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At its recently held 2024 Investor Day, The Cigna Group (CI - Free Report) laid an update on its growth strategies as well as came up with a new array of innovative solutions to deal with the headwinds prevailing in the healthcare industry.
Management currently aims to achieve long-term average annual adjusted earnings per share (EPS) growth within 10-14%, up from the prior growth target of 10-13%. An upped long-term view reflects the confidence of Cigna about the performance of its two growth platforms, which are Evernorth Health Services and Cigna Healthcare. A solid financial position may also provide a cushion for the health insurer to pursue business investments. Over the next five years, management expects CI to generate operating cash flows of around $60 billion.
Evernorth remains well-poised for growth on the back of strength in pharmacy benefits, specialty and care services businesses and therefore, is projected to record long-term average annual adjusted income growth between 5% and 8%. Average margins for the unit are anticipated to stay within 3.5-4.5% over the long term.
Meanwhile, Cigna estimates long-term average annual adjusted income growth within 7-10% in the Cigna Healthcare unit, attributable to expanding U.S. Employer, Individual and Family Plans, and International Health businesses. Long-term average margins are forecasted to remain in the 10.5-11.5% band for the segment.
In addition to this, management reiterated its outlook for 2024 adjusted EPS to be a minimum of $28.25, suggesting growth of at least 12.6% from the 2023 reported figure of $25.09. Adjusted revenues continue to be forecasted at a minimum of $235 billion in 2024, which indicates an improvement of at least 20.3% from the 2023 figure of $195.3 billion. The pharmacy benefit services business is likely to win 270 new clients in 2024.
Concurrently, the Evernorth business unveiled EncircleRx, a data-driven solution that acts as a financial guarantee for interested employers and health plans, and enables them to better manage the escalating GLP-1 expenses. This industry-first offering provides clients with access to the insights and clinical prowess of Evernorth and subsequently, eligible patients are enrolled in a clinically proven lifestyle modification program. As part of the program, behavioral change assistance will be extended by an Omada Health care team and patients can achieve their desired health outcomes, whether it is to lose weight, control diabetes and minimize cardiovascular comorbidities.
Also, the Evernorth unit introduced a behavioral health practice, Evernorth Behavioral Care Group, that provides enhanced value-based care to patients. Within 72 hours of scheduling, an in-person or online appointment is assured to patients. The newly formed group establishes seamless communication between behavioral health clinicians and payers, thereby minimizing the administrative workload. It has commenced seeing patients across specific states, with plans to increase the numbers by 2025.
The same unit of Cigna also disclosed plans to make a Humira biosimilar carrying no out-of-pocket costs available to the eligible patients of Evernorth’s specialty pharmacy offering, Accredo, in late 2024. The addition of cost-effective and clinically effective biosimilars within the formulary reflects Cigna’s focus to generate cost savings for its clients and lure more customers into buying prescription medications from the pharmacy network of CI. This, in turn, is expected to grow its pharmacy revenues, which account for the most significant chunk of Cigna’s overall top line. The revenue component advanced 7% year over year in 2023.
Shares of Cigna have gained 26% in the past year compared with the industry’s 4.5% growth. CI currently carries a Zacks Rank #2 (Buy).
DaVita’s earnings surpassed estimates in each of the last four quarters, the average surprise being 35.57%. The Zacks Consensus Estimate for DVA’s 2024 earnings indicates a 5.9% rise, while the consensus mark for revenues suggests an improvement of 2.7% from the respective year-ago actuals. The consensus mark for DVA’s 2024 earnings has moved 6% north in the past 30 days.
The bottom line of HCA Healthcare outpaced estimates in three of the trailing four quarters and missed the mark once, the average surprise being 9.78%. The Zacks Consensus Estimate for HCA’s 2024 earnings indicates a 7.8% rise, while the consensus mark for revenues suggests an improvement of 6.2% from the respective year-ago actuals. The consensus mark for HCA’s 2024 earnings has moved 0.9% north in the past 30 days.
Medpace’s earnings surpassed estimates in each of the last four quarters, the average surprise being 12.42%. The Zacks Consensus Estimate for MEDP’s 2024 earnings indicates a 19.1% rise, while the consensus mark for revenues suggests an improvement of 15.9% from the respective year-ago actuals. The consensus mark for MEDP’s 2024 earnings has moved 5.3% north in the past 30 days.
Shares of DaVita, HCA Healthcare and Medpace have gained 79%, 28.8% and 117.9%, respectively, in the past year.
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Cigna (CI) Unveils Updated Long-Term Growth Targets & Solutions
At its recently held 2024 Investor Day, The Cigna Group (CI - Free Report) laid an update on its growth strategies as well as came up with a new array of innovative solutions to deal with the headwinds prevailing in the healthcare industry.
