Cigna Q4 Earnings Miss Estimates on Decline in Medical Membership

The Cigna Group CI reported fourth-quarter 2024 adjusted earnings per share (EPS) of $6.64, which missed the Zacks Consensus Estimate by 15.2%. The bottom line declined 2.2% year over year.

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Adjusted revenues improved 28.4% year over year to $65.7 billion. The top line beat the consensus mark by 3.9%.

The quarterly results were hurt by a decline in its overall medical customer base and elevated medical costs. Nevertheless, the downside was partly offset by expanding specialty volumes in the Evernorth Health Services segment and new client wins.

CI’s medical customer base was 19.15 million as of Dec. 31, 2024, which slipped 3.2% year over year and lagged the Zacks Consensus Estimate of 19.17 million. The metric was dampened by a decline in Individual and Family Plans customers.

Total benefits and expenses escalated 29% year over year to $63.5 billion due to higher pharmacy and other service costs as well as medical costs and other benefit expenses. Adjusted SG&A expense ratio of 5.7% improved 170 basis points (bps) year over year resulting from business mix shift and continued operational efficiencies.

Adjusted income from operations fell 8% year over year to $1.8 billion due to reduced contributions from the Cigna Healthcare unit.

The Cigna Group Price, Consensus and EPS Surprise

The Cigna Group price-consensus-eps-surprise-chart | The Cigna Group Quote

Cigna’s Segmental Update

Evernorth Health Services: The unit’s adjusted revenues climbed 33% year over year to $53.7 billion, higher than the Zacks Consensus Estimate of $51.1 billion. The metric benefited from client wins in Specialty and Care Services, and Pharmacy Services business lines.

Adjusted operating income, on a pre-tax basis, was $2.1 billion, which advanced 14% year over year but fell short of the consensus mark of $2.17 billion. The metric gained from consistent affordability improvements and expanding clinical care services. However, the adjusted pre-tax margin deteriorated 70 bps year over year to 4%.

Cigna Healthcare: The segment recorded adjusted revenues of $13.3 billion, which grew 3% year over year but missed the Zacks Consensus Estimate of $13.4 billion. The metric gained as a result of premium rate hikes.

Pre-tax adjusted operating income dropped 47% year over year to $511 million, lower than the consensus mark of $1.1 billion. The metric was impacted due to a deteriorating medical care ratio (MCR).

MCR was 87.9%, which deteriorated 570 bps year over year at the fourth-quarter end due to elevated stop-loss medical costs.

CI’s Financial Position (As of Dec. 31, 2024)

Cigna exited the fourth quarter with cash and cash equivalents of $7.6 billion, which slid 3.5% from the 2023-end level. Total assets of $155.9 billion increased 2% from the 2023-end figure.

Long-term debt amounted to $28.9 billion, up 2.8% from the figure as of Dec. 31, 2023. Short-term debt totaled $3.1 billion.

Total shareholders’ equity of $41 billion decreased 11.2% from the 2023-end level.

CI generated operating cash flows of $10.4 billion in 2024, which tumbled 12.3% from the 2023 figure.

Cigna’s Capital Deployment Update

Cigna bought back 20.9 million shares for around $7 billion in 2024. Additionally, the board of directors approved a $6 billion increase in the company's share repurchase authorization, raising the total authorization to $10.3 billion as of Dec. 31, 2024.

On Jan. 30, 2025, management sanctioned an 8% hike in the quarterly cash dividend. The increased dividend amounted to $1.51 per share, which will be paid out on Mar. 20, 2025, to shareholders of record as of Mar. 5, 2025.

CI’s 2025 Outlook Unveiled

Adjusted revenues are forecasted at a minimum of $252 billion, which indicates an improvement of at least 2% from the 2024 figure of $247.1 billion.

Adjusted operating income is anticipated to be a minimum of $7.9 billion, which indicates growth of at least 2.1% from the 2024 figure of $7.7 billion.

