The Cigna Group Reports Strong First Quarter 2024 Results, Raises 2024 Outlook
-
Total revenues for the first quarter 2024 were
$57.3 billion -
Shareholders' net loss for the first quarter 2024 was
$0.3 billion , or$0.97 per share -
Adjusted income from operations1 for the first quarter 2024
was
$1.9 billion , or$6.47 per share -
2024 outlook2 for adjusted income from operations1,2 increased to at least
$28.40 per share
"Our strong first quarter results reflect the performance of our
Shareholders' net loss for first quarter 2024 was
The sale of our Medicare businesses to HCSC remains on track with the expiration of the waiting period under the Hart-Scott Rodino Act having occurred on
A reconciliation of shareholders' net (loss) income to adjusted income from operations1 is provided on the following page and on Exhibit 1 of this earnings release.
CONSOLIDATED HIGHLIGHTS
The following table includes highlights of results and reconciliations of total revenues to adjusted revenues3 and shareholders' net (loss) income to adjusted income from operations1:
Consolidated Financial Results (dollars in millions): |
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Three Months Ended |
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|
|
|
2024 |
2023 |
2023 |
|
|
|
|
Total Revenues |
$ 57,255 |
$ 46,517 |
$ 51,114 |
Net Realized Investment Results from Equity Method Investments3 |
(8) |
(38) |
35 |
Adjusted Revenues3 |
$ 57,247 |
$ 46,479 |
$ 51,149 |
|
|
|
|
Consolidated Earnings, net of taxes |
|
|
|
Shareholders' Net (Loss) Income |
$ (277) |
$ 1,267 |
$ 1,029 |
Net Realized Investment Losses1 |
1,827 |
6 |
58 |
Amortization of Acquired Intangible Assets1 |
322 |
344 |
360 |
Special Items1 |
3 |
1 |
552 |
Adjusted Income from Operations1 |
$ 1,875 |
$ 1,618 |
$ 1,999 |
|
|
|
|
Shareholders' Net (Loss) Income, per share |
$ (0.97) |
$ 4.24 |
$ 3.49 |
Adjusted Income from Operations1, per share |
$ 6.47 |
$ 5.41 |
$ 6.79 |
- Total revenues for first quarter 2024 increased 23% from first quarter 2023, primarily driven by significant growth in
Evernorth Health Services , reflecting several large client wins. - Adjusted income from operations1 for first quarter 2024 increased 16% from first quarter 2023, reflecting strong contributions from
Cigna Healthcare and Evernorth Health Services . - The SG&A expense ratio4 and adjusted SG&A expense ratio4 were 6.5% and 6.4%, respectively, for first quarter 2024, compared to 7.6% for both ratios in first quarter 2023, reflecting business mix shift and continued operating efficiency.
- The debt-to-capitalization ratio was 44.3% at
March 31, 2024 compared to 40.1% atDecember 31, 2023 , primarily reflecting timing of debt issuance, in part due to the Accelerated Share Repurchase Agreements (ASR Agreements). - Year to date through
May 1, 2024 , the company purchased 10.1 million shares of common stock for approximately$3.4 billion . This includes the initial delivery of 7.6 million shares of common stock in accordance with the ASR Agreements. Final settlement under the ASR Agreements is expected to occur in second quarter 2024.
CUSTOMER RELATIONSHIPS
The following table summarizes
Customer Relationships (in thousands): |
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As of the Periods Ended |
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2024 |
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|
2023 |
2023 |
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|
|
|
|
|
|
|
|
|
|
|
|
Total Pharmacy Customers5 |
|
|
|
|
122,767 |
|
|
|
|
|
98,749 |
98,570 |
|
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|
|
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|
|
|
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|
|
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|
17,562 |
|
|
|
|
|
17,869 |
18,170 |
|
|
|
|
|
1,622 |
|
|
|
|
|
1,604 |
1,610 |
Total Medical Customers5 |
|
|
|
|
19,184 |
|
|
|
|
|
19,473 |
19,780 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Behavioral Care |
|
|
|
|
23,801 |
|
|
|
|
|
26,890 |
24,956 |
Dental |
|
|
|
|
18,443 |
|
|
|
|
|
18,731 |
18,543 |
Medicare Part D |
|
|
|
|
2,558 |
|
|
|
|
|
2,541 |
2,550 |
|
|
|
|
|
|
|
|
|
|
|
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Total Customer Relationships5 |
|
|
|
|
186,753 |
|
|
|
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|
166,384 |
164,399 |
- Total pharmacy customers5 at
March 31, 2024 increased 25% fromDecember 31, 2023 to 122.8 million due to new sales and the continued expansion of relationships. - Total medical customers5 at
March 31, 2024 were 19.2 million, primarily reflecting a year-to-date decrease in Individual and Family Plans customers, driven by targeted pricing actions in certain geographies. - Behavioral Care customers5 at
March 31, 2024 were 23.8 million. The year-over-year decrease was primarily due to known non-renewal of supplemental behavioral coverage contracts, which were insignificant to total revenues and adjusted income from operations.
HIGHLIGHTS OF SEGMENT RESULTS
See Exhibit 1 for a reconciliation of adjusted income (loss) from operations1 to shareholders' net (loss) income.
This segment partners with health plans, employers, governmental organizations and health care providers to solve challenges in the areas of pharmacy benefits, home delivery pharmacy, specialty pharmacy, specialty distribution, and care delivery and management solutions.
Pharmacy Benefit Services drives high-quality, cost-effective pharmacy care through various services such as drug claim adjudication, retail pharmacy network administration, benefit design consultation, drug utilization review, drug formulary management and access to our home delivery pharmacy. Specialty and Care Services provides specialty drugs for the treatment of complex and rare diseases, specialty distribution of pharmaceuticals and medical supplies, as well as clinical programs to help our clients drive better whole-person health outcomes through Care Delivery and Management Solutions.
Financial Results (dollars in millions): |
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Three Months Ended |
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2024 |
2023 |
2023 |
|
|
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|
Adjusted Revenues3 |
$ 46,226 |
$ 36,179 |
$ 40,519 |
Adjusted Income from Operations, Pre-Tax1 |
$ 1,360 |
$ 1,320 |
$ 1,890 |
Adjusted Margin, Pre-Tax6 |
2.9 % |
3.6 % |
4.7 % |
- First quarter 2024 adjusted revenues3 increased 28% relative to first quarter 2023, reflecting several large client wins and continued expansion of existing relationships as well as strong organic growth in Specialty and Care Services businesses.
- First quarter 2024 adjusted income from operations, pre-tax1, increased 3% relative to first quarter 2023, reflecting growth in Specialty and Care Services businesses and continued affordability improvements, partially offset by planned investments related to the onboarding costs of new clients and continued advancement of our digital capabilities and care solutions.
- First quarter 2024 adjusted margin, pre-tax6, was 2.9% compared to 3.6% for first quarter 2023, reflecting several large client wins and business mix.
This segment includes the
Financial Results (dollars in millions): |
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Three Months Ended |
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|
2024 |
2023 |
2023 |
|
|
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|
Adjusted Revenues3,7 |
$ 13,277 |
$ 12,718 |
$ 13,005 |
Adjusted Income from Operations, Pre-Tax1 |
$ 1,340 |
$ 1,115 |
$ 969 |
Adjusted Margin, Pre-Tax6 |
10.1 % |
8.8 % |
7.5 % |
- First quarter 2024 adjusted revenues3,7 grew 4%, over first quarter 2023, reflecting premium rate increases to cover expected increases in underlying medical costs, and business mix.
- First quarter 2024 adjusted income from operations, pre-tax1, increased 20% relative to first quarter 2023, primarily driven by a lower MCR4 and continued operating efficiency.
- The Cigna Healthcare MCR4 was 79.9% for first quarter 2024 compared to 81.3% for first quarter 2023, reflecting continued strong performance across our
U.S. Healthcare businesses driven by effective pricing execution, affordability initiatives, and business mix, including within the Individual and Family Plans business. -
Cigna Healthcare net medical costs payable8 was$5.66 billion atMarch 31, 2024 ,$4.74 billion atMarch 31, 2023 , and$4.86 billion atDecember 31, 2023 . The increase was primarily driven by claims submission and payment process disruptions related to a third-party cyber incident. Favorable prior year reserve development on a gross pre-tax basis was$226 million and$144 million for the three months endedMarch 31, 2024 and 2023, respectively.
Corporate and Other Operations
Corporate reflects interest expense, amounts not allocated to operating segments and includes intersegment eliminations. Additionally, this discussion includes items reported in Other Operations, which is comprised of
Financial Results (dollars in millions): |
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Three Months Ended |
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2024 |
2023 |
2023 |
|
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Adjusted (Loss) from Operations, Pre-Tax1 |
$ (391) |
$ (399) |
$ (400) |
2024 OUTLOOK2
(dollars in millions, except where noted and per share amounts) |
|
|
2024 Consolidated Metrics |
Projection for Full Year Ending
|
Change from Prior Projection |
Adjusted Revenues2,3 |
at least |
|
Adjusted Income from Operations1,2 |
at least |
|
Adjusted Income from Operations, per share1,2 |
at least |
|
Adjusted SG&A Expense Ratio2,4 |
~6.1% |
|
Adjusted Effective Tax Rate2,9 |
20.5% to 21.0% |
|
Cash Flow from Operations2 |
at least |
|
Weighted Average Shares Outstanding (millions)2 |
282 to 286 |
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2024 Evernorth Metrics |
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|
Adjusted Income from Operations, Pre-Tax1,2 |
at least |
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2024 Cigna Healthcare Metrics |
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|
Adjusted Income from Operations, Pre-Tax1,2 |
at least |
|
Medical Care Ratio2,4 |
81.7% to 82.5% |
-10 bps at the midpoint |
Total Medical Customers2,5 |
~19.3M |
|
The foregoing statements represent the Company's current estimates of
This quarterly earnings release and the Quarterly Financial Supplement are available on
The call-in numbers for the conference call are as follows:
Live Call
(888) 566-1889 (Domestic)
(773) 799-3989 (International)
Passcode: 05022024
Replay
(866) 407-9272 (Domestic)
(203) 369-0617 (International)
It is strongly suggested you dial in to the conference call by
About
Notes:
1. Adjusted income (loss) from operations is a principal financial measure of profitability used by The Cigna Group's management because it presents the underlying results of operations of the Company's businesses and permits analysis of trends in underlying revenue, expenses and shareholders' net income (loss). Adjusted income from operations is defined as shareholders' net income (loss) (or income (loss) before income taxes less pre-tax income (loss) attributable to noncontrolling interests for the segment metric) excluding net realized investment results, amortization of acquired intangible assets and special items.
2. Management is not able to provide a reconciliation of adjusted income from operations to shareholders' net (loss) income, adjusted revenues to total revenues, adjusted SG&A expense ratio to SG&A expense ratio, or adjusted effective tax rate to effective tax rate, on a forward-looking basis because it is unable to predict, without unreasonable effort, certain components thereof including (i) future net realized investment results (from equity method investments with respect to adjusted revenues) and (ii) future special items. These items are inherently uncertain and depend on various factors, many of which are beyond
The Company's outlook excludes the potential effects of any other business combinations that may occur after the date of this earnings release. The Company's outlook includes the potential effects of expected future share repurchases and anticipated 2024 dividends.
The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions, and alternate uses of capital. The share repurchase program may be effected through open market purchases in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended, including through Rule 10b5-1 trading plans, or privately negotiated transactions. The program may be suspended or discontinued at any time.
3. Adjusted revenues is used by The Cigna Group's management because it permits analysis of trends in underlying revenue. The Company defines adjusted revenues as total revenues excluding the following adjustments: special items and
4. Operating ratios are defined as follows:
-
The Cigna Healthcare medical care ratio ("MCR") represents medical costs as a percentage of premiums for allCigna Healthcare risk products provided through guaranteed cost or experience-rated funding arrangements. -
SG&A expense ratio on a GAAP basis for the first quarter 2024 represents enterprise selling, general and administrative expenses of
$3,705 million as a percentage of total revenue of$57.3 billion at a consolidated level. SG&A expense ratio on a GAAP basis for the first quarter 2023 represents enterprise selling, general and administrative expenses of$3,538 million as a percentage of total revenue of$46.5 billion at a consolidated level. -
Adjusted SG&A expense ratio for the first quarter 2024 represents enterprise selling, general and administrative expenses of
$3,668 million excluding special items of$37 million as a percentage of adjusted revenue at a consolidated level. Adjusted SG&A expense ratio for the first quarter 2023 represents enterprise selling, general and administrative expenses of$3,537 million excluding special items of$1 million as a percentage of adjusted revenue at a consolidated level.
5. Customer relationships are defined as follows:
-
Total medical customers includes individuals who meet any one of the following criteria: are covered under a medical insurance policy, managed care arrangement, or service agreement issued by
Cigna Healthcare ; have access toCigna Healthcare's provider network for covered services under their medical plan; or have medical claims that are administered byCigna Healthcare . -
During the fourth quarter of 2023, the
U.S. Commercial andU.S. Government operating segments combined to form theU.S. Healthcare operating segment. Information presented for three months endedMarch 31, 2023 has been restated to conform to the new operating segment presentation.
6. Adjusted margin, pre-tax, is calculated by dividing adjusted income (loss) from operations, pre-tax by adjusted revenues for each segment.
7. The Cigna Group owns noncontrolling interests in certain operating joint ventures. As such, the adjusted revenues for the
8. Medical costs payable within the Cigna Healthcare segment are presented net of reinsurance and other recoverables. The gross medical costs payable balance was
9. The measure "adjusted effective tax rate" is not determined in accordance with GAAP and should not be viewed as a substitute for the most directly comparable GAAP measure, "consolidated effective tax rate". We define adjusted effective tax rate as the consolidated income tax rate applicable to the Company's pre-tax income excluding pre-tax income (loss) attributable to noncontrolling interests, net realized investment results, amortization of acquired intangible assets, and special items. The Cigna Group's share of certain realized investment results of its joint ventures reported in the
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release, and oral statements made in connection with this release, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on
Forward-looking statements are subject to risks and uncertainties, both known and unknown, that could cause actual results to differ materially from those expressed or implied in forward-looking statements. Such risks and uncertainties include, but are not limited to: our ability to achieve our strategic and operational initiatives; our ability to adapt to changes in an evolving and rapidly changing industry; our ability to compete effectively, differentiate our products and services from those of our competitors and maintain or increase market share; price competition, inflation and other pressures that could compress our margins or result in premiums that are insufficient to cover the cost of services delivered to our customers; the potential for actual claims to exceed our estimates related to expected medical claims; our ability to develop and maintain satisfactory relationships with physicians, hospitals, other health service providers and with producers and consultants; our ability to maintain relationships with one or more key pharmaceutical manufacturers or if payments made or discounts provided decline; changes in the pharmacy provider marketplace or pharmacy networks; changes in drug pricing or industry pricing benchmarks; our ability to invest in and properly maintain our information technology and other business systems; our ability to prevent or contain effects of potential cyberattack or other privacy or data security incidents; risks related to our use of artificial intelligence and machine learning; political, legal, operational, regulatory, economic and other risks that could affect our multinational operations, including currency exchange rates; risks related to strategