While its competitors are cashing in on Medicare Advantage plans, Cigna has seen strong revenue growth in its commercial business lines.
That growth led to a solid first-quarter earnings report, as the company looks to close its acquisition of pharmacy benefit manager Express Scripts by the end of the year.
Cigna beat estimates with $11.4 billion in revenue in the first quarter of 2018, a 9% increase compared to the same quarter last year. Net income soared to $917 million, a 55% increased over the $593 million reported in the first three months last year.
Most of that was driven by strong growth in commercial plans, which added 518,000 members compared to the same time last year. The Bloomfield, Connecticut-based insurer saw significant growth among smaller businesses with 50-500 employees, reporting 14% year-over-year growth.
Commercial premiums jumped 16% compared to the first quarter last year, accounting for nearly $5 billion in the first three months.
Cigna ended the quarter with 401,000 on individual plans, including 338,000 through the Affordable Care Act exchanges.
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That growth was offset by losses within the insurer’s government plans, which haven’t fared as well. The company saw a 2% decline in Medicare-covered lives compared to the first quarter last year.
That could change in the coming years, however, as Cigna looks to re-establish its presence in the Medicare Advantage market. Last year, the Centers for Medicare & Medicaid Services (CMS) lifted sanctions tied to violations of coverage determinations, appeals, and grievances.
Cigna CEO David Cordani indicated last year that the company was interested in building up its Medicare Advantage offerings through acquisitions. On Thursday's earnings call, Cordani recognized a future growth opportunity in converting commercial members to MA plans, noting that the company is well-positioned to execute on that strategy in 2019.
“That’s a future growth opportunity that’s not lost on us in any way shape or form,” he said.
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Cigna executives continued to make their case for the Express Scripts deal, pointing to increasing drug costs, particularly for specialty drugs. Cordani emphasized the merger would provide better-coordinated care and “deeper alignment across critical elements of the health system” that would “directly benefit customers and clients.”
That deal, which the company expects to close by the end of the year, is being closely scrutinized by the Department of Justice.