Manojna Maddipatla, Tamara
Mathias FEBRUARY 6, 2020
(Reuters) - Cigna Corp
(CI.N) on Thursday forecast 2020 revenue well above
Wall Street estimates on Thursday, as it expects a significant increase in the
number of people signing up for its government-backed Medicare Advantage health
plans.
Shares of the
Bloomfield, Connecticut-based health insurer were up 2.6% at $211.86.
The company said it is
on track to achieve 13% to 16% customer growth in its Medicare Advantage
business this year, above its prior forecast of 10% to 15% growth.
“Our suspicion is that
the Street may not have also fully factored in yet the very solid enrollment
growth the company is going to achieve in Medicare Advantage this year,”
Stephens analyst Scott Fidel said.
The insurer, which is
now also one of the biggest pharmacy benefit managers after its $52 billion
acquisition of Express Scripts in 2018, said it expects revenue of between $154
billion and $156 billion in 2020. That exceeds the average analyst estimate of
$148.73 billion, according to Refinitiv data.
Cigna’s revenue
outlook for the year also reflects its recent deal with smaller pharmacy
benefits manager Prime Therapeutics, Fidel said.
In December, the
company signed a three-year partnership deal with Prime, which is owned by a
group of Blue Cross and Blue Shield plans. The arrangement will increase the
number of prescriptions Cigna handles beginning with the second quarter.
While Cigna’s medical
care ratio - the percentage premiums it collects that goes to pay medical
claims - worsened in the fourth quarter, it met analyst expectations of 82.3%.
This is in contrast to
medical costs for three other major U.S. health insurers that missed estimates
in the fourth quarter, pressured by higher claims from the flu season and the
suspension of the industry-wide health insurance fee.
Cigna attributed the
year-over-year increase in medical costs to suspension of the fee and higher
costs in its unit that offers health plans for individuals.
Cigna forecast 2020
adjusted earnings of between $18 and $18.60 per share. Analysts were estimating
$18.59.
Excluding items, the
company earned $4.31 per share, beating the average analysts’ estimate by 11
cents, according to IBES data from Refinitiv.
Cigna’s adjusted
revenue rose to $36.54 billion in the quarter, ahead of expectations of $35.07
billion.
Reporting by Tamara Mathias and Manojna Maddipatla in Bengaluru,
Caroline Humer in New York; Editing by Arun Koyyur and Bill Berkrot
Our Standards:The Thomson
Reuters Trust Principles.
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