Advertisement
Australia markets closed
  • ALL ORDS

    8,153.70
    +80.10 (+0.99%)
     
  • ASX 200

    7,896.90
    +77.30 (+0.99%)
     
  • AUD/USD

    0.6510
    -0.0008 (-0.13%)
     
  • OIL

    83.11
    -0.06 (-0.07%)
     
  • GOLD

    2,254.80
    +16.40 (+0.73%)
     
  • Bitcoin AUD

    107,920.28
    +799.94 (+0.75%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • AUD/EUR

    0.6038
    +0.0004 (+0.06%)
     
  • AUD/NZD

    1.0901
    -0.0001 (-0.01%)
     
  • NZX 50

    12,105.29
    +94.63 (+0.79%)
     
  • NASDAQ

    18,254.69
    -26.15 (-0.14%)
     
  • FTSE

    7,952.62
    +20.64 (+0.26%)
     
  • Dow Jones

    39,807.37
    +47.29 (+0.12%)
     
  • DAX

    18,492.49
    +15.40 (+0.08%)
     
  • Hang Seng

    16,541.42
    +148.58 (+0.91%)
     
  • NIKKEI 225

    40,382.15
    +214.08 (+0.53%)
     

Cigna (CI) Q1 Earnings Surpass Estimates, Ups '23 EPS View

The Cigna Group CI reported first-quarter 2023 adjusted earnings of $5.41 per share, which beat the Zacks Consensus Estimate by 3.4% but fell short of our estimate of earnings of $5.43 per share. The bottom line declined 10.7% year over year.

Adjusted revenues of $46,479 million improved 5% year over year in the quarter under review on the back of solid performances of Evernorth Health Services and Cigna Healthcare businesses. The top line outpaced the consensus mark by 2.1%.

The quarterly results also gained due to an expanding medical customer base and declining COVID costs.

The medical customer base of Cigna advanced 8% year over year to 19.5 million as of Mar 31, 2023. This was due to increased fee-based clients as well as higher Individual and Medicare Advantage customers. The reported figure surpassed the Zacks Consensus Estimate of 18.9 million and our estimate of 18.8 million.

ADVERTISEMENT

Total benefits and expenses of $11,618 million escalated 15% year over year in the quarter under review. The adjusted selling, general and administrative (SG&A) expense ratio deteriorated 30 basis points (bps) year over year to 7.6%.

The Cigna Group Price, Consensus and EPS Surprise

 

Cigna Group Price, Consensus and EPS Surprise
Cigna Group Price, Consensus and EPS Surprise

The Cigna Group price-consensus-eps-surprise-chart | The Cigna Group Quote

 

Segmental Update

In February 2023, Cigna announced the rebranding of its segments. Evernorth, renamed Evernorth Health Services, performs the role of the pharmacy, care and benefits solutions provider of CI. Cigna Healthcare assumes the part of the health benefits provider of the company through which it will cater to customers and clients via the U.S. Commercial, U.S. Government and International Health businesses.

Evernorth Health Services: The segment reported adjusted revenues of $36,179 million in the first quarter, which rose 8% year over year. This can be attributed to solid organic growth in specialty pharmacy services and, care delivery and management solutions.

Adjusted operating income on a pretax basis inched up 1% year over year to $1,320 million and came higher than the Zacks Consensus Estimate of $1,244 million. The metric benefited on the back of specialty pharmacy revenues.

Cigna Healthcare: Adjusted revenues of the segment amounted to $12,718 million, which climbed 12% year over year in the quarter under review, thanks to the growing customer base in U.S. Government and U.S. Commercial businesses coupled with higher specialty contributions.

The segment’s adjusted operating income on a pretax basis came in at $1,115 million, which decreased 14% year over year but surpassed the consensus mark of $1,062 million. The metric was hurt due to an elevated adjusted expense ratio and reduced net investment income.

The segment’s medical care ratio (MCR) improved 20 bps year over year to 81.3% at the first-quarter end on the back of prudent pricing actions and favorable cost trends.

Financial Position (as of Mar 31, 2023)

Cigna exited the first quarter with cash and cash equivalents of $7,935 million, which advanced 33.9% from the figure at 2022 end. Total assets of $148 billion increased 2.8% from the 2022-end level.

