-
Total revenues in the first quarter were $37.9 billion. Adjusted
revenues1 were $33.4 billion. -
Shareholders’ net income for the first quarter was $1.37 billion,
or $3.56 per share -
Adjusted income from operations2 for the
first quarter was $1.5 billion, or $3.90 per share -
Adjusted income from operations2,3,4 is
now projected to be in the range of $6.24 billion to $6.4 billion in
2019, or $16.25 to $16.65 per share3, which
represents per share growth of 14% to 17% over 2018
BLOOMFIELD, Conn.–(BUSINESS WIRE)–Global health service company Cigna Corporation (NYSE: CI) today
reported strong first quarter 2019 results led by the Health Services
and Integrated Medical segments.
“Cigna’s first quarter performance reflects focused execution of our
proven growth strategy and positions us well to achieve our increased
outlook for 2019,” said David M. Cordani, President and Chief Executive
Officer. “Our combination with Express Scripts is fueling additional
innovative programs for the benefit of our customers and patients, as we
accelerate our efforts to improve the affordability of health care.”
Total revenues for first quarter 2019 were $37.9 billion. Adjusted
revenues1 were $33.4 billion and reflect strong contributions
from each of Cigna’s ongoing businesses.
Shareholders’ net income for first quarter 2019 was $1.37 billion, or
$3.56 per share, compared with $0.9 billion, or $3.72 per share, for
first quarter 2018.
Cigna’s adjusted income from operations2 for first quarter
2019 was $1.5 billion, or $3.90 per share, compared with $1.0 billion,
or $4.11 per share, for 2018. This reflects strong earnings
contributions led by the Health Services and Integrated Medical segments.
Reconciliations of total revenues to adjusted revenues1 and
of shareholders’ net income to adjusted income from operations2
are provided on the following page, and on Exhibit 1 of this earnings
release.
CONSOLIDATED HIGHLIGHTS
The following table includes highlights of results and reconciliations
of total revenues to adjusted revenues1 and shareholders’ net
income to adjusted income from operations2:
| Consolidated Financial Results (dollars in millions): | |||||||||
| Three Months Ended | |||||||||
| March 31, | December 31, | ||||||||
| 2019 | 2018 | 2018 | |||||||
| Total Revenues | $ | 37,946 | $ | 11,413 | $ | 14,300 | |||
| Net Realized Investment Losses (Gains) from Equity Method Investments1 | (28) | 2 | 20 | ||||||
| Special Items and Transitioning Client Contributions1 | (4,489) | – | (569) | ||||||
| Adjusted Revenues1 | $ | 33,429 | $ | 11,415 | $ | 13,751 | |||
| Consolidated Earnings, net of taxes | |||||||||
| Shareholders’ Net Income | $ | 1,368 | $ | 915 | $ | 144 | |||
| Net Realized Investment Losses (Gains)2 | (38) | 25 | 58 | ||||||
| Amortization of Other Acquired Intangible Assets2 | 564 | 20 | 103 | ||||||
| Special Items and Transitioning Client Contributions1,2 | (396) | 50 | 342 | ||||||
| Adjusted Income from Operations2 | $ | 1,498 | $ | 1,010 | $ | 647 | |||
| Shareholders’ Net Income, per share | $ | 3.56 | $ | 3.72 | $ | 0.55 | |||
| Adjusted Income from Operations2, per share | $ | 3.90 | $ | 4.11 | $ | 2.46 | |||
-
Year to date through May 1, 2019, the Company repurchased 3.1 million
shares of common stock for approximately $556 million. -
The debt to capitalization ratio improved to 48.8% at March 31, 2019
from 50.9% at December 31, 2018. -
The SG&A expense ratio5 was 9.3% for first quarter
2019, a significant decrease from 23.5% for first quarter 2018 driven
by business mix changes resulting from the Express Scripts
combination, and the health insurance tax suspension.
