Cigna logs $1.3B profit in Q1, promises transparency around PBMs
The company pledges more transparency around its PBM business, run through the Evernorth subsidiary.
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Health insurer Cigna has reported $1.3 billion in profit for the first quarter of this year, and has pledged more transparency around its pharmacy benefit manager business, which plays heavily into the company's Evernorth subsidiary.
Cigna Chairman and CEO David Cordani said during a recent earnings call that the company plans to provide greater affordability, choice and transparency for clients and customers of Express Risk, its PBM business within Evernorth.
"We recognize the ongoing attention and legislative debate regarding the rising costs of prescription drugs," said Cordani. "We are taking an active leadership role, and I want to be clear about how we are using our differentiated capabilities to create and capture value out of the drug supply chain on behalf of our clients and customers."
The financial results show consistency, as Cigna logged $1.2 billion in profit in the fourth quarter of 2022, and the same amount in Q1 2022.
Total revenues also grew to $45.5 billion, up slightly from the $44 billion posted in Q1 2022. Total revenue at Evernorth hit $36.2 billion, up 8% year-over-year, with Cigna attributing that growth to its specialty pharmacy and its care delivery and management tools.
Evernorth includes pharmacy benefit manager Express Scripts, specialty pharmacy Accredo and eviCore healthcare, which provides utilization management services for health plans or employer groups and outpatient diagnostic imaging service programs.
Executive vice president and Chief Financial Officer Brian Evanko called its Express Scripts PBM "a foundational asset with a diverse set of earnings sources including service and administrative fees, clinical programs, and value based care arrangements, along with retained rebates and retail spread."
During the earnings call, Evanko said about 20% of Evernorth's adjusted pretax earnings comprised PBM retained rebates and retail spread.
"This percentage has decreased over time as we continue to expand fee based client relationships, and as our Evernorth portfolio becomes more diverse and continues to grow," he said. "Importantly, as Evernorth's business mix has changed over the years, margins have remained stable. This speaks to our flexibility to adapt to an ever-changing market and gives us confidence in our ability to navigate disruption in the operating or regulatory environment.
"Our foundational PBM asset will continue to create and deliver significant value, which will allow us to sustain growth at attractive competitive returns," said Evanko.
WHAT'S THE IMPACT?
Among other results, Cigna Healthcare's revenue was up 12% year-over-year, hitting $12.7 billion. That growth, executives said, is attributable to growing membership in government and commercial plans, with 1.5 million members added during the quarter.
Due to these results, Cigna is boosting its guidance for the year to about $24.70 in earnings per share, and the company is now expecting about $188 billion in revenue for the full year.
"Consistent with our prior commentary, we expect earnings this year to be back-half weighted, in large part driven by Evernorth's earnings ramp over the course of the year, with second-half EPS contributing slightly below 55% of full year EPS," said Evanko.
He added that first-quarter results were above the company's expectations, reflecting "strong contributions across our diversified portfolio of complementary businesses."
THE LARGER TREND
Cigna Group, Cigna Healthcare and Evernorth Health Services are now three distinct brands within the company, part of a rebranding initiative announced in February.
The new holding company name is the Cigna Group, the company announced. It employs more than 70,000 people and maintains sales capabilities in more than 30 countries and jurisdictions, the organization said.
Of the sub-brands, Cigna Healthcare is the health benefits provider of the Cigna Group, serving customers and clients through its U.S. Commercial, U.S. Government and International Health businesses.
Evernorth Health Services, meanwhile, partners across the healthcare system to serve customers and clients, including health plans, employers, government entities and others. It creates pharmacy, care and benefits solutions. Its capabilities are powered by Express Scripts, Express Scripts Pharmacy, Accredo, eviCore, MDLIVE and myMatrixx.
Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com
