Cigna profits skyrocket on Express Scripts combo

Photo | Contributed Bloomfield-based Cigna placed at No. 15 on the most recent Fortune 500 list.

Write a Comment

By Matt Pilon

Bloomfield-based health insurer Cigna said its profits increased 578% in the fourth quarter, thanks mostly to its massive $670 billion acquisition of pharmacy-benefits provider Express Scripts.

Cigna reported profits of $977 million, or $2.60 per diluted share, for the three months ended Dec. 31, 2019. That was up from $144 million, or 55 cents, in the same quarter a year earlier.

Revenue more than doubled, growing from $14.3 billion to $38.25 billion in the latest quarter. That growth was mostly driven by the pharmacy business, but premium revenue also grew by nearly $900 million, while Cigna’s joint venture business in China added another $750 million.

On a call with analysts and investors Thursday, CEO David Cordani called the results exceptional.

”Looking forward, our 2019 performance gives us considerable momentum for attractive growth in 2020 and beyond,” Cordani said.

Cigna closed its Express Scripts deal in Dec. 2018, so its recently concluded quarter capped its first full year of combined operations.

For the full year, the insurer booked profits of $5.1 billion, or $13.44 per diluted share, up from $2.6 billion, or $10.54 per share in 2018.

The results, both for the quarter and the full year, beat analyst estimates compiled by Zacks Investment Research ahead of the earnings report. The 2019 results also beat Cigna’s own guidance, which it had revised upward three months ago.

Cigna shares popped on the earnings report, trading around $211.63 just after Thursday’s opening bell, up 2.5 percent over Wednesday’s closing price of $206.40.

Cigna said its medical customer count grew to 17.1 million as of the end of 2019, an increase of 184,000 customers over the year. Meanwhile, its pharmacy customer base increased to nearly 76 million, an increase of 2.7 million.

As it heads into the mid-point of its first quarter, Cigna said it expects its full year 2020 revenues and operating income to be higher than 2019 (on an adjusted, non-GAAP basis).

The outlook assumes a full year of contributions from the company’s group disability and life business unit, which it expects to sell in the third quarter to New York Life for $6.3 billion.