CUSTOMER RELATIONSHIPS
The following table summarizes our medical customers and overall
customer relationships:
|
Customer Relationships (in thousands): |
||||||||
|
|
As of the Periods Ended | |||||||
| March 31, | December 31, | |||||||
| 2019 | 2018 | 2018 | ||||||
| Commercial | 14,016 | 13,825 | 13,982 | |||||
| Government | 1,405 | 1,389 | 1,407 | |||||
| International Markets | 1,572 | 1,555 | 1,572 | |||||
| Total Medical Customers6 | 16,993 | 16,769 | 16,961 | |||||
| Pharmacy6 | 74,935 | 8,796 | 73,230 | |||||
| Behavioral Care6 | 28,046 | 26,998 | 27,215 | |||||
| Dental | 17,122 | 16,521 | 16,544 | |||||
| Medicare Part D | 3,302 | 784 | 3,295 | |||||
| International Markets Supplemental Policies6,7 | 12,576 | 12,061 | 12,569 | |||||
| Group Disability and Life Covered Lives6 | 15,200 | 15,300 | 14,800 | |||||
| Total Customer Relationships | 168,174 | 97,229 | 164,614 | |||||
-
The total medical customer base6 at first quarter 2019 was
17 million, an organic increase of 32,000 customers year to date and
224,000 over first quarter 2018 driven by growth in the Select and
Middle Market segments, partially offset by a decline in National
Accounts. -
The pharmacy customer base6 at first quarter 2019 was 75
million, an organic increase of 1.7 million customers year to date,
driven by strong new commercial sales. -
Pharmacy6 and Medicare Part D customers in the first
quarter 2019 and fourth quarter 2018 include customers gained through
the completion of the Express Scripts combination on December 20, 2018.
HIGHLIGHTS OF SEGMENT RESULTS
See Exhibit 1 for a reconciliation of adjusted income (loss) from
operations2 to shareholders’ net income.
Health Services
This segment includes a broad range of pharmacy services, including
benefits management, specialty pharmacy services, clinical solutions,
home delivery, and health management services.
| Financial Results (dollars in millions): | |||||||||
| Three Months Ended | |||||||||
| March 31, | December 31, | ||||||||
| 2019 | 2018 | 2018 | |||||||
| Adjusted Revenues1 | $ | 22,460 | $ | 1,071 | $ | 3,313 | |||
| Adjusted Income from Operations, Pre-Tax2 | $ | 994 | $ | 83 | $ | 153 | |||
| Adjusted Margin, Pre-Tax8 | 4.4% | 7.7% | 4.6% | ||||||
-
Cigna completed the combination with Express Scripts on December 20,
2018. Accordingly, contributions from the Express Scripts business are
reflected in the Health Services segment results for the entire first
quarter 2019, a portion of fourth quarter 2018, and are not reflected
in first quarter 2018 results. -
Growth in first quarter 2019 adjusted revenues1 and
adjusted income from operations, pre-tax2 were driven by
the combination with Express Scripts. -
Health Services fulfilled 292 million adjusted pharmacy scripts9
in first quarter 2019, consistent with the company’s expectations. -
Health Services delivered solid results in first quarter 2019, driven
by organic growth in pharmacy customers since the start of the year,
and strong adjusted pharmacy script volumes and performance in
specialty pharmacy care.
Integrated Medical
This segment includes Cigna’s U.S. Commercial and Government businesses
that provide comprehensive medical solutions to clients and customers.
U.S. Commercial products and services include medical, pharmacy,
behavioral health, dental, vision, health advocacy programs and other
products and services to insured and self-insured customers. Government
solutions include Medicare Advantage, Medicare Supplement, and Medicare
Part D plans for seniors, Medicaid plans, and individual health
insurance coverage both on and off the public exchanges.
