Cigna raises 2024 profit view, beats Q4 earnings estimates on lower costs
Reuters
Published Feb 02, 2024 06:03AM ET
Updated Feb 02, 2024 06:42AM ET
By Khushi Mandowara and Sneha S K
(Reuters) -Health insurer Cigna (NYSE:CI) Group raised its 2024 profit forecast on Friday after lower-than-expected medical costs and strong demand in its pharmacy benefit management unit helped it beat fourth-quarter profit estimates, sending its shares up nearly 5% in premarket trading.
The company now expects full-year profit to be at least $28.25 per share, compared with earlier forecast of at least $28. Analysts estimate $28.29 per share in 2024 profit.
The raised forecast is in contrast to a warning from Humana (NYSE:HUM) that higher costs due to increased care will hit its 2024 and 2025 profit. Humana is a large player in the market for Medicare Advantage (MA) plans for adults aged 65 and above.
Cigna, however, has a lesser presence in the MA market, compared to Humana and UnitedHealth (NYSE:UNH), both of which flagged an increase in medical procedures in the fourth quarter.
Cigna's medical care ratio, the percentage of premiums spent on medical care, came in at 82.2% in the quarter ended Dec. 31, below LSEG estimates of 84.2%.
The health insurer said higher pricing of some of its plans helped to keep its costs under check.
For 2024, the company forecast medical care ratio between 81.7% and 82.7%, compared with analysts' estimate of 81.93%.
Cigna reported a 35% jump in profit to $6.79 per share on an adjusted basis in the fourth quarter, beating analysts' estimate by 25 cents.
Adjusted sales in the company's Evernorth unit, under which it operates pharmacy benefit management business, jumped 12% to $40.52 billion.
Pharmacy benefit managers (PBMs) act as intermediaries between drugmakers and insurers. They get after-market discounts from drugmakers to add treatments to the lists they recommend to insurers and companies offering coverage for employees.
Cigna shareholder's net income fell to $1.03 billion in the quarter, from $1.19 billion a year earlier, mainly due to loss on sale of businesses and a deferred tax benefit.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.