(Reuters) – Cigna Corp <CI.N> on Thursday reported better-than-expected quarterly profit and stuck to its profit target for the year as it benefited from strong sales at its Express Scripts pharmacy benefits business (PBM).
Rivals UnitedHealth Group Inc <UNH.N>, Anthem Inc <ANTM.N> and Humana Inc <HUM.N> also reaffirmed their profit estimates for 2020, even as they warned of higher costs from resumption in elective surgeries deferred due to the COVID-19 pandemic.
While health insurers benefit from the deferred health care in the first half of the year, the gains could be short lived, depending on how quickly the virus outbreak subsides and the healthcare business returns to something close to normal, according to a Reuters analysis.
Cigna said it continues to expect 2020 adjusted income from operations to be between $18 and $18.60 per share. Analysts were expecting $18.32 per share, according to Refinitiv IBES data.
It said growth in its adjusted sales for the first quarter was also boosted by higher enrollment in its Medicare Advantage health plans, meant for people older than 65 or those with disabilities, as well as a jump in the premiums collected.
The insurer, which closed its $52 billion acquisition of Express Scripts in 2018, said adjusted revenue from the unit that houses the PBM rose nearly 21% to $27.17 billion.
Analysts had expected the business to gain as people refilled prescription medications for a longer period to stock up on their medicines before the virus-led lockdowns, while others turned to mail order pharmacy services during the period.
The company’s medical care ratio – the amount spent on medical claims versus the income from premiums – improved to 78.3% in the quarter, from 78.9% in the year earlier, but marginally fell short of estimates of 78.2%.
Excluding items, it earned $4.69 per share, beating the average analyst estimate of $4.35, according to IBES data from Refinitiv.
Net income fell to $1.18 billion, or $3.15 per share, in the quarter ended March 31, from $1.37 billion, or $3.56 per share, a year earlier.
The company reported total revenue of $38.47 billion, beating estimates of $37.18 billion.
(Reporting by Manojna Maddipatla in Bengaluru; Editing by Shinjini Ganguli)