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Cigna (CI) Q2 Earnings Top on Specialty Business Strength
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The Cigna Group (CI - Free Report) reported second-quarter 2024 adjusted earnings per share (EPS) of $6.72, which beat the Zacks Consensus Estimate by 4.7%. The bottom line improved 9.6% year over year.
Adjusted revenues were $60.5 billion, which climbed 24.4% year over year on the back of large client wins in the Evernorth Health Services segment. The top line outpaced the consensus mark by 3.4%.
The quarterly results were driven by growth in the Specialty and Care Services businesses within the Evernorth Health Services segment. However, the company faced headwinds, including a decline in its medical customer base and an escalation in total benefits and expenses.
CI’s medical customer base was 19 million as of Jun 30, 2024, which slipped 2.4% year over year and lagged the Zacks Consensus Estimate of 19.2 million. The metric was hurt by a decline in Individual and Family Plans customers.
Total benefits and expenses of $58.1 billion escalated 25% year over year, higher than our estimate of $56.2 billion. The year-over-year increase was due to a significant rise in pharmacy and other service costs. Adjusted SG&A expense ratio improved 110 basis points (bps) year over year to 6% as a result of the business mix shift and continued operational efficiencies.
Adjusted income from operations grew 5% year over year to $1.9 billion on the back of solid contributions from the Evernorth Health Services and Cigna Healthcare businesses.
Evernorth Health Services: The unit recorded adjusted revenues of $49.5 billion, which surged 30% year over year. The metric outpaced the Zacks Consensus Estimate of $47.4 billion and our estimate of $46 billion. The top line benefited on the back of organic growth in Specialty and Care Services businesses and new client wins.
Adjusted operating income on a pretax basis advanced 7% year over year to $1.62 billion, higher than the consensus mark of $1.59 billion and our estimate of $1.52 billion. The metric gained from consistent affordability improvements. However, the adjusted pre-tax margin of 3.3% deteriorated 70 bps year over year.
Cigna Healthcare: Adjusted revenues were $13.1 billion, which grew 3% year over year as a result of premium rate hikes. Yet, the metric lagged our estimate of $14.7 billion.
The unit’s pre-tax adjusted operating income advanced 3% year over year to $1.2 billion, which almost met the consensus mark but missed our estimate of $1.28 billion. The metric benefited on the back of continued operational efficiencies and improved net investment income.
MCR deteriorated 110 bps year over year to 82.3% at the second-quarter end. The metric compares favorably with our estimate of 82.7%.
Financial Position (As of Jun 30, 2024)
Cigna exited the second quarter with cash and cash equivalents of $6.8 billion, which fell 13.2% from the 2023-end level. Total assets of $155.4 billion increased 1.8% from the figure at 2023 end.
Long-term debt amounted to $30.2 billion, which grew 7.2% from the figure as of Dec 31, 2023. Short-term debt totaled $1.7 billion.
Total shareholders’ equity of $41.3 billion declined 10.6% from the 2023-end level.
CI generated operating cash flows of $5.1 billion in the first half of 2024, which dropped 32.1% from the prior-year comparable period.
Debt-to-capitalization ratio was 43.6% at the second-quarter end, which deteriorated 170 bps year over year.
Share Repurchase Update
From Jan 1, 2024, till Jul 31, 2024, Cigna bought back 14.7 million shares for around $5 billion.
2024 Guidance
Adjusted revenues continue to be forecasted at a minimum of $235 billion, which indicates an improvement of at least 20.3% from the 2023 reported figure.
Adjusted operating income is presently anticipated to be a minimum of $8.065 billion.
Adjusted EPS is estimated to be a minimum of $28.40, which indicates growth of at least 13.2% from the 2023 figure.
CI continues to expect total medical customers of roughly 19.3 million.
MCR continues to be projected within the band of 81.7-82.5%. The adjusted SG&A expense ratio continues to be estimated at around 6.1%.
Adjusted operating income, on a pretax basis, for the Evernorth Health Services segment is still anticipated to be a minimum of $7 billion. Meanwhile, the metric for the Cigna Healthcare unit is still forecasted to be a minimum of $4.775 billion.
Operating cash flow continues to be forecasted at a minimum of $11 billion.
Earlier, capital expenditures were expected to be around $1.5 billion.
Long-Term Targets Reaffirmed
Cigna expects to achieve average annual adjusted EPS growth in the range of 10-14% in the long term.
Over the next five years, the company is expected to generate operating cash flows of roughly $60 billion.
Of the Medical sector players that have reported second-quarter 2024 results so far, the bottom-line results of UnitedHealth Group Incorporated (UNH - Free Report) , Elevance Health, Inc. (ELV - Free Report) and HCA Healthcare, Inc. (HCA - Free Report) beat the respective Zacks Consensus Estimate.
