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Cigna Q1 Earnings Top on Higher Enrollment, 2018 View Up

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Cigna Corp. (CI - Free Report) came up with adjusted earnings per share of $4.11 in first-quarter 2018, beating the Zacks Consensus Estimate of $3.37. Also, earnings grew 48% year over year. Better-than-expected earnings were primarily driven by revenue growth.

Cigna posted revenues of $11.4 billion, which surpassed the Zacks Consensus Estimate of $11 billion.  Revenues grew 9% year over year, led by strong business growth in Cigna's Commercial Healthcare and Global Supplemental Benefits segments.

Premiums were up 10.4% year over year to $9 billion, while fees increased 8.4% to $1.35 billion.

The company’s medical enrollment grew by 327,000 lives to 16.2 million customers driven by growth in Select, Individual and Middle Market segments.

Total benefits and expenses of $10.16 billion increased 6% year over year, led by higher global health care medical cost and operating expenses.

Strong Segment Performance

Global Health Care: Operating revenues of $9.09 billion were up 9.7% year over year led by continued strong performance of the company’s Commercial Employer business in its targeted markets.

Adjusted operating earnings were $871 million, up 42.8% year over year due to strong medical cost performance, a lower tax rate and favorable prior year reserve development.

Global Supplemental Benefits: Operating revenues of $1.10 billion were up 21% year over year, reflecting continued business growth and favorable foreign currency effect.

Adjusted operating income increased 51.4% year over year to $112 million, reflecting business growth and gains from expense management.

Global Disability and Life: Operating revenues of $1.12 billion were down 0.4% year over year as premium growth from disability and other was offset by lower premium in Life business.

Adjusted operating income declined 1.5% year over year to $67 million, due to an increase in life insurance claims.

Financial Position

Cigna’s cash and marketable investments were of $2.77 billion as of Mar 31, 2018, down from $2.97 billion as of Dec 31, 2017.

Long-term debt was $5.2 billion as of Mar 31, 2018, almost unchanged from the Dec 31, 2017 level.

2018 Guidance Raised

For 2018, the company expects to earn in the range of $12.85 and $13.25, up from the previous outlook range of $12.40 and $12.90, on a per share basis. Total revenue growth (kept unchanged) is expected to grow in the range of 7% to 8% and medical customers are projected to grow by 0.4 million to 0.5 million lives, from the previous estimate of 0.3 million to 0.5 million.

Our Take

Cigna’s results reflect its strong market positioning in a competitive market. The company is on track to buy Express Scripts, which should raise its rank in the health insurance industry and equip it better to face stiff competition. Synergies from the acquisition should buoy the company's long-term growth potential. Its robust Global Supplemental business, growing Government business and increasing membership, and strong capital position are the other positives. A strong outlook for 2018 reflects its business strength.

Zacks Rank and Other Releases

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

Other health insurers UnitedHealth Group Inc. (UNH - Free Report) , Anthem Inc. (ANTM - Free Report) and Aetna Inc. (AET - Free Report) beat estimates in the first quarter by 4.11%, 12% and 7.4%, respectively.

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