| Financial Results (dollars in millions): | |||||||||
| Three Months Ended | |||||||||
| March 31, | December 31, | ||||||||
| 2019 | 2018 | 2018 | |||||||
| Adjusted Revenues1 | $ | 9,195 | $ | 8,150 | $ | 8,297 | |||
| Adjusted Income from Operations, Pre-Tax2 | $ | 1,170 | $ | 1,012 | $ | 643 | |||
| Adjusted Margin, Pre-Tax8 | 12.7% | 12.4% | 7.7% | ||||||
-
Integrated Medical delivered strong results in first quarter 2019, led
by organic growth and strong margins in our Commercial and Government
businesses. -
First quarter 2019 adjusted revenues1 increased 13%
relative to first quarter 2018, driven by Commercial customer growth
and expansion of specialty relationships, as well as premium increases
consistent with underlying cost trends. -
First quarter 2019 adjusted income from operations, pre-tax2
and adjusted margin, pre-tax8 reflect strong medical and
specialty contributions and continued effective medical cost
performance. -
Adjusted income from operations, pre-tax2 for first quarter
2019 and first quarter 2018 included favorable net prior year reserve
development on a pre-tax basis of $50 million and $51 million,
respectively. -
The medical care ratio5 (“MCR”) of 78.9% for first quarter
2019 reflects strong performance and execution in our commercial and
government businesses and favorable prior year development, partially
offset by the addition of the Express Scripts Medicare Part D business
and the pricing effect of the health insurance tax suspension. -
Integrated Medical net medical costs payable10 was
approximately $2.72 billion at March 31, 2019, $2.41 billion at March
31, 2018 and $2.43 billion at December 31, 2018.
International Markets
This segment includes supplemental health, life and accident insurance
products and health care coverage in our international markets, as well
as health care benefits for globally mobile employees of multinational
organizations.
|
Financial Results (dollars in millions, policies and customers |
|||||||||
| Three Months Ended | |||||||||
| March 31, | December 31, | ||||||||
| 2019 | 2018 | 2018 | |||||||
| Adjusted Revenues1,7 | $ | 1,394 | $ | 1,341 | $ | 1,355 | |||
| Adjusted Income from Operations, Pre-Tax2 | $ | 206 | $ | 217 | $ | 120 | |||
| Adjusted Margin, Pre-Tax8 | 14.8% | 16.2% | 8.9% | ||||||
| As of the Periods Ended | |||||||||
| March 31, | December 31, | ||||||||
| 2019 | 2018 | 2018 | |||||||
| International Markets Supplemental Policies6,7 | 12,576 | 12,061 | 12,569 | ||||||
| International Markets Medical Customers6 | 1,572 | 1,555 | 1,572 | ||||||
-
First quarter 2019 adjusted revenues1,7 grew 4% over first
quarter 2018, reflecting continued business growth, partially offset
by some impact from unfavorable foreign currency movements. -
First quarter 2019 adjusted income from operations, pre-tax2
and adjusted margin, pre-tax8 reflect business growth,
offset by unfavorable foreign currency impacts and spending to
strengthen our capabilities to further long-term growth.
Group Disability and Other Operations
This segment includes Cigna’s Group Disability and Life business which
offers group long-term and short-term disability, and group life,
accident, voluntary and specialty insurance products and services.
Additionally, this segment includes Corporate Owned Life Insurance
(“COLI”) and the Company’s run-off operations.
|
Financial Results (dollars in millions): |
|||||||||
| Three Months Ended | |||||||||
| March 31, | December 31, | ||||||||
| 2019 | 2018 | 2018 | |||||||
| Adjusted Revenues1 | $ | 1,296 | $ | 1,271 | $ | 1,246 | |||
| Adjusted Income from Operations, Pre-Tax2 | $ | 84 | $ | 116 | $ | 109 | |||
| Adjusted Margin, Pre-Tax8 | 6.5% | 9.1% | 8.7% | ||||||
-
First quarter 2019 adjusted income from operations, pre-tax2
and adjusted margin, pre-tax8 reflect unfavorable
disability claims partially offset by strong life results.
Corporate
Corporate reflects interest expense, as well as amounts not allocated to
operating segments and includes intersegment eliminations.
|
Financial Results (dollars in millions): |
||||||||||
| Three Months Ended | ||||||||||
| March 31, | December 31, | |||||||||
| 2019 | 2018 | 2018 | ||||||||
| Adjusted (Loss) from Operations, Pre-Tax2 | $ | (490) | $ | (92) | $ | (148) | ||||
-
The first quarter 2019 adjusted loss from operations, pre-tax2
increased as a result of higher interest expense associated with the
financing of the combination with Express Scripts.
