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Can High Benefits and Expenses Affect Cigna (CI) Q3 Earnings?
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The Cigna Group (CI - Free Report) is set to report its third-quarter 2023 results on Nov 2, before the opening bell. Increased pharmacy revenues and net investment income in the quarter are likely to be undone by higher benefits and expenses.
Where Do the Estimates Stand?
The Zacks Consensus Estimate for third-quarter earnings per share of $6.66 suggests a 10.3% increase from the prior-year figure of $6.04. The consensus mark remained stable over the past week. The consensus estimate for third-quarter revenues of $48 billion indicates a 5.7% increase from the year-ago reported figure.
Cigna beat the consensus estimate for earnings in all the prior four quarters, with the average being 3.6%. This is depicted in the graph below:
Before we get into what to expect for the to-be-reported quarter in detail, it’s worth taking a look at CI’s previous-quarter performance first.
Q2 Earnings Rewind
In the last reported quarter, the global health company’s adjusted earnings per share of $6.13 beat the Zacks Consensus Estimate by 2.5%, primarily on the solid performance of the Evernorth Health Services and Cigna Healthcare businesses, partially offset by an elevated expense level.
Now, let’s see how things have shaped up before the third-quarter earnings announcement.
Q3 Factors to Note
The anticipated improved performances in Cigna's Evernorth and Cigna Healthcare segments are poised to be significant contributors to the company's upcoming quarterly results. The company is expected to have gained from an expanding customer base and the growth in specialty pharmacy services during the third quarter.
Both the Zacks Consensus Estimate and our model estimate for pharmacy revenues suggest a nearly 4% rise from the year-ago quarter’s actuals. Also, the consensus mark for fees and other revenues indicates 22.8% year-over-year growth, whereas our estimate suggests an almost 15% increase.
The consensus mark for Evernorth’s revenues indicates a 7.7% year-over-year jump. The Zacks Consensus Estimate for total medical customers signals an 8.4% increase from the year-ago period’s reported number, whereas our estimate suggests 7.9% growth.
The Zacks Consensus Estimate for net investment income implies 26.5% growth from the year-ago period. The factors stated above are likely to have positioned the company for year-over-year growth in the third quarter.
However, our estimate for the third quarter medical care ratio suggests a 90 basis points year-over-year deterioration. Also, we expect total Benefits and Expenses in the quarter to have increased 5.2% year over year due to higher pharmacy and other service costs, medical costs and other benefit expenses, partially offsetting the positives and making an earnings beat uncertain.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Cigna this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: The company’s Earnings ESP is 0.00%. This is because the Most Accurate Estimate currently stands at $6.66 per share, in line with the Zacks Consensus Estimate.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Cigna currently carries a Zacks Rank #3.
Stocks to Consider
While an earnings beat looks uncertain for Cigna, here are some companies from the broader Medical space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
The Zacks Consensus Estimate for Apellis’ earnings per share for the to-be-reported quarter indicates a 50.9% year-over-year improvement. APLS beat earnings estimates twice in the past four quarters and missed on two occasions, the average surprise being 1.4%.
AstraZeneca PLC (AZN - Free Report) has an Earnings ESP of +0.63% and a Zacks Rank #3.
The Zacks Consensus Estimate for AstraZeneca’s bottom line for the to-be-reported quarter is pegged at 79 cents per share. AZN beat earnings estimates in each of the past four quarters, the average surprise being 8.4%. The consensus mark for its revenues predicts a 4.6% year-over-year growth.
Jazz Pharmaceuticals plc (JAZZ - Free Report) has an Earnings ESP of +0.72% and is a Zacks #2 Ranked player.
The Zacks Consensus Estimate for Jazz Pharmaceuticals’ bottom line for the to-be-reported quarter of $4.85 per share has remained stable over the past week. The consensus mark for JAZZ’s revenues is pegged at $970.5 million, signaling 3.2% year-over-year growth.
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Can High Benefits and Expenses Affect Cigna (CI) Q3 Earnings?
