Amid Unsettled Insurer Market, Cigna Posts Positive Q3 Results

The Bloomfield, Conn.-based health insurer Cigna reported better-than-expected earnings on Oct. 31, despite considerable instability among health insurers this year, and despite losses involved in its investment in VillageMD.

As the Hartford Business Journal’s David Krechevsky wrote on Oct. 31, “The Cigna Group on Thursday reported a nearly $740 million profit for the third quarter of 2024, despite an after-tax loss of $1 billion related to its investment in VillageMD. The Bloomfield-based healthcare and insurance company reported net income attributable to shareholders of $739 million, or $2.63 per share, down 52 percent from $1.55 billion, or $5.45 per share in the second quarter. The third-quarter results topped analysts’ expectations, according to Zacks Investment Research. Total revenues were $63.7 billion, up 5 percent from $60.5 billion in the second quarter.”

Further, Krechevsky wrote, “Year over year, revenues increased 30% from the third quarter of 2023, primarily driven by growth in Evernorth Health Services, the company said. Cigna invested $2.5 billion into VillageMD’s acquisition of Summit Health, stating at the time the investment was intended to grow its Evernorth portfolio of health services. In its earnings report, Cigna said it recorded a $1 billion, or $3.69-per-share, loss from that investment.”

Meanwhile, late in the afternoon on Thursday, Josh Nathan-Kazis and Brian Swint of Barron’s reported that “Cigna said third-quarter earnings per share were $7.51, compared with a FactSet analyst consensus of $7.23. Sales also were slightly better than anticipated, coming in at $63.7 billion versus consensus for $59.6 billion.” And, they reported, “The medical cost ratio, an important measure of how premiums are paid out to cover expenses—rose to 82.8 percent from 80.5 percent in the third quarter. Analysts had anticipated a medical cost ratio of 83 percent.”

Indeed, Nathan-Kazis and Swint wrote, “The results came at the tail end of the bumpiest managed-care earnings season in recent memory. Cigna’s solid performance in the quarter sets it apart as one of the handful of health insurers where all seems to be running somewhat smoothly in what’s been a very difficult year for the sector.” The results sent Cigna’s stock up 2 percent on Thursday. And they quoted Mizuho analyst Ann Hynes as stating in a note on Thursday that “We view this as a solid quarter.”

Additionally, Reuters’ Sriparna Roy wrote on Thursday that “Cigna projected 2025 profit growth of at least 10 percent on Thursday, after posting quarterly results that beat Wall Street expectations, driven by strong demand for its specialty drugs and new clients for its pharmacy benefit management unit. The company said it benefited from increased adoption of biosimilars, or less expensive close versions, of AbbVie's blockbuster arthritis drug Humira in the third quarter,” Roy wrote, adding that “The company in June started distributing Humira biosimilars at no out-of-pocket cost to patients using its specialty pharmacy, Accredo.”

What’s more, Roy wrote, Cigna “also expects to begin offering an interchangeable biosimilar to Johnson & Johnson's (JNJ.N), opens new tab big-selling psoriasis drug Stelara in 2025.” And, she noted, “Revenue for the Evernorth healthcare services unit, which includes Cigna's pharmacy benefit management business, rose 36% to $52.64 billion.”

Cigna said third-quarter earnings per share were $7.51, compared with a FactSet analyst consensus of $7.23. Sales also were slightly better than anticipated, coming in at $63.7 billion versus consensus for $59.6 billion. The medical cost ratio, an important measure of how premiums are paid out to cover expenses—rose to 82.8% from 80.5% in the third quarter. Analysts had anticipated a medical cost ratio of 83%.

These results were released against the backdrop of considerable instability among health insurance companies. As Barron’s Nathan-Kazis and Swint wrote, “The past few weeks have been marked by heart-stopping plunges, and a few startling surges, for shares of the country’s largest health insurers. UnitedHealth Group stock plummeted 8.1% when the company reported third-quarter earnings on Oct. 15, and Elevance Health shares fell 10.6% when it reported its results two days later. But shares of Centene jumped 4.2% after the insurer reported earnings on Oct. 25, and Humana stock climbed 3.3% Wednesday after that company issued results. Companies have been juggling cross-cutting trends, as what had seemed to be a simple story of higher-than-expected utilization rates seems to be fracturing. Some of these companies, however, seem to be moving through more smoothly than others,” they noted.

Back in May, Cigna announced that it had written off more than half of its multibillion-dollar investment in VillageMD amid the declining value of the primary care chain. Cigna invested $2.5 billion into VillageMD in late 2022, with the goal of accelerating value-based care arrangements for employer clients by tying VillageMD’s physician network with Cigna’s health services business, Evernorth — hopefully reaping profits from shared savings as a result. But on May 2, as Healthcare Dive’s Rebecca Pifer reported on that date, Cigna” wrote off $1.8 billion of that investment, citing VillageMD’s lackluster growth after its majority owner Walgreens elected to close underperforming clinics.”