from the earlier projection of 82-83.5%. Adjusted SG&A expense ratio is expected between 7.1% and 7.3%, which indicates deterioration from the earlier projection range of 6.9% to 7.3%.

Operating cash flows are projected to be a minimum of $8.5 billion, up from the previous outlook of “at least $8.25 billion.”

Long-Term Targets

Over the long term, Cigna anticipates to achieve revenue growth in the range of 6-8%, while average annual adjusted EPS growth is estimated to be within 10-13%.

Zacks Rank

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

Other Medical Sector Releases

Of the Medical sector players that have reported second-quarter results so far, the bottom lines of Humana Inc. (HUM - Free Report) , Centene Corporation (CNC - Free Report) and Universal Health Services, Inc. (UHS - Free Report) beat the Zacks Consensus Estimate.

Humana reported second-quarter 2022 adjusted earnings per share of $8.67, which outpaced the Zacks Consensus Estimate by 13%. The bottom line improved 26% year over year. Revenues of Humana amounted to $23.7 billion, which improved 15% year over year in the second quarter. The top line beat the consensus mark by 1.2%. Total premiums of HUM climbed 11.5% year over year in the quarter under review, while revenues from services increased nearly three-fold year over year.

Centene Corporation’s second-quarter 2022 adjusted earnings per share of $1.77 surpassed the Zacks Consensus Estimate by 2.3%. The bottom line increased from $1.25 per share a year ago. Total revenues of Centene rose 16% year over year to $35,936 million in the second quarter. The top line beat the consensus mark by 1.1%. While CNC’s revenues from Medicaid rose 8% year over year in the second quarter, revenues from Commercial and Medicare jumped 11% and 26%, respectively.

Universal Health reported second-quarter 2022 adjusted earnings of $2.20 per share, which outpaced the Zacks Consensus Estimate by 5.8%. However, the bottom line plunged 41.5% year over year. Net revenues of Universal Health grew 3.9% year over year to $3.3 billion in the second quarter. The top line beat the consensus mark by a whisker. UHS’s total operating costs of $3.1 billion escalated 12% year over year in the quarter under review.