Cigna raises financial forecast for 2021 despite the ongoing COVID-19 pandemic
The insurer's overall revenue reached $41 billion during the first quarter, driven in large part by its Evernorth health services unit.
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Major health insurer Cigna beat financial expectations during the first quarter of 2021 with a $1.2 billion profit and has adjusted its 2021 outlook to reflect renewed optimism, despite the difficulties created by the ongoing COVID-19 pandemic.
The insurer's overall revenue reached $41 billion during the quarter, driven in large part by its Evernorth health services unit, which includes pharmacy benefit manager Express Scripts. The unit posted a 13% increase in revenue from the same time last year.
Cigna's adjusted income from operations for first-quarter 2021 was $1.7 billion, compared with $1.8 billion for the first quarter of 2020 – numbers the company attributed to Evernorth. Evernorth fulfilled 393 million adjusted pharmacy scripts in the first quarter, an increase of 9% over the first quarter of 2020, driven by what Cigna called "strong organic growth."
Evernorth's performance, according to Cigna, was the result of effective management of the supply chain, combined with strong business growth and its performance in specialty pharmacy services.
WHAT'S THE IMPACT
Cigna launched Evernorth in September 2020 as a rebrand of its health services portfolio. It includes 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.
The open business model was intended to bring together Cigna's health services as well as outside partners in pharmacy solutions, benefits management and care solutions. This will help solve problems across a fragmented healthcare ecosystem, Cigna said.
The Q1 numbers are a springboard for a relatively rosy outlook for the rest of the year. In its earnings report, Cigna projected 2021 adjusted revenue to be at least $166 billion, while the outlook for consolidated adjusted income from operations is at least $7 billion. The projections factor in potential complications from the pandemic.
Adjusted margin, after tax, is projected to be about 4.2%, while cash flow from operations is expected to be around $7,500.
For Cigna's overall U.S. medical business, first-quarter adjusted revenue grew 5% year over year, reflecting customer growth in Medicare Advantage, the individual business and the Select segment, as well as premium increases and favorable net investment income.
Adjusted income from operations, pre-tax and adjusted margin, pre-tax decreased relative to the first quarter of 2020, reflecting COVID-19-related impacts that were partially offset by favorable net investment income and the repeal of the health insurance industry tax.
THE LARGER TREND
COVID-19-related impacts included the direct costs of testing, treatment and vaccines; lower Medicare Advantage risk adjustment revenues; decreased contributions from specialty products; and increased disenrollment resulting from the economic impacts of the pandemic, partially offset by a reduction in non-COVID-19 utilization.
The medical care ratio of 81.8% for the quarter compares to 78.3% for the same quarter in 2020 and reflects COVID-19-related impacts and the pricing effect of the repeal of the health insurance industry tax, partially offset by one fewer calendar day in the first quarter of 2021.
U.S. Medical net medical costs payable was $3.32 billion on March 31, $2.80 billion on March 31, 2020, and $2.96 billion on Dec. 31, 2020.
Cigna took a financial hit last week when the Delaware Supreme Court ruled that the company won't receive a $1.85 billion breakup fee after the dissolution of its attempted merger with Anthem. Neither entity will receive any funds for the breakup, the court decided, backing up a previous decision from Chancery Court Vice Chancellor J. Travis Laster in 2020.
The merger attempt was initiated back in 2015, with Anthem setting its sights on purchasing Cigna for around $54 billion in a deal that would have created the largest health insurer in the U.S.
Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com