2019 OUTLOOK
Cigna’s outlook for full year 2019 consolidated adjusted income from
operations2,3,4 is in the range of $6.24 billion to $6.4
billion, or $16.25 to $16.65 per share. Cigna’s outlook excludes the
impact of additional prior year reserve development of medical costs and
potential effects of any future share repurchase4.
|
(dollars in millions, except where noted and per share amounts) |
Projection for Full- |
Change from Prior |
||||
| December 31, 2019 | Projection | |||||
|
2019 Consolidated Operating Metrics |
||||||
| Adjusted Income from Operations2,3,4 | $ | 6,240 to 6,400 | $ | + 0 to 40 | ||
| Adjusted Income from Operations, per share2,3,4 | $ | 16.25 to 16.65 | $ | + 0.15 to + 0.25 | ||
|
Adjusted Revenues1,3 |
$ | 132,500 to 134,500 | $ | + 1,000 | ||
|
SG&A Expense Ratio5 |
10.0% to 10.5% | |||||
| Adjusted Tax Rate11 | 23.5% to 24.5% | |||||
|
2019 Segment-Level Operating Metrics |
||||||
| Adjusted Income from Operations, Pre-Tax2,3,4 | ||||||
| Health Services | $ | 5,050 to 5,200 | ||||
| Integrated Medical | $ | 3,700 to 3,800 | $ | + 0 to 50 | ||
| Adjusted Pharmacy Scripts – Health Services9 | 1.17 to 1.19 billion | |||||
| Medical Customer Growth6 | 300,000 to 400,000 customers | |||||
| Medical Care Ratio5 | 80.5% to 81.5% | |||||
| Medical Cost Trend12 | 3.5% to 4.5% | |||||
2020 OUTLOOK
Health Services’ projected 2020 retention rate for the 2019 selling
season for pharmacy services is in the range of 96% to 98%.
The foregoing statements represent the Company’s current estimates of
Cigna’s 2019 consolidated and segment adjusted income from operations2,3,4
and other key metrics as of the date of this release. Actual results may
differ materially depending on a number of factors. Investors are urged
to read the Cautionary Note Regarding Forward-Looking Statements
included in this release. Management does not assume any obligation to
update these estimates.
This quarterly earnings release and the Quarterly Financial Supplement
are available on Cigna’s website in the Investor Relations section (http://www.cigna.com/aboutcigna/investors).
Management will be hosting a conference call to review first quarter
2019 results and discuss full year 2019 outlook beginning today at 8:30
a.m. ET. A link to the conference call is available in the Investor
Relations section of Cigna’s website located at https://www.cigna.com/aboutcigna/investors/events/index.page.
The call-in numbers for the conference call are as follows:
| Live Call | ||||
| (888) 324-7575 (Domestic) | ||||
| (210) 234-0013 (International) | ||||
| Passcode: 5022019 | ||||
| Replay | ||||
| (800) 839-5571 (Domestic) | ||||
| (402) 220-2073 (International) |
It is strongly suggested you dial in to the conference call by 8:15 a.m.
ET.
About Cigna
Cigna Corporation (NYSE: CI) is a global health service company
dedicated to improving the health, well-being and peace of mind of those
we serve. Cigna delivers choice, predictability, affordability and
access to quality care through integrated capabilities and connected,
personalized solutions that advance whole person health. All products
and services are provided exclusively by or through operating
subsidiaries of Cigna Corporation, including Cigna Health and Life
Insurance Company, Cigna Life Insurance Company of New York, Connecticut
General Life Insurance Company, Express Scripts companies or their
affiliates, and Life Insurance Company of North America. Such products
and services include an integrated suite of health services, such as
medical, dental, behavioral health, pharmacy, vision, supplemental
benefits, and other related products including group life, accident and
disability insurance.
