Cigna’s Stock Skyrockets from 11-month Low: Profits Soar, Revenue Surpasses Expectations, & Outlook Rises!

Cigna Group, a global health services organization, experienced a 0.5% increase in premarket trading in early August 2022 after the healthcare insurer reported better-than-expected profits and revenues, and raised its full-year outlook. This positive news comes despite a decline in total customer relationships. The company’s shares had previously endured an 11-month low in their closing price.

In its latest financial report, Cigna Group revealed that net income rose to $1.27 billion, equivalent to $4.24 per share. This is a significant increase from the $1.20 billion or $3.73 per share that was reported in the same period of the previous year. Moreover, when nonrecurring items are excluded, the adjusted earnings per share (EPS) amount to $5.41, surpassing the FactSet consensus of $5.26.

Cigna’s revenue also grew by 5.7% to reach $46.52 billion, which is markedly above the FactSet consensus of $45.59 billion. A primary driver of this growth was the increase in pharmacy revenue, which climbed by 4.7% to $32.14 billion. This, in turn, was attributed to higher fill rates for Medicare Part D customers and the larger number of specialty prescriptions. The health services segment contributed to the company’s revenue growth as well, with a 4.9% increase amounting to $33.14 billion, fueled by the performance of Evernorth and a $2.88 billion boost from the company’s international markets and Medicare Part D operations.

On the other hand, Cigna’s medical customer relationships declined by 0.3% to 17.04 million, which was attributed to a decrease in commercial customers as employers continue to face challenges posed by the COVID-19 pandemic. Meanwhile, in the integrated medical and Medicare Advantage categories, the insurer experienced a more moderate decline in customers. The company believes that, as the pandemic continues to impact commercial customers, this decline in demand for insurance plans may persist. Nevertheless, Cigna’s international revenue increased by 4.4% to $4.37 billion, but this growth was partially offset by a decline in group disability and life revenues, which fell by 3.3% to $1.42 billion in the second quarter.

Despite these downward trends, Cigna remains optimistic and has raised its full-year 2022 outlook for adjusted income from operations to reflect the strong results in the first half of the year. The insurance company now expects an adjusted income from operations per share of $22.90 to $23.30, an increase from the previous range of $22.70 to $23.10. It has also projected total revenue growth of nearly 5% in 2022, with an adjusted EPS of $7.55 to $7.65.

Cigna’s adjusted EPS projection is mainly due to the company’s strong performance in the health services segment, particularly Evernorth. The healthcare insurer also credits its ongoing investment in pharmacy solutions for the elderly and the launch of high-value virtual care platforms, such as the acquisition of MDLive. Moreover, Cigna has been able to better serve its diverse customer base by expanding in key growth areas like Medicare, Medicaid, and international markets.

Another factor contributing to the company’s optimistic outlook is the significant progress made in promoting vaccinations, which has in turn led to a decline in COVID-19 cases and a reduction in COVID-19-related costs. The pandemic, however, continues to impact customer behavior, with a higher demand for insurance products related to older age groups and ongoing disruptions in care provisions for various health conditions. As such, Cigna Group continues to identify and address the emerging needs of its clients amid the uncertainties surrounding the pandemic.

In summary, though Cigna Group faces challenges in the midst of the ongoing COVID-19 pandemic, the company remains steadfast in its commitment to offering high-quality healthcare services to its customers. Its improved financial performance, driven by increased profitability and growth in key sectors, has allowed it to bounce back from its recent lows in share prices. Therefore, by raising its full-year outlook for 2022, the multinational health services organization showcases optimism for its future growth potential.


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