Cigna’s Earnings Call Reveals Mixed Performance

Cigna ((CI)) has held its Q4 earnings call. Read on for the main highlights of the call.

The latest earnings call from Cigna presented a mixed picture to investors and analysts. While the company celebrated notable achievements in revenue growth and shareholder returns, challenges in specific segments like stop loss medical costs put a damper on the overall earnings. However, Cigna’s proactive measures to tackle these issues, backed by its robust financial standing, suggest a balanced outlook for the future.

Full-Year Revenue Growth

Cigna achieved a remarkable full-year revenue growth of 27%, reaching approximately $247 billion. This significant increase underscores the company’s strong operational performance and its ability to drive substantial top-line growth, reinforcing its position in the competitive healthcare sector.

Record Shareholder Returns

The company returned an impressive $8.6 billion to shareholders through dividends and share repurchases. Notably, Cigna increased its quarterly dividend by 8% to $1.51 per share, reflecting its commitment to delivering value to its investors.

Strong Performance in Evernorth

Evernorth, Cigna’s specialty and care services segment, delivered robust results. Adjusted revenues grew by an impressive 33% to $53.7 billion, while pre-tax adjusted earnings increased by 14% to $2.1 billion, highlighting Evernorth’s significant contribution to the overall business.

Biosimilar Adoption Success

Cigna reported success in the adoption of biosimilars, with nearly 50% of eligible Humira scripts utilizing biosimilars by year-end 2024. The company also announced plans to offer an interchangeable Stelara Biosimilar at zero cost to patients, aiming to enhance accessibility and affordability.

Strong Cash Flow and Capital Deployment

The company generated $10.4 billion in cash flow from operations in 2024 and expects to deliver approximately $10 billion in 2025. This strong cash flow enables Cigna to continue its strategic capital deployment, including share repurchases and dividend payouts.

Stop Loss Medical Costs Pressure

Cigna faced challenges with higher than anticipated medical costs in its stop loss products, resulting in a full-year medical care ratio of 83.2%, exceeding the guidance range. This pressure highlights an area of concern that the company is actively addressing.

Underperformance in Cigna Healthcare Segment

The Cigna Healthcare segment underperformed in the fourth quarter, with earnings falling short of expectations due to elevated medical costs in stop loss products. This led to a medical care ratio of 87.9%, signaling a need for strategic adjustments.

Shortfall in Adjusted Earnings Per Share

Although Cigna’s adjusted earnings per share increased by 9% year-over-year to $27.33, it fell short of market expectations. This shortfall underscores the impact of challenges within certain segments, despite overall growth.

Forward-Looking Guidance

Looking ahead to 2025, Cigna provided detailed guidance reflecting its strategic direction and financial health. The company anticipates earnings per share of at least $29.50, supported by projected revenues of $252 billion and adjusted income from operations of $7.9 billion. Cigna plans significant share repurchases, empowered by an increased authorization of $10.3 billion. Despite short-term pressures, particularly in stop loss products, Cigna remains confident in achieving long-term growth targets of 10% to 14%.

In summary, Cigna’s earnings call depicted a company navigating through a mixture of achievements and challenges. While certain segments underperformed, the overall sentiment remains optimistic, supported by robust revenue growth, increased shareholder returns, and strategic initiatives in biosimilars and Evernorth. Cigna’s forward-looking guidance further reinforces its commitment to achieving long-term growth and maintaining financial strength.