Major insurer Cigna reported a rebound in healthcare utilization in the third quarter from massive declines in the second quarter due to COVID-19.
Cigna, which posted a $1.39 billion profit in the third quarter, said that healthcare use remains slightly below average when not taking into account costs for COVID-19. The insurer's performance in the quarter was bolstered by its newly rebranded Evernorth subsidiary.
Cigna executives said that utilization was 95% below normal levels without factoring COVID-19 costs.
"When you add on top of that the impact of testing and treatment for COVID and on top of that the additional actions we took to reduce barriers and reduce cost-sharing … that puts you altogether a little bit above normal," said Eric Palmer, chief financial officer for Cigna, on an investor call.
Cigna reported during its second-quarter earnings call that June would be much closer to normal utilization levels.
In the second quarter, Cigna’s healthcare utilization rate declined between 30 to 35% in April. The onset of the pandemic in March caused healthcare use to plummet across the country as patients were afraid of heading to the doctor’s office and hospitals were forced to cancel or postpone elective procedures.
But healthcare use levels have since rebounded, albeit in some cases still below pre-pandemic levels.
“It really does vary by geography,” Palmer said of COVID-19’s impact on healthcare spending.
The quarterly profit represents a slight uptick from $1.35 billion in the third quarter of 2019.
Cigna also reported $40.96 billion in revenue for the quarter, up from $38.56 billion in the third quarter of 2019. The insurer beat Wall Street projections for the quarter on both earnings and revenue.
In its release, Cigna said that in addition to the strong performance by Evernorth's businesses in the quarter, which includes Express Scripts, the financials represent healthcare utilization returning to more typical levels and other impacts related to COVID-19.
"In these dynamic and challenging times, we at Cigna continue to act as champions for our customers, clients, and communities as we deliver on our promises to make health care more affordable, predictable and simple," said David Cordani, CEO of Cigna, in a statement.
"We delivered attractive revenue growth and strong earnings, while further improving our capital position, driving strategic flexibility," Cordani said. "Additionally, our launch of Evernorth accelerates our strategy, broadens our reach and expands our opportunities for growth, further enhancing the value we deliver to the marketplace each and every day."
Across Evernorth's businesses, revenue was up about 20% compared to the third quarter of 2019, Cigna said, reaching $29.8 billion. Evernorth reported pretax margins of 4.8%, according to the report.
Among the highlights for that business segment, Cigna said that more than 381 million pharmacy scripts were filled in the third quarter, up 19% year over year.
Cordani said on the investor call that Evernorth represents a reinforcement and acceleration of its health service strategy.
"It's a further reinforcement of the dedication we have of resources for supporting large complex employer needs, health plan needs, government entity needs ... as well as integrated system and healthcare providers taking on value-based risk," he said.
Revenue was also up for Cigna's health plan business, including both commercial and government plans, reaching $9.6 billion, a 5% increase over the third quarter of 2019.
Cigna expects full-year revenues of about $158 billion and earnings of between $18.30 and $18.60 per share.
But the insurer said there could be some disruption in its commercial membership as the COVID-19 pandemic has sparked major job losses across the country.
"We know it is a disrupted environment," said Cordani. "We expect that we will continue to see employer customer disruption throughout the residual part of this year and into 2021."