Global health company The Cigna Group (NYSE: CI) today reported strong third quarter results reflecting revenue and earnings growth across its diversified portfolio of businesses.
“We continued to drive growth in the third quarter by harnessing our deep clinical expertise and service capabilities across our company, supporting high-quality care, improved affordability and better outcomes,” said David M. Cordani, chairman and chief executive officer. “With disciplined execution and continued innovation across Evernorth Health Services and Cigna Healthcare, we’re meeting the evolving needs of those we serve.”
Shareholders’ net income for the third quarter 2023 was $1.4 billion, or $4.74 per share, compared with $2.8 billion, or $8.97 per share, for the third quarter 20223, which included an after-tax gain of $1.4 billion, or $4.52 per share, from the Chubb Transaction4.
The Cigna Group’s adjusted income from operations1 for the third quarter 2023 was $2.0 billion, or $6.77 per share, compared with $1.9 billion, or $6.05 per share, for the third quarter 20223, reflecting strong contributions from both Evernorth Health Services and Cigna Healthcare.
A reconciliation of shareholders’ net income to adjusted income from operations1 is provided on the following page and on Exhibit 1 of this earnings release.
CONSOLIDATED HIGHLIGHTS
The following table includes highlights of results and reconciliations of total revenues to adjusted revenues5 and shareholders’ net income to adjusted income from operations1:
|
Consolidated Financial Results (dollars in millions): |
||||
|
Three Months Ended |
Nine Months |
|||
|
September 30, |
June 30, |
September 30, |
||
|
2023 |
20223 |
2023 |
2023 |
|
|
Total Revenues |
$ 49,048 |
$ 45,281 |
$ 48,586 |
$ 144,151 |
|
Net Realized Investment Losses from Equity |
30 |
80 |
30 |
22 |
|
Adjusted Revenues5 |
$ 49,078 |
$ 45,361 |
$ 48,616 |
$ 144,173 |
|
Consolidated Earnings, net of taxes |
||||
|
Shareholders’ Net Income |
$ 1,408 |
$ 2,757 |
$ 1,460 |
$ 4,135 |
|
Net Realized Investment Losses1 |
41 |
145 |
9 |
56 |
|
Amortization of Acquired Intangible Assets1 |
363 |
322 |
346 |
1,053 |
|
Special Items1 |
199 |
(1,365) |
5 |
205 |
|
Adjusted Income from Operations1 |
$ 2,011 |
$ 1,859 |
$ 1,820 |
$ 5,449 |
|
Shareholders’ Net Income, per share |
$ 4.74 |
$ 8.97 |
$ 4.92 |
$ 13.89 |
|
Adjusted Income from Operations1, per share |
$ 6.77 |
$ 6.05 |
$ 6.13 |
$ 18.31 |
- Total revenues and adjusted revenues5 for the third quarter 2023 each increased 8% from the third quarter 2022, reflecting strong growth across Evernorth Health Services and Cigna Healthcare.
- Shareholders’ net income for the third quarter 2023 was $1.4 billion, or $4.74 per share, compared with $2.8 billion, or $8.97 per share, for the third quarter 20223, which included an after-tax gain of $1.4 billion, or $4.52 per share, from the Chubb Transaction4.
- Adjusted income from operations1 for the third quarter 2023 increased 8% from the third quarter 2022, reflecting strong contributions from Evernorth Health Services and Cigna Healthcare.
- The SG&A expense ratio6 and adjusted SG&A expense ratio6 were 7.7% and 7.3%, respectively, for the third quarter 2023 compared to 7.0% and 6.9%, respectively, for the third quarter 2022, reflecting increased investments to support business growth and expand our capabilities.
- The debt-to-capitalization ratio was 40.5% at September 30, 2023 compared to 41.9% at June 30, 2023.
- Year to date through November 1, 2023, the Company repurchased 7.7 million shares of common stock for approximately $2.2 billion.
