Cigna reports $277 million net loss amid VillageMD Clinic asset decrease

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Cigna reported a $277 million net loss during its Q1 earnings call on Thursday. This compares with profits of $1.27 billion a year earlier. 
  
The loss is driven by a noncash after-tax net realized investment loss of $1.8 billion, primarily related to a VillageMD impairment charge to write off assets.

The loss in value is excluded from adjusted income from operations and adjusted earnings per share, said Ralph Giacobbe, SVP of Investor Relations, during Thursday's earnings call.

CFO Brian Evanko said this accounting item does not alter the company's forward-looking value-based care strategy to align incentives with providers, including with VillageMD. 

"Our partnership has already launched in targeted geographic markets and we will seek to build upon that early progress," Evanko said.

Cigna's Evernorth Health Services holds a minority stake in VillageMD, but is scaling back on the expansion of clinics the company attached to Walgreens, which reported a $6 billion loss in its second quarter due to the loss in value of its controlling stake in VillageMD, according to Forbes.

Cigna on Thursday also reported challenges and disruptions due to the Change Healthcare cyberattack in February.

"Within the quarter, we booked approximately $650 million in incremental reserves in Cigna Healthcare relating to this disruption," Evanko said. "Approximately two-thirds of the incremental reserve pertains to claims that we received but were not paid out as of March 31. These claims have since been paid out to providers."

Evanko said Cigna experienced incremental operating expenses that are reflected in the first-quarter results due to Change.

WHY THIS MATTERS

Cigna does not have a heavy presence in the Medicare Advantage market as does Humana and Aetna, that recently reported Q1 losses due to higher than expected utilization of services and that forecast higher premiums and potential cuts to benefits due to the recent rate payment notice.

Cigna is moving ahead with plans to sell its Medicare Advantage business to Health Care Service Corporation for an estimated $3.7 billion.

THE LARGER TREND

Cigna remains optimistic, especially in the growth of its specialty pharmacy business, said CEO David Cordani.

"Clearly, we're very excited about the growth opportunities we see ahead in Specialty," Cordani said. "Our Specialty businesses are a cornerstone of the accelerated growth within Evernorth and our confidence in our leading position and capabilities will continue to fuel innovation such as the biosimilar launch I just discussed."

This week, Evernorth Health Services announced it would offer a Humira biosimilar available for $0 out-of-pocket for eligible patients of its specialty pharmacy Accredo beginning this June.

Email the writer: SMorse@himss.org