Cigna beats quarterly profit expectations as COVID medical costs fall

Cigna Corp beat Wall Street estimates for quarterly profit on Friday, aided by a sharp fall in medical costs due to lower COVID-19-related hospitalizations.

Health insurers have largely managed to keep medical costs in check during the fourth quarter amid a so-called "tripledemic" of an early flu season coinciding with COVID and respiratory syncytial virus cases.

Cigna's quarterly medical care ratio, or its spending on claims as a percentage of premiums, declined to 84.0% from 87.0%, and was better than the analysts' average estimate of 84.28%, according to Refinitiv data.

The company's annual profit forecast of at least $24.60 per share was marginally below expectations of $24.84 per share.

This follows a 2.3% drop in 2024 Medicare Advantage rate, compared with a 5% growth in 2023, proposed by U.S. Centers for Medicare & Medicaid Services on Wednesday. Enrollments for 2024 start later this year.

The insurer forecast medical care ratio of 81.5% to 82.5% for 2023, compared with Wall Street estimate of 81.9%.

The company, which served 18 million people in 2022 through its commercial and government-supported plans, expects to add at least 1.2 million customers this year.

Cigna's Evernorth unit, which operates its pharmacy benefit management business that negotiates between drugmaker and insurers, generated revenue of $36.19 billion in the quarter, 3% higher than the previous year.

Excluding one-off items, the company reported a profit of $4.96 per share in the fourth quarter, beating analysts' average estimate by 10 cents.

Shares of Cigna were marginally higher at $302 in premarket trade.