CUSTOMER RELATIONSHIPS
The following table summarizes The Cigna Group’s medical customers and overall customer relationships:
Customer Relationships (in thousands):
|
As of the Periods Ended |
||||
|
September 30, |
June 30, |
December 31, |
||
|
2023 |
2022 |
2023 |
2022 |
|
|
Total Pharmacy Customers7 |
98,325 |
94,846 |
98,638 |
93,905 |
|
U.S. Commercial |
16,009 |
14,761 |
15,999 |
14,852 |
|
U.S. Government |
1,970 |
1,381 |
1,883 |
1,354 |
|
International Health |
1,628 |
1,812 |
1,624 |
1,798 |
|
Total Medical Customers7 |
19,607 |
17,954 |
19,506 |
18,004 |
|
Behavioral Care |
25,100 |
44,522 |
26,383 |
44,841 |
|
Dental |
18,593 |
18,380 |
18,634 |
18,397 |
|
Medicare Part D |
2,544 |
2,902 |
2,542 |
2,874 |
|
Total Customer Relationships7 |
164,169 |
178,604 |
165,703 |
178,021 |
- Total pharmacy customers7 at September 30, 2023 increased 5% from December 31, 2022 to 98.3 million due to new sales and the continued expansion of relationships.
- Total medical customers7 at September 30, 2023 grew 9% from December 31, 2022 to 19.6 million, an increase of 1.6 million customers, primarily driven by growth in U.S. Commercial fee-based customers as well as in Individual and Medicare Advantage customers.
- Customer relationships7 were impacted by the non-renewal of a supplemental behavioral coverage contract with New York Life, which was insignificant to total revenues and adjusted income from operations1. Excluding the impact of this contract7, behavioral care and total customer relationships7 at September 30, 2023 increased 2% and 4%, respectively, from December 31, 2022.
HIGHLIGHTS OF SEGMENT RESULTS
See Exhibit 1 for a reconciliation of adjusted income (loss) from operations1 to shareholders’ net income.
Evernorth Health Services
This segment offers a broad range of coordinated and point solution health services and capabilities, as well as those from partners across the health care system, in Pharmacy Benefits, Home Delivery Pharmacy, Specialty Pharmacy, Distribution and Care Delivery and Management Solutions to health plans, employers, government organizations and health care providers.
|
Financial Results (dollars in millions): |
||||
|
Three Months Ended |
Nine Months |
|||
|
September 30, |
June 30, |
September 30, |
||
|
2023 |
2022 |
2023 |
2023 |
|
|
Adjusted Revenues5 |
$ 38,596 |
$ 35,698 |
$ 38,205 |
$ 112,980 |
|
Adjusted Income from Operations, Pre-Tax1 |
$ 1,716 |
$ 1,625 |
$ 1,516 |
$ 4,552 |
|
Adjusted Margin, Pre-Tax8 |
4.4 % |
4.6 % |
4.0 % |
4.0 % |
- Third quarter 2023 adjusted revenues5 increased 8% relative to third quarter 2022, reflecting strong organic growth in specialty and care delivery and management solutions.
- Third quarter 2023 adjusted income from operations, pre-tax1, increased 6% relative to third quarter 2022, reflecting growth in specialty and continued affordability improvements, partially offset by increased strategic investments in technology to support the onboarding of new clients and continued advancement of our digital capabilities and care solutions.
- Third quarter 2023 adjusted margin, pre-tax8, was 4.4% compared to 4.6% for third quarter 2022, reflecting continued strategic investments in technology to support the onboarding of new clients and expansion of existing client relationships.
Cigna Healthcare
This segment includes U.S. Commercial, U.S. Government and International Health businesses, which provide comprehensive medical benefits and coordinated solutions to clients and customers. U.S. Commercial products and services include medical, pharmacy, behavioral health, dental, and other products and services for insured and self-insured clients. U.S. Government solutions include Medicare Advantage, Medicare Supplement and Medicare Part D plans for seniors, and individual health insurance plans. International Health solutions include health care coverage in our international markets, as well as health care benefits for globally mobile individuals and employees of multinational organizations.
|
Financial Results (dollars in millions): |
||||
|
Three Months Ended |
Nine Months |
|||
|
September 30, |
June 30, |
September 30, |
||
|
2023 |
20223 |
2023 |
2023 |
|
|
Adjusted Revenues5,9 |
$ 12,768 |
$ 11,177 |
$ 12,714 |
$ 38,200 |
|
Adjusted Income from Operations, Pre-Tax1 |
$ 1,222 |
$ 1,050 |
$ 1,172 |
$ 3,509 |
|
Adjusted Margin, Pre-Tax8 |
9.6 % |
9.4 % |
9.2 % |
9.2 % |
- Third quarter 2023 adjusted revenues5,9 grew 14% over third quarter 2022, reflecting customer growth and premium rate increases to cover underlying medical cost trends.
