Cigna Reports Strong Second Quarter 2018 Results, Raises Outlook
BLOOMFIELD, Conn.--(BUSINESS WIRE)--Aug 2, 2018--Cigna Corporation (NYSE: CI) today reported second quarter 2018 results, with strong performance across the company’s Global Health Care, Global Supplemental Benefits, and Group Disability and Life businesses.
“Cigna continues to deliver innovative solutions that expand choice, transparency and quality for our customers and clients,” said David M. Cordani, President and Chief Executive Officer. “Our strong second quarter results once again reflect the consistent effective execution of our global strategy, which will be further enhanced through our pending combination with Express Scripts.”
Total revenues 1 in the quarter were $11.5 billion, an increase of 10% over second quarter 2017, led by continued strong business growth in Cigna’s Global Health Care and Global Supplemental Benefits segments.
For the second quarter of 2018, shareholders’ net income was $806 million, or $3.29 per share, compared with $813 million, or $3.15 per share, for the second quarter of 2017.
Cigna’s adjusted income from operations 2 for the second quarter of 2018 was $955 million, or $3.89 per share, compared with $750 million, or $2.91 per share, for the second quarter of 2017. This represents per share growth of 34% and reflects continued strong contributions from each of the company’s growth platforms.
Reconciliations of shareholders’ net income to adjusted income from operations 2 are provided on the following page, and on Exhibit 2 of this earnings release.
The following table includes highlights of results and reconciliations of total revenues to consolidated operating revenues 5 and shareholders’ net income to adjusted income from operations 2:Cash and marketable investments at the parent company were $1.2 billion at June 30, 2018 and December 31, 2017. Year to date, as of August 1, 2018, the company repurchased 1.3 million shares of common stock for approximately $275 million. The company does not expect to conduct additional share repurchases prior to closing of the Express Scripts combination.
HIGHLIGHTS OF SEGMENT RESULTS
See Exhibit 2 for a reconciliation of shareholders’ net income to adjusted income (loss) from operations 2.
Global Health Care
This segment includes Cigna’s Commercial and Government businesses that deliver medical and specialty health care products and services to domestic and multi-national clients and customers using guaranteed cost, retrospectively experience-rated and administrative services only (“ASO”) funding arrangements. Specialty health care includes behavioral, dental, disease and medical management, stop loss and pharmacy-related products and services.Second quarter 2018 operating revenues increased 12% relative to second quarter 2017, driven by Commercial customer growth and expansion of specialty relationships, as well as premium increases consistent with underlying cost trends. Cigna’s medical customer base 7 at the end of second quarter 2018 totaled 16.2 million, an increase of 329,000 customers year to date, driven by continued organic growth in our Select, Middle Market, and Individual segments. Second quarter 2018 adjusted income from operations 2 and adjusted margin, after-tax 6 reflect medical and specialty business growth, strong medical cost performance, a lower tax rate and favorable prior year reserve development. Prior year reserve development for second quarter 2018, first quarter 2018, and second quarter 2017 on an after-tax basis was $23 million, $43 million, and $36 million, respectively. The Total Commercial medical care ratio 8 (“MCR”) of 76.3% for second quarter 2018 reflects the consistent strong performance of our Commercial Employer business, favorability in Individual, the pricing effect of the resumption of the health insurance tax, and favorable prior year reserve development. The Total Government MCR 8 of 83.7% for second quarter 2018 reflects solid execution in both Medicare Advantage and Part D. The second quarter 2018 Global Health Care operating expense ratio 8 of 22.7% reflects the return of the health insurance tax, ongoing investments in growth and innovation, and continued effective expense management. Global Health Care net medical costs payable 9 was approximately $2.76 billion at June 30, 2018 and $2.45 billion at December 31, 2017.
Global Supplemental Benefits
This segment includes Cigna’s global individual supplemental health, life and accident insurance business, primarily in Asia, and Medicare supplement coverage in the United States.Global Supplemental Benefits delivered strong revenue growth and margins in second quarter 2018, as we further deepen our customer relationships and broaden our distribution capabilities in our targeted markets. Second quarter 2018 operating revenues 10 grew 16% over second quarter 2017, primarily reflecting continued business growth. Second quarter 2018 adjusted income from operations 2 and adjusted margin, after-tax 6 reflect business growth and strong operating expense management.
Group Disability and Life
This segment includes Cigna’s group disability, life and accident insurance operations.Second quarter 2018 adjusted income from operations 2 and adjusted margin, after-tax 6 reflect solid disability performance and favorable life results.
Corporate & Other Operations
Adjusted loss from operations 2 for Cigna’s remaining operations is presented below:Second quarter 2018 adjusted loss from operations 2 increased relative to second quarter 2017 primarily driven by lower corporate tax benefits.
Cigna’s outlook for full year 2018 consolidated adjusted income from operations 2,3,4 is in the range of $3.34 billion to $3.42 billion, or $13.60 to $13.90 per share. Cigna’s outlook excludes the impact of additional prior year reserve development and potential effects of any future capital deployment 4.
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