Cigna maintains sales capability in over 30 countries and jurisdictions,
and has more than 160 million customer relationships throughout the
world. To learn more about Cigna®, including links to follow
us on Facebook or Twitter, visit www.cigna.com.
| Notes: | ||||
|
1. |
At the consolidated level, the measure “adjusted revenues” is |
|||
|
2. |
Adjusted income (loss) from operations is defined as |
|||
|
Adjusted income (loss) from operations is a measure of profitability used by Cigna’s management because it presents the underlying results of operations of Cigna’s businesses and permits analysis of trends in underlying revenue, expenses and shareholders’ net income. This consolidated measure is not determined in accordance with accounting principles generally accepted in the United States (GAAP) and should not be viewed as a substitute for the most directly comparable GAAP measure, shareholders’ net income. See Exhibit 1 for a reconciliation of adjusted income from operations to shareholders’ net income. |
||||
|
Effective in the fourth quarter of 2018, Cigna updated its segments. Refer to our Current Report on Form 8-K filed with the Securities and Exchange Commission on January 23, 2019 and our Annual Report on Form 10-K for the year ended December 31, 2018 for additional information and prior period results on the historic and new segment bases. |
||||
|
3. |
Management is not able to provide a reconciliation of adjusted |
|||
|
4. |
The Company’s outlook excludes the potential effects of any |
|||
|
5. |
Operating ratios are defined as follows: |
|||
|
• |
Medical care ratio represents medical costs as a percentage of |
|||
|
• |
SG&A expense ratio represents enterprise selling, general and |
|||
|
6. |
Customer relationships are defined as follows: |
|||
|
• |
Total medical customers includes individuals in our Integrated |
|||
|
• |
Pharmacy customer relationships excludes transitioning clients. |
|||
|
• |
International Markets policies exclude International Markets |
|||
|
• |
Group Disability and Life covered lives are estimated. |
|||
|
7. |
Cigna owns a 50% noncontrolling interest in its China joint |
|||
|
8. |
Adjusted margin, pre-tax, is calculated by dividing adjusted |
|||
|
9. |
For Health Services adjusted pharmacy scripts, non-specialty |
|||
|
10. |
Medical costs payable within the Integrated Medical segment are |
|||
|
11. |
The measure “adjusted tax rate” is not determined in accordance |
|||
|
12. |
Medical cost trend includes all U.S. commercial employer |
|||
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release, and oral statements made with respect to information
contained in this release, may contain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are based on Cigna’s current expectations and
projections about future trends, events and uncertainties. These
statements are not historical facts. Forward-looking statements may
include, among others, statements concerning our projected adjusted
income (loss) from operations outlook for 2019, on both a consolidated
and segment basis; projected adjusted revenue outlook for 2019;
projected global medical customer growth over year end 2018; projected
growth beyond 2019; statements concerning our long-term projected
adjusted income (loss) from operations outlook; projected medical care
and SG&A expense ratios and medical cost trends; projected adjusted
pharmacy scripts; our projected consolidated adjusted tax rate; future
financial or operating performance, including our ability to deliver
affordable, personalized and innovative solutions for our customers and
clients; future growth, business strategy, strategic or operational
initiatives; economic, regulatory or competitive environments,
particularly with respect to the pace and extent of change in these
areas; financing or capital deployment plans and amounts available for
future deployment; our prospects for growth in the coming years; the
merger (the “Merger”) with Express Scripts Holding Company (“Express
Scripts”) and other statements regarding Cigna’s future beliefs,
expectations, plans, intentions, financial condition or performance. You
may identify forward-looking statements by the use of words such as
“believe,” “expect,” “plan,” “intend,” “anticipate,” “estimate,”
“predict,” “potential,” “may,” “should,” “will” or other words or
expressions of similar meaning, although not all forward-looking
statements contain such terms.
Forward-looking statements are subject to risks and uncertainties, both
known and unknown, that could cause actual results to differ materially
from those expressed or implied in forward-looking statements. Such
risks and uncertainties include, but are not limited to: our ability to
achieve our financial, strategic and operational plans or initiatives;
our ability to predict and manage medical and pharmacy costs and price
Contacts
INVESTOR RELATIONS CONTACT:
Will McDowell
215-761-4198
[email protected]
MEDIA CONTACT:
Ellie Polack
860-902-4906
[email protected]
