Despite sale of its MA business, Cigna CEO says the market is still 'attractive'

UPDATED: Feb. 2 at 1:15 p.m.

Cigna still sees significant potential in the Medicare market, despite inking a deal earlier this week to sell its Medicare business to Health Care Service Corporation.

CEO David Cordani said on the company's earnings call Friday morning that the Medicare segment accounted for about $12 billion in revenue and that while Cigna still sees "the seniors market as an attractive growth market," the existing business would have required investments, focus, capital and resources that were "disproportionate to their size within the Cigna Group's portfolio."

For now, Cigna sees greater opportunity in engaging with Medicare through its Evernorth business, rather than offering Medicare Advantage, Part D and other coverage. 

In the deal with HCSC, for example, Evernorth is signed on to administer pharmacy benefits to the former Cigna Medicare plans for the next four years. Cordani said that the company has pushed to continue building relationships in the Medicare space through Evernorh.

"We've been quite deliberate now for several years, working to expand the service portfolio and the value proposition within Evernorth for health plan partners as it relates to their government services, be it Medicare, be it duals, be it Medicaid, et cetera," Cordani said. "And we're demonstrating a very attractive proven track record of growing our government reach but through the services franchise, and we will continue to fuel that on a go-forward basis and see that as an attractive trajectory for us."

Cigna and HCSC expect the $3.7 billion deal to close in the first quarter of 2025.

The Cigna Group beat the Street on both profit and revenue in the fourth quarter, where it reported $1 billion in earnings.

The company reported its Q4 results on Friday morning. The insurer brought in $51.1 billion in revenue for the quarter, according to the report.

By comparison, Cigna earned $1.2 billion in profit in the prior-year quarter, as well as $45.8 billion in revenue.

At the end of the year, the company posted $5.2 billion in profit and $195.3 billion in revenue. In 2022, it reported $6.7 billion in profit and $180.5 billion in revenue, according to the report.

"2023 was another very strong year for our company with consistent execution and sustained growth," said Cigna CEO David Cordani said in the press release. "We will accelerate our momentum in 2024 as we lead in improving value, affordability and clinical outcomes, as well as with expanding access and choice."

Fourth-quarter revenues at Cigna Healthcare, the company's insurance arm, were up 17% year-over-year, reaching $13 billion. Its full-year revenues were also up by double digits (14%) compared to 2022, reaching $51.2 billion.

At the end of 2023, Cigna reported 18.2 million members in its U.S.-based health plans, as well as 1.6 million in its global plans.

Revenues at Evernorth also grew year-over-year, according to the report. The segment reported $40.5 billion in revenue for Q4, up 12% over the prior-year quarter. Full-year revenues were up 9% in 2023 compared to 2022, hitting $153.5 billion.

Evernorth, which includes the pharmacy benefit management giant Express Scripts, boasted 98.6 million pharmacy customers at the end of 2023.

In addition to reporting its Q4 results, Cigna also set its guidance for 2024 on Friday. The company expects to earn at least $235 billion in revenue and $28.25 in earnings per share for the year.