Adjusted EPS is estimated to be a minimum of $29.50, which indicates growth of at least 7.9% from the 2024 figure of $27.33.

MCR is projected within the band of 83.2-84.2%.

Adjusted operating income, on a pretax basis, for the Evernorth Health Services segment is anticipated to be a minimum of $7.2 billion. Meanwhile, the metric for the Cigna Healthcare unit is forecasted to be a minimum of $4.1 billion.

Cigna expects total medical customers to be roughly 18.1 million.

The adjusted SG&A expense ratio is estimated at around 5.4%.

Operating cash flow is forecasted at around $10 billion.

Capital expenditures are expected to be around $1.4 billion.

Cigna’s Long-Term Outlook

Cigna expects to achieve average annual adjusted EPS growth in the band of 10-14% in the long term.

Over the next five years, the company expects to generate cash flows of roughly $60 billion.

CI’s Zacks Rank

Cigna currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Medical Sector Releases

Of the Medical sector players that have reported fourth-quarter 2024 results so far, the bottom-line results of UnitedHealth Group Incorporated UNH, Elevance Health, Inc. ELV and HCA Healthcare, Inc. HCA beat the respective Zacks Consensus Estimate.

UnitedHealth Group reported fourth-quarter 2024 adjusted EPS of $6.81, which surpassed the Zacks Consensus Estimate of $6.71. The bottom line advanced 10.6% year over year. Revenues rose 6.8% year over year to $100.8 billion. However, the top line missed the consensus mark by 1.4%. UnitedHealth’s MCR was 85.5% in 2024, which deteriorated from 83.2% in 2023.

UnitedHealth’s operating earnings grew 1.1% year over year to $7.8 billion in the fourth quarter. However, the net margin deteriorated 30 bps year over year to 5.5%. Revenues of the health benefits business of UnitedHealth, UnitedHealthcare, advanced 4.7% year over year to $74.1 billion. Earnings from operations amounted to $3 billion in the fourth quarter, down from $3.1 billion a year ago. The UnitedHealthcare business catered to 50.68 million people as of Dec. 31, 2024, which fell 3.9% year over year.

Elevance Health’s fourth-quarter 2024 adjusted EPS of $3.84 surpassed the Zacks Consensus Estimate by 1.1%. However, the bottom line deteriorated 31.7% year over year. Operating revenues of $45 billion rose 6% year over year. Moreover, the top line beat the consensus mark by a whisker. Medical membership of Elevance Health was around 45.7 million as of Dec. 31, 2024, which slipped 2% year over year.

Premiums increased 3.2% year over year to $36.2 billion. Product revenues of $6.7 billion increased 24.5% year over year. Net investment income declined 0.4% year over year to $527 million. The Health Benefits unit’s operating revenues totaled $37.6 billion, which increased 3% year over year. Operating gain declined 75% year over year to $0.2 billion. The Carelon segment’s operating revenues amounted to $14.7 billion, which rose 19% year over year.

HCA Healthcare, Inc. reported fourth-quarter 2024 adjusted EPS of $6.22, which outpaced the Zacks Consensus Estimate by 4.2%. The bottom line advanced 5.4% year over year. Revenues rose 5.7% year over year to $18.3 billion. The top line beat the consensus mark by 1.1%. Same-facility equivalent admissions improved 3.1% year over year in the fourth quarter while same-facility admissions advanced 3% year over year.

Same-facility revenue per equivalent admission grew 2.9% year over year. Same-facility inpatient surgeries increased 2.8% year over year. Same-facility outpatient surgeries dipped 1.3% year over year. Additionally, same-facility emergency room visits rose 2.4% year over year in the fourth quarter. Adjusted EBITDA of $3.7 billion improved 2.6% year over year. HCA Healthcare operated 190 hospitals and roughly 2,400 ambulatory sites of care across 20 states and the United Kingdom as of Dec. 31, 2024.

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