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Cigna (CI) Narrows 2016 Guidance After Q2 Earnings Miss
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Cigna Corp. (CI - Free Report) reported second-quarter 2016 operating net earnings of $1.98 per share that significantly missed the Zacks Consensus Estimate of $2.39. Also, earnings declined 22.3% year over year. The earnings decline stemmed from poor performance by the company’s Global Disability and Life segment which sustained an operating loss due to poor life claims experience and the impact of modifications to the disability claims management process implemented in the previous quarter.
However, revenues of $9.89 billion surpassed the Zacks Consensus Estimate of $9.78 billion. Revenues also grew 4.5% year over year. Higher contribution from its segments, namely Global Health Care, Global Supplemental Benefits and Group Disability and Life, drove the upside.
Cigna's global medical customers were 15.1 million, up 2.5% from 14.8 million members in the year-ago quarter. The improvement was driven by organic growth in the Middle Market, Medicare Advantage and Select segments.
Premiums of $7.7 billion increased 3% year over year. All the segments of the company registered premium growth.
Quarterly Review by Segment
Premiums and fees from the Global Health Care segment increased 3.1% year over year to $6.9 billion. Customer growth, specialty contributions and rate actions in the company’s Commercial employer group drove the upside. However, the increase was partially offset by a lesser number of Medicare Part D and Individual customers. Operating earnings were $486 million, down 8% year over year due to strong contributions from Commercial employer, Government and specialty businesses. The company expects adjusted income from operations in the range of $1.9 billion to $1.93 billion for the segment.
Premiums and fees from Cigna's Global Supplemental Benefits climbed 6.8% year over year to $800 million on the back of strong new sales in the company’s target markets. Operating income increased 7.8% year over year to $83 million. The company expects adjusted income from operations in the range of $255 million to $275 million for the segment.
The Global Disability and Life segment’s premiums and fees also increased 3% year over year to $1.0 billion, primarily driven by consistent strong persistency and new sales. However, the segment posted operating loss of $12 million against operating profit of $106 million in the year-ago quarter. The loss was an impact of modifications to the company’s disability claims management process implemented in the first quarter and a poor life claims experience. For 2016, adjusted income from operations is expected in the range of $40 million to $80 million for the segment.
2016 Guidance
For 2016, Cigna expects earnings per share of $7.75–$8.10, down from the earlier guidance of $8.95–$9.35 per share. The company projects mid-single-digit percentage growth in revenues, while the number of global medical customers are projected to increase in low single digits.
Zacks Rank & Performance of Other Multi Line Insurers
Currently, Cigna carries a Zacks Rank #3 (Hold). Among the other multi line insurers that have reported their second-quarter earnings results so far, the bottom line at Anthem Inc. , Centene Corp. (CNC - Free Report) and UnitedHealth Group Inc. (UNH - Free Report) beat their Zack Consensus Estimate.
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Cigna (CI) Narrows 2016 Guidance After Q2 Earnings Miss
Cigna Corp. (CI - Free Report) reported second-quarter 2016 operating net earnings of $1.98 per share that significantly missed the Zacks Consensus Estimate of $2.39. Also, earnings declined 22.3% year over year. The earnings decline stemmed from poor performance by the company’s Global Disability and Life segment which sustained an operating loss due to poor life claims experience and the impact of modifications to the disability claims management process implemented in the previous quarter.
However, revenues of $9.89 billion surpassed the Zacks Consensus Estimate of $9.78 billion. Revenues also grew 4.5% year over year. Higher contribution from its segments, namely Global Health Care, Global Supplemental Benefits and Group Disability and Life, drove the upside.
Cigna's global medical customers were 15.1 million, up 2.5% from 14.8 million members in the year-ago quarter. The improvement was driven by organic growth in the Middle Market, Medicare Advantage and Select segments.
Premiums of $7.7 billion increased 3% year over year. All the segments of the company registered premium growth.
Quarterly Review by Segment
Premiums and fees from the Global Health Care segment increased 3.1% year over year to $6.9 billion. Customer growth, specialty contributions and rate actions in the company’s Commercial employer group drove the upside. However, the increase was partially offset by a lesser number of Medicare Part D and Individual customers. Operating earnings were $486 million, down 8% year over year due to strong contributions from Commercial employer, Government and specialty businesses. The company expects adjusted income from operations in the range of $1.9 billion to $1.93 billion for the segment.
Premiums and fees from Cigna's Global Supplemental Benefits climbed 6.8% year over year to $800 million on the back of strong new sales in the company’s target markets. Operating income increased 7.8% year over year to $83 million. The company expects adjusted income from operations in the range of $255 million to $275 million for the segment.
The Global Disability and Life segment’s premiums and fees also increased 3% year over year to $1.0 billion, primarily driven by consistent strong persistency and new sales. However, the segment posted operating loss of $12 million against operating profit of $106 million in the year-ago quarter. The loss was an impact of modifications to the company’s disability claims management process implemented in the first quarter and a poor life claims experience. For 2016, adjusted income from operations is expected in the range of $40 million to $80 million for the segment.
2016 Guidance
For 2016, Cigna expects earnings per share of $7.75–$8.10, down from the earlier guidance of $8.95–$9.35 per share. The company projects mid-single-digit percentage growth in revenues, while the number of global medical customers are projected to increase in low single digits.
CIGNA CORP Price, Consensus and EPS Surprise
CIGNA CORP Price, Consensus and EPS Surprise | CIGNA CORP Quote
Zacks Rank & Performance of Other Multi Line Insurers
Currently, Cigna carries a Zacks Rank #3 (Hold). Among the other multi line insurers that have reported their second-quarter earnings results so far, the bottom line at Anthem Inc. , Centene Corp. (CNC - Free Report) and UnitedHealth Group Inc. (UNH - Free Report) beat their Zack Consensus Estimate.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>