UnitedHealth Group reported second-quarter adjusted EPS of $6.80, which beat the Zacks Consensus Estimate by 2.3%. The bottom line rose 10.7% year over year. Revenues amounted to $98.9 billion, which improved 6.4% year over year. The top line outpaced the consensus mark of $98.7 billion The medical care ratio of UnitedHealth Group deteriorated 190 bps year over year to 85.1%.
UNH’s operating earnings deteriorated 2.3% year over year to $7.9 billion. The net margin deteriorated to 4.3% from 5.9% in the year-ago period. The health benefits business of UnitedHealth Group, UnitedHealthcare, generated revenues of $73.9 billion. The figure rose 5.3% year over year. The UnitedHealthcare business served 50.4 million people as of Jun 30, 2024, which decreased 4.6% year over year. Revenues in the Optum business line were $62.9 billion, which climbed 11.7% year over year.
Elevance Health reported second-quarter adjusted earnings of $10.12 per share, which outpaced the Zacks Consensus Estimate by 1.3%. The bottom line improved 12% year over year. Operating revenues of $43.2 billion dipped 0.4% year over year. However, the top line beat the consensus mark by 0.5%. Medical membership of Elevance Health was around 45.8 million as of Jun 30, 2024, which slipped 5% year over year. Premiums decreased 3.2% year over year to $35.4 billion. Product revenues of $5.5 billion advanced 13.8% year over year.
The Health Benefits segment’s operating revenues totaled $37.2 billion, which decreased 2.2% year over year. Operating gain remained almost flat year over year at $2.1 billion. The operating margin of 5.8% improved 20 bps year over year. The Carelon unit’s operating revenues amounted to $13.3 billion, which rose 10% year over year.
HCA Healthcare reported second-quarter adjusted EPS of $5.50, which beat the Zacks Consensus Estimate by 10.7%. The bottom line improved 28.2% year over year. Revenues amounted to $17.5 billion, which improved 10.3% year over year. The top line outpaced the consensus mark by 2.2%. Same-facility equivalent admissions increased 5.2% year over year while same-facility admissions grew 5.8% year over year.
Same-facility revenue per equivalent admission rose 4.4% year over year. Same-facility inpatient surgeries grew 2.6% year over year while same-facility outpatient surgeries declined 2.1% year over year. Additionally, same-facility emergency room visits rose 5.5% year over year and beat our growth estimate of 4.3%. Adjusted EBITDA improved 16.2% year over year to $3.6 billion.
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Cigna (CI) Q2 Earnings Top on Specialty Business Strength
The Cigna Group (CI - Free Report) reported second-quarter 2024 adjusted earnings per share (EPS) of $6.72, which beat the Zacks Consensus Estimate by 4.7%. The bottom line improved 9.6% year over year.
Adjusted revenues were $60.5 billion, which climbed 24.4% year over year on the back of large client wins in the Evernorth Health Services segment. The top line outpaced the consensus mark by 3.4%.
The quarterly results were driven by growth in the Specialty and Care Services businesses within the Evernorth Health Services segment. However, the company faced headwinds, including a decline in its medical customer base and an escalation in total benefits and expenses.
CI’s medical customer base was 19 million as of Jun 30, 2024, which slipped 2.4% year over year and lagged the Zacks Consensus Estimate of 19.2 million. The metric was hurt by a decline in Individual and Family Plans customers.
Total benefits and expenses of $58.1 billion escalated 25% year over year, higher than our estimate of $56.2 billion. The year-over-year increase was due to a significant rise in pharmacy and other service costs. Adjusted SG&A expense ratio improved 110 basis points (bps) year over year to 6% as a result of the business mix shift and continued operational efficiencies.
Adjusted income from operations grew 5% year over year to $1.9 billion on the back of solid contributions from the Evernorth Health Services and Cigna Healthcare businesses.
The Cigna Group Price, Consensus and EPS Surprise
The Cigna Group price-consensus-eps-surprise-chart | The Cigna Group Quote
Segmental Update
Evernorth Health Services: The unit recorded adjusted revenues of $49.5 billion, which surged 30% year over year. The metric outpaced the Zacks Consensus Estimate of $47.4 billion and our estimate of $46 billion. The top line benefited on the back of organic growth in Specialty and Care Services businesses and new client wins.
Adjusted operating income on a pretax basis advanced 7% year over year to $1.62 billion, higher than the consensus mark of $1.59 billion and our estimate of $1.52 billion. The metric gained from consistent affordability improvements. However, the adjusted pre-tax margin of 3.3% deteriorated 70 bps year over year.
Cigna Healthcare: Adjusted revenues were $13.1 billion, which grew 3% year over year as a result of premium rate hikes. Yet, the metric lagged our estimate of $14.7 billion.
The unit’s pre-tax adjusted operating income advanced 3% year over year to $1.2 billion, which almost met the consensus mark but missed our estimate of $1.28 billion. The metric benefited on the back of continued operational efficiencies and improved net investment income.