The Cigna Group (CI - Free Report) is set to report its third-quarter 2023 results on Nov 2, before the opening bell. Increased pharmacy revenues and net investment income in the quarter are likely to be undone by higher benefits and expenses.
Where Do the Estimates Stand?
The Zacks Consensus Estimate for third-quarter earnings per share of $6.66 suggests a 10.3% increase from the prior-year figure of $6.04. The consensus mark remained stable over the past week. The consensus estimate for third-quarter revenues of $48 billion indicates a 5.7% increase from the year-ago reported figure.
Cigna beat the consensus estimate for earnings in all the prior four quarters, with the average being 3.6%. This is depicted in the graph below:
Cigna Group Price and EPS Surprise
Cigna Group price-eps-surprise | Cigna Group Quote
Before we get into what to expect for the to-be-reported quarter in detail, it’s worth taking a look at CI’s previous-quarter performance first.
Q2 Earnings Rewind
In the last reported quarter, the global health company’s adjusted earnings per share of $6.13 beat the Zacks Consensus Estimate by 2.5%, primarily on the solid performance of the Evernorth Health Services and Cigna Healthcare businesses, partially offset by an elevated expense level.
Now, let’s see how things have shaped up before the third-quarter earnings announcement.
Q3 Factors to Note
The anticipated improved performances in Cigna's Evernorth and Cigna Healthcare segments are poised to be significant contributors to the company's upcoming quarterly results. The company is expected to have gained from an expanding customer base and the growth in specialty pharmacy services during the third quarter.
Both the Zacks Consensus Estimate and our model estimate for pharmacy revenues suggest a nearly 4% rise from the year-ago quarter’s actuals. Also, the consensus mark for fees and other revenues indicates 22.8% year-over-year growth, whereas our estimate suggests an almost 15% increase.
The consensus mark for Evernorth’s revenues indicates a 7.7% year-over-year jump. The Zacks Consensus Estimate for total medical customers signals an 8.4% increase from the year-ago period’s reported number, whereas our estimate suggests 7.9% growth.
The Zacks Consensus Estimate for net investment income implies 26.5% growth from the year-ago period. The factors stated above are likely to have positioned the company for year-over-year growth in the third quarter.
However, our estimate for the third quarter medical care ratio suggests a 90 basis points year-over-year deterioration. Also, we expect total Benefits and Expenses in the quarter to have increased 5.2% year over year due to higher pharmacy and other service costs, medical costs and other benefit expenses, partially offsetting the positives and making an earnings beat uncertain.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Cigna this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: The company’s Earnings ESP is 0.00%. This is because the Most Accurate Estimate currently stands at $6.66 per share, in line with the Zacks Consensus Estimate.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Cigna currently carries a Zacks Rank #3.
Stocks to Consider
While an earnings beat looks uncertain for Cigna, here are some companies from the broader Medical space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
Apellis Pharmaceuticals, Inc. (APLS - Free Report) has an Earnings ESP of +3.42% and is a Zacks #2 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Apellis’ earnings per share for the to-be-reported quarter indicates a 50.9% year-over-year improvement. APLS beat earnings estimates twice in the past four quarters and missed on two occasions, the average surprise being 1.4%.
AstraZeneca PLC (AZN - Free Report) has an Earnings ESP of +0.63% and a Zacks Rank #3.
The Zacks Consensus Estimate for AstraZeneca’s bottom line for the to-be-reported quarter is pegged at 79 cents per share. AZN beat earnings estimates in each of the past four quarters, the average surprise being 8.4%. The consensus mark for its revenues predicts a 4.6% year-over-year growth.
Jazz Pharmaceuticals plc (JAZZ - Free Report) has an Earnings ESP of +0.72% and is a Zacks #2 Ranked player.
The Zacks Consensus Estimate for Jazz Pharmaceuticals’ bottom line for the to-be-reported quarter of $4.85 per share has remained stable over the past week. The consensus mark for JAZZ’s revenues is pegged at $970.5 million, signaling 3.2% year-over-year growth.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.