Long-term debt amounted to $29,124 million, up 3.6% from the figure as of Dec 31, 2022. Short-term debt amounted to $3,418 million.

Shareholders’ equity of $44,502 million dipped 0.4% from the 2022-end level.

In the reported quarter, net cash provided by operating activities amounted to $5,028 million, which increased nearly three-fold year over year.

Debt-to-capitalization ratio deteriorated 130 bps year over year to 42.2% at the first-quarter end.

Share Repurchase Update

From Jan 1, 2023 till May 4, 2023, Cigna bought back 3.7 million shares of common stock worth around $1.1 billion.

2023 Guidance Updated

Concurrent with first-quarter results, management revised full-year guidance with respect to certain metrics.

Adjusted revenues are estimated at a minimum of $188 billion, up from the prior view of “at least $187 billion". The updated outlook indicates a minimum improvement of 4.1% from the 2022 figure.

Adjusted operating income is forecasted to be a minimum of $7,360 million in 2023, up from the previous guidance of “at least $7,330 million.”

Adjusted earnings per share are anticipated to be a minimum of $24.70, higher than the earlier view of “at least $24.60.” The revised outlook implies minimum growth of 6.1% from the 2022 figure.

CI projects total medical customer growth of a minimum of 1,300,000 this year, while the prior outlook called for the metric to grow “at least 1,200,000.”

MCR is expected within the 81.5-82.3% band for 2023, compared with the previous view of 81.5-82.5%. The adjusted SG&A expense ratio is anticipated at roughly 7.3%.

Adjusted operating income on a pretax basis for the Evernorth Health Services segment is forecasted at a minimum of $6,400 million. Meanwhile, the same for the Cigna Healthcare unit is estimated to be a minimum of $4,425 million, up from the prior view of "at least $4,400 million".

Operating cash flow is projected to be a minimum of $9,000 million. Earlier, capital expenditures were expected at around $1,400 million.

Long-Term Targets Reaffirmed

Cigna expects to achieve average annual adjusted earnings per share growth within 10-13% in the long term.

Over the 2022-2026 period, management expects CI to generate operating cash flows of roughly $50 billion.

Zacks Rank

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

Other Medical Sector Releases

Of the Medical sector players that have reported first-quarter 2023 results so far, the bottom-line results of Elevance Health, Inc. ELV, HCA Healthcare, Inc. HCA and Abbott Laboratories ABT beat the respective Zacks Consensus Estimate.

Elevance Health’s first-quarter 2023 earnings of $9.46 per share beat the Zacks Consensus Estimate of earnings of $9.26 per share and our estimate of earnings of $9.22 per share. Additionally, the bottom line advanced 15.5% year over year. ELV’s operating revenues improved 10.6% year over year to $41,898 million in the quarter under review. The top line beat the consensus mark by 2.5% and came higher than our estimate of $40,766.5 million. Medical membership of Elevance Health, as of Mar 31, 2023, totaled 48.1 million, which rose 2.9% year over year in the first quarter.

HCA Healthcare’s first-quarter 2023 adjusted earnings of $4.93 per share surpassed the Zacks Consensus Estimate by 23.6%. Also, the bottom line climbed 19.7% year over year. HCA’s revenues advanced 4.3% year over year to $15.6 billion. The top line beat the consensus mark by 2% and our estimate of $15.2 billion. While same-facility equivalent admissions rose 7.5% year over year in the first quarter, same-facility admissions improved 4.4% year over year.

Abbott Laboratories reported first-quarter 2023 adjusted earnings of $1.03 per share, which exceeded the Zacks Consensus Estimate by 5.1%. The adjusted figure declined from the prior-year quarter’s levels by 40.5%. First-quarter worldwide sales of $9.74 billion were down 18.1% year over year on a reported basis. The top line exceeded the Zacks Consensus Estimate by 1.1%. ABT reported an adjusted operating profit of $2.00 billion for the quarter under review, down 41.6% year over year. Adjusted operating margin also contracted 827 bps to 20.5%.

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

Abbott Laboratories (ABT) : Free Stock Analysis Report

Cigna Group (CI) : Free Stock Analysis Report

HCA Healthcare, Inc. (HCA) : Free Stock Analysis Report

Elevance Health, Inc. (ELV) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research