Cigna is bracing for elevated claims costs through the remainder of 2021, executives told investors Thursday morning.
Brian Evanko, Cigna's chief financial officer, said on the company's earnings call that costs associated with COVID-19 were higher than anticipated, and non-COVID utilization grew at a more rapid clip than was expected.
In the insurer's U.S. commercial plans, non-COVID costs were back to baseline, or pre-pandemic levels, Evanko said. In Medicare Advantage, meanwhile, claims have accelerated compared to the first quarter of the year, but are still slightly below baseline.
"Let me be clear: Our second-quarter results and our full-year outlook have been adversely impacted by elevated claim costs compared to our prior expectations," Evanko said.
He said the insurer expects to see elevated claims costs stick around for the rest of 2021, though the company feels confident in reaffirming its guidance on the back of strong growth, particularly at its Evernorth subsidiary.
CEO David Cordani said that amid ongoing hurdles posed by the pandemic, the insurer is working hard to ensure it meets customers' needs.
"Within this challenging environment, we continue to take proactive steps to ensure our customers have access to the care they need," Cordani said.
The insurer posted $1.5 billion in profit in the second quarter of 2021, echoing its industry peers in seeing its earnings decline from the same period in 2020.
In the prior-year quarter, Cigna reported $1.8 billion in profit, according to the insurer's earnings release posted Thursday. National health plans reported sky-high profits in the second quarter of 2020 amid the peak of COVID-19's impact on care utilization, to the point that Congress began investigating their financial performance.
Cigna's second-quarter 2021 earnings surpassed Wall Street's expectations, according to analysts at Zacks Investment Research.
The insurer also beat the Street on revenue for the quarter, reporting $43.1 billion. That's up from the second quarter of 2020 when Cigna reported $39.3 billion in revenue.
Profits were also down in the first half of 2021 compared to the first half of 2020, according to the earnings release. Through the first six months of this year, Cigna brought in $2.6 billion in profit, compared to $2.9 billion in the first half of 2020.
Revenues for the first half of 2021 were up significantly year over year, however, Cigna said. Through June 30, the insurer brought in $84.1 billion in revenue. In the first half of 2020, by contrast, it reported $77.6 billion in revenue.
"Our more than 70,000 employees continue rising to the moment, delivering for our customers, patients and clients during a period of ongoing uncertainty around the world," said Cordani in a statement. "Our second-quarter results were solid, as we continue to drive our business forward and invest to fuel our sustained long-term growth."
The company boasted 101.9 million pharmacy benefit customers and nearly 17 million medical benefit customers at the end of the second quarter, according to the release.
As a result of its performance, Cigna raised its full-year guidance for revenue, and it now expects to bring in about $170 billion this year. It maintained its earnings guidance of $20.20 per share, an estimate that bakes in about $2.50 per share in unfavorable impacts related to the pandemic.