- Third quarter 2023 adjusted income from operations, pre-tax1 increased 16% relative to third quarter 2022, primarily driven by a lower U.S. Commercial MCR6 and higher net investment income.
- The Cigna Healthcare MCR6 was 80.5% for third quarter 2023 compared to 80.8% for third quarter 2022, reflecting continued strong performance in our U.S. Commercial business driven by affordability initiatives and effective pricing execution, partially offset by business mix, reflecting higher customer growth in U.S. Government.
- Cigna Healthcare net medical costs payable10 was $5.09 billion at September 30, 2023, $4.05 billion at September 30, 2022, and $3.96 billion at December 31, 2022. The increases are primarily driven by customer growth and business mix. Favorable prior year reserve development on a gross pre-tax basis was $237 million and $278 million for the nine months ended September 30, 2023 and September 30, 2022, respectively.
Corporate and Other Operations
Corporate reflects interest expense, amounts not allocated to operating segments and includes intersegment eliminations. Additionally, this discussion includes items reported in Other Operations, which is comprised of Corporate Owned Life Insurance (“COLI”) and the Company’s run-off operations.
|
Financial Results (dollars in millions): |
||||
|
Three Months Ended |
Nine Months |
|||
|
September 30, |
June 30, |
September 30, |
||
|
2023 |
20223 |
2023 |
2023 |
|
|
Adjusted (Loss) from Operations, Pre-Tax1 |
$ (409) |
$ (295) |
$ (394) |
$ (1,202) |
- Third quarter 2023 adjusted loss from operations, pre-tax1, was $409 million compared to $295 million for third quarter 2022, primarily reflecting the impact of higher interest rates on interest expense and pension costs.
2023 OUTLOOK2
The Cigna Group’s outlook2 for full year 2023 adjusted revenues2,5 increased to at least $192.0 billion. The Cigna Group’s outlook2 for full year 2023 consolidated adjusted income from operations1,2 is at least $7.36 billion, or at least $24.75 per share2. Additionally, this outlook includes the impact of expected future share repurchases and anticipated 2023 dividends.
|
(dollars in millions, except where noted and per share amounts) |
||
|
2023 Consolidated Metrics |
Projection for Full Year Ending December 31, 2023 |
Change from Prior Projection |
|
Adjusted Revenues2,5 |
at least $192,000 |
+$2,000 |
|
Adjusted Income from Operations1,2 |
at least $7,360 |
|
|
Adjusted Income from Operations, per share1,2 |
at least $24.75 |
+$0.05 |
|
Adjusted SG&A Expense Ratio2,6 |
~7.4% |
+10 bps |
|
Adjusted Effective Tax Rate2,11 |
20.5% to 21.0% |
-50 bps at the midpoint |
|
Cash Flow from Operations2 |
at least $10,500 |
+$1,000 |
|
Weighted Average Shares Outstanding (millions)2 |
296 to 298 |
-1 at the midpoint |
|
2023 Evernorth Metrics |
||
|
Adjusted Income from Operations, Pre-Tax1,2 |
at least $6,400 |
|
|
2023 Cigna Healthcare Metrics |
||
|
Adjusted Income from Operations, Pre-Tax1,2 |
at least $4,425 |
|
|
Medical Care Ratio2,6 |
81.5% to 82.0% |
-15 bps at the midpoint |
|
Total Medical Customer Growth2,7 |
at least 1,600,000 |
+200,000 |
About The Cigna Group
The Cigna Group (NYSE: CI) is a global health company committed to creating a better future built on the vitality of every individual and every community. We relentlessly challenge ourselves to partner and innovate solutions for better health. The Cigna Group includes products and services marketed under Evernorth Health Services, Cigna Healthcare, or its subsidiaries. The Cigna Group maintains sales capabilities in more than 30 countries and jurisdictions, and has approximately 165 million customer relationships around the world. Learn more at thecignagroup.com.