Management currently aims to achieve long-term average annual adjusted earnings per share (EPS) growth within 10-14%, up from the prior growth target of 10-13%. An upped long-term view reflects the confidence of Cigna about the performance of its two growth platforms, which are Evernorth Health Services and Cigna Healthcare. A solid financial position may also provide a cushion for the health insurer to pursue business investments. Over the next five years, management expects CI to generate operating cash flows of around $60 billion.
Evernorth remains well-poised for growth on the back of strength in pharmacy benefits, specialty and care services businesses and therefore, is projected to record long-term average annual adjusted income growth between 5% and 8%. Average margins for the unit are anticipated to stay within 3.5-4.5% over the long term.
Meanwhile, Cigna estimates long-term average annual adjusted income growth within 7-10% in the Cigna Healthcare unit, attributable to expanding U.S. Employer, Individual and Family Plans, and International Health businesses. Long-term average margins are forecasted to remain in the 10.5-11.5% band for the segment.
In addition to this, management reiterated its outlook for 2024 adjusted EPS to be a minimum of $28.25, suggesting growth of at least 12.6% from the 2023 reported figure of $25.09. Adjusted revenues continue to be forecasted at a minimum of $235 billion in 2024, which indicates an improvement of at least 20.3% from the 2023 figure of $195.3 billion. The pharmacy benefit services business is likely to win 270 new clients in 2024.
Concurrently, the Evernorth business unveiled EncircleRx, a data-driven solution that acts as a financial guarantee for interested employers and health plans, and enables them to better manage the escalating GLP-1 expenses. This industry-first offering provides clients with access to the insights and clinical prowess of Evernorth and subsequently, eligible patients are enrolled in a clinically proven lifestyle modification program. As part of the program, behavioral change assistance will be extended by an Omada Health care team and patients can achieve their desired health outcomes, whether it is to lose weight, control diabetes and minimize cardiovascular comorbidities.
Also, the Evernorth unit introduced a behavioral health practice, Evernorth Behavioral Care Group, that provides enhanced value-based care to patients. Within 72 hours of scheduling, an in-person or online appointment is assured to patients. The newly formed group establishes seamless communication between behavioral health clinicians and payers, thereby minimizing the administrative workload. It has commenced seeing patients across specific states, with plans to increase the numbers by 2025.
The same unit of Cigna also disclosed plans to make a Humira biosimilar carrying no out-of-pocket costs available to the eligible patients of Evernorth’s specialty pharmacy offering, Accredo, in late 2024. The addition of cost-effective and clinically effective biosimilars within the formulary reflects Cigna’s focus to generate cost savings for its clients and lure more customers into buying prescription medications from the pharmacy network of CI. This, in turn, is expected to grow its pharmacy revenues, which account for the most significant chunk of Cigna’s overall top line. The revenue component advanced 7% year over year in 2023.
Shares of Cigna have gained 26% in the past year compared with the industry’s 4.5% growth. CI currently carries a Zacks Rank #2 (Buy).
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other top-ranked stocks in the Medical space are DaVita Inc. (DVA - Free Report) , HCA Healthcare, Inc. (HCA - Free Report) and Medpace Holdings, Inc. (MEDP - Free Report) . Each of these companies currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s earnings surpassed estimates in each of the last four quarters, the average surprise being 35.57%. The Zacks Consensus Estimate for DVA’s 2024 earnings indicates a 5.9% rise, while the consensus mark for revenues suggests an improvement of 2.7% from the respective year-ago actuals. The consensus mark for DVA’s 2024 earnings has moved 6% north in the past 30 days.
The bottom line of HCA Healthcare outpaced estimates in three of the trailing four quarters and missed the mark once, the average surprise being 9.78%. The Zacks Consensus Estimate for HCA’s 2024 earnings indicates a 7.8% rise, while the consensus mark for revenues suggests an improvement of 6.2% from the respective year-ago actuals. The consensus mark for HCA’s 2024 earnings has moved 0.9% north in the past 30 days.
Medpace’s earnings surpassed estimates in each of the last four quarters, the average surprise being 12.42%. The Zacks Consensus Estimate for MEDP’s 2024 earnings indicates a 19.1% rise, while the consensus mark for revenues suggests an improvement of 15.9% from the respective year-ago actuals. The consensus mark for MEDP’s 2024 earnings has moved 5.3% north in the past 30 days.
Shares of DaVita, HCA Healthcare and Medpace have gained 79%, 28.8% and 117.9%, respectively, in the past year.