(Reuters) – Cigna Corp <CI.N> on Thursday reported quarterly profit that exceeded expectations and backed its profit forecast for the next two years, benefiting from strength in its Express Scripts pharmacy business that fills prescriptions.
Shares of the health insurer rose 3% to $201.89 before the opening bell.
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 near normal, according to a Reuters analysis.
Some U.S. states such as Ohio and Florida have already disclosed plans to resume elective surgeries and procedures.
Cigna also reaffirmed its 2021 adjusted profit target of between $20 and $21 per share, beating its rivals to it.
“Cigna formally maintained the long-term guidance while UnitedHealth and Anthem really did not address their long term outlook in their first quarter reports or calls,” Stephens analyst Scott Fidel said.
First-quarter adjusted revenue from the unit that houses Express Scripts, acquired by Cigna in a $52 billion in 2018, 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 unit performed better than expected, likely reflecting a pull forward of script volumes into the first quarter similar to peers with PBM operations, Cowen analyst Charles Rhyee said.
Cigna said growth in its adjusted sales for the first quarter was 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 health insurer 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.
Excluding items, the company earned $4.69 per share in the first quarter, beating the average analyst estimate of $4.35, according to IBES data from Refinitiv.
Adjusted income from operations included a $48 million benefit from a favorable tax matter, the company said.
(Reporting by Manojna Maddipatla in Bengaluru; Editing by Shinjini Ganguli)