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A month has gone by since the last earnings report for Cigna (CI). Shares have added about 1.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Cigna due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Cigna Earnings Surpass Estimates in Q2, Improve Y/Y
Cigna’s second-quarter 2020 earnings of $5.81 per share surpassed the Zacks Consensus Estimate by 15% and also grew 35% year over year.
Results reflected revenue and earnings growth owing to a strong fundamental performance and lower medical costs from deferred care following the COVID-19 pandemic.
Cigna’s revenues of $39.3 billion beat the Zacks Consensus Estimate by 4.2% and also increased 13.9% year over year mirroring solid contributions from each of the company's ongoing businesses.
The company’s medical enrollment grew by 86,000 lives from the prior-year quarter to 17.083 million customers, attributable to membership gains in the Government and International markets.
Selling, general and administrative expense ratio was 8.4, improved 60 basis points year over year on significant growth in revenues and cost-control measures.
Strong Segmental Performances
Health Services: Adjusted revenues of $28.6 billion were up 21.5% year over year, driven by insourcing of Integrated Medical pharmacy volumes and a sturdy performance in specialty pharmacy services, partly offset by a decline in retail script volumes.
Operating income of $1.25 billion increased 7% year over year, representing customer growth, higher adjusted pharmacy scripts volumes, benefits from effective management of the supply chain and a steady performance in specialty pharmacy services, partially offset by an increase in operating expenses to support growth
Integrated Medical: Adjusted revenues of $9.23 billion were up 3% year over year, highlighting customer wins in Medicare Advantage and in the Select segment, as well as premium growth. However, this upside was partially offset by premium relief programs for clients that were carried out in response to the COVID-19 pandemic.
Operating income of $1.52 billion surged 53.83% year over year on significantly lower medical utilization in both the Commercial and Government segments compared with the historic patterns. However, this uptrend was partially offset by premium relief programs for clients and cost share waivers for customers.