Insurance giant Cigna posted $1.35 billion in profits last quarter, citing continued revenue increases from pharmacy benefit manager Express Scripts as a key driver.
The Bloomfield, Connecticut-based company reported revenues of $38.6 billion for the quarter, up from $11.5 billion in the same quarter of 2018. In the second quarter, Cigna also attributed major jumps in revenue to the merger with Express Scripts, which closed late last year.
“Cigna's strong results and continued momentum reflect the differentiated value we create for our customers and clients,” said David Cordani, president and CEO, in a statement. “Our combination with Express Scripts enables us to leverage industry-leading capabilities and more rapidly innovate to enhance clinical and cost outcomes for those we serve.”
The company is revising its earnings forecast for the year upward to a range of $6.38 billion to $6.46 billion, or $16.80 to $17 per share, an 18% to 20% increase over 2018.
However, Cordani cited several headwinds for earnings growth next year during an investor call. Chief among them is the reinstatement of the health insurer tax under the Affordable Care Act expected to resume in 2020.
While Congress has considered delaying the tax again, so far lawmakers have not taken action.
Cigna also projected that the medical loss ratio would be from 80.2% to 81.2%.
Cordani said that the insurer was excited by the increase in quality of Medicare Advantage plans, with 77% of its MA customers in four-star plans for 2020. That figure is expected to increase to 85% for 2021.
Cigna also downplayed the loss of renewal of a Medicaid contract in Texas, where state regulators on Tuesday rolled out $10 billion for three-year state managed care contracts.
"We received notice earlier this week that our role in that contract will wind down," said Chief Financial Officer Eric Palmer.
Palmer said that the contract was a minimal contribution to earnings and would only result in losing less than a penny a share.
"It represents $900 million in revenue but [minimal] contribution to earnings."
Cordani added that the insurer has had a “lower-level priority” for Medicaid.