MCR deteriorated 110 bps year over year to 82.3% at the second-quarter end. The metric compares favorably with our estimate of 82.7%.
Financial Position (As of Jun 30, 2024)
Cigna exited the second quarter with cash and cash equivalents of $6.8 billion, which fell 13.2% from the 2023-end level. Total assets of $155.4 billion increased 1.8% from the figure at 2023 end.
Long-term debt amounted to $30.2 billion, which grew 7.2% from the figure as of Dec 31, 2023. Short-term debt totaled $1.7 billion.
Total shareholders’ equity of $41.3 billion declined 10.6% from the 2023-end level.
CI generated operating cash flows of $5.1 billion in the first half of 2024, which dropped 32.1% from the prior-year comparable period.
Debt-to-capitalization ratio was 43.6% at the second-quarter end, which deteriorated 170 bps year over year.
Share Repurchase Update
From Jan 1, 2024, till Jul 31, 2024, Cigna bought back 14.7 million shares for around $5 billion.
2024 Guidance
Adjusted revenues continue to be forecasted at a minimum of $235 billion, which indicates an improvement of at least 20.3% from the 2023 reported figure.
Adjusted operating income is presently anticipated to be a minimum of $8.065 billion.
Adjusted EPS is estimated to be a minimum of $28.40, which indicates growth of at least 13.2% from the 2023 figure.
CI continues to expect total medical customers of roughly 19.3 million.
MCR continues to be projected within the band of 81.7-82.5%. The adjusted SG&A expense ratio continues to be estimated at around 6.1%.
Adjusted operating income, on a pretax basis, for the Evernorth Health Services segment is still anticipated to be a minimum of $7 billion. Meanwhile, the metric for the Cigna Healthcare unit is still forecasted to be a minimum of $4.775 billion.
Operating cash flow continues to be forecasted at a minimum of $11 billion.
Earlier, capital expenditures were expected to be around $1.5 billion.
Long-Term Targets Reaffirmed
Cigna expects to achieve average annual adjusted EPS growth in the range of 10-14% in the long term.
Over the next five years, the company is expected to generate operating cash flows of roughly $60 billion.
Zacks Rank
Cigna currently carries a Zacks Rank #2 (Buy). 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 second-quarter 2024 results so far, the bottom-line results of UnitedHealth Group Incorporated (UNH - Free Report) , Elevance Health, Inc. (ELV - Free Report) and HCA Healthcare, Inc. (HCA - Free Report) beat the respective Zacks Consensus Estimate.
UnitedHealth Group reported second-quarter adjusted EPS of $6.80, which beat the Zacks Consensus Estimate by 2.3%. The bottom line rose 10.7% year over year. Revenues amounted to $98.9 billion, which improved 6.4% year over year. The top line outpaced the consensus mark of $98.7 billion The medical care ratio of UnitedHealth Group deteriorated 190 bps year over year to 85.1%.
UNH’s operating earnings deteriorated 2.3% year over year to $7.9 billion. The net margin deteriorated to 4.3% from 5.9% in the year-ago period. The health benefits business of UnitedHealth Group, UnitedHealthcare, generated revenues of $73.9 billion. The figure rose 5.3% year over year. The UnitedHealthcare business served 50.4 million people as of Jun 30, 2024, which decreased 4.6% year over year. Revenues in the Optum business line were $62.9 billion, which climbed 11.7% year over year.
Elevance Health reported second-quarter adjusted earnings of $10.12 per share, which outpaced the Zacks Consensus Estimate by 1.3%. The bottom line improved 12% year over year. Operating revenues of $43.2 billion dipped 0.4% year over year. However, the top line beat the consensus mark by 0.5%. Medical membership of Elevance Health was around 45.8 million as of Jun 30, 2024, which slipped 5% year over year. Premiums decreased 3.2% year over year to $35.4 billion. Product revenues of $5.5 billion advanced 13.8% year over year.
The Health Benefits segment’s operating revenues totaled $37.2 billion, which decreased 2.2% year over year. Operating gain remained almost flat year over year at $2.1 billion. The operating margin of 5.8% improved 20 bps year over year. The Carelon unit’s operating revenues amounted to $13.3 billion, which rose 10% year over year.
HCA Healthcare reported second-quarter adjusted EPS of $5.50, which beat the Zacks Consensus Estimate by 10.7%. The bottom line improved 28.2% year over year. Revenues amounted to $17.5 billion, which improved 10.3% year over year. The top line outpaced the consensus mark by 2.2%. Same-facility equivalent admissions increased 5.2% year over year while same-facility admissions grew 5.8% year over year.
Same-facility revenue per equivalent admission rose 4.4% year over year. Same-facility inpatient surgeries grew 2.6% year over year while same-facility outpatient surgeries declined 2.1% year over year. Additionally, same-facility emergency room visits rose 5.5% year over year and beat our growth estimate of 4.3%. Adjusted EBITDA improved 16.2% year over year to $3.6 billion.