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Cigna Corp.’s ability to rein
in medical costs during the second quarter of 2022 impressed equities
analysts and led the health insurer on Aug. 4 to surpass the Wall Street
consensus earnings per share (EPS) estimate while raising its full-year EPS
outlook.
Firm’s MLR beat leads the
industry
- Cigna posted
“the largest MLR beat among MCOs this quarter,” with its medical loss
ratio of 80.7% coming in 220 basis points below the consensus estimate,
Evercore ISI analyst Michael Newshel pointed out in a note to investors.
That comes after a 110 basis-point beat in the first quarter of 2022, he
added.
- And SVB
Securities analyst Whit Mayo observed that “medical costs were
well-controlled during the quarter,” with Cigna’s MLR “driving the bulk
of the [company’s] outperformance.”
- During an Aug.
4 conference call to discuss quarterly results, Cigna Chief Financial
Officer Brian Evanko said the company’s MLR outperformance was the
result of “strong pricing actions taken over the past 12 months, our
continued affordability initiatives to lower costs for our clients, and
lower-than-expected utilization within the quarter.” Specifically,
non-COVID costs in the quarter were below predicted levels — driven by
lower rates of inpatient, emergency department and surgical care — and
direct COVID costs were also below expectations.
Execs address recession
fears
- Cigna’s
executives also acknowledged potential storm clouds on the horizon amid
the contracting U.S. economy.
- Yet CEO David
Cordani noted in his prepared remarks that “our company is built to
perform in a variety of market conditions, including economic
slowdowns.”
- Evanko
elaborated further on the subject, stating, “we have a strong and
resilient enterprise with a diverse service-based framework spanning
broad, addressable markets, and our first-half results demonstrate the
resiliency of our portfolio and strength of our execution in a dynamic
environment,” Cigna’s CFO said. Still, he added, “we continue to
proactively prepare [for a downturn] with a variety of actions and tools
to respond to evolving economic conditions.”
- For the full
year, Cigna raised its adjusted earnings outlook to at least $22.90 per
share.
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