By Raghav Mahobe and Leroy Leo
(Reuters) – Cigna Corp raised its adjusted annual profit forecast for the third time on Thursday after beating quarterly estimates on the strength of the health insurer’s Evernorth unit which houses its pharmaceutical benefit management business.
The forecast follows similar moves from rivals UnitedHealth Group, Elevance Health and Centene Corp.
Cigna shares rose nearly 2% in morning trading.
Evernorth’s quarterly unit sales increased approximately 6% to $35.70 billion, driven by strong growth in its specialty pharmacy services which provide medications for conditions such as rheumatoid arthritis, cancer, HIV and rare diseases.
Cigna’s insurance business managed to maintain tight control over costs as the medical care ratio, a measure of medical expenses to premiums collected, improved to 80.8% from 83.5% a year ago when there was an increase in COVID cases.
The insurer’s COVID-related costs in the third quarter were at a similar level to the second quarter, “whereas we had assumed a slight uptick,” Chief Financial Officer Brian Evanko said on a conference call with investors. .
Last week, Centene selected Cigna’s Express Scripts unit as the pharmacy benefits manager of its roughly $40 billion annual drug spend.
Evanko said its PBM is expected to spend about $200 million next year to put the systems in place to implement the contract before it takes effect in 2024.
Cigna now expects adjusted operating profit of at least $23.10 per share for the year, down from an earlier forecast of at least $22.90. Analysts on average expect earnings of $23 per share, according to Refinitiv data.
Net income attributable to shareholders jumped 70.1% to $2.76 billion due to a $1.4 billion after-tax gain from the sale of its accident and health business in Asia Pacific and Turkey to Chubb Ltd.
Excluding special items, Cigna’s earnings were $6.04 per share, beating the consensus estimate of $5.71 per share.
(Reporting by Raghav Maobe and Leroy Leo in Bengaluru; Editing by Arun Koyyur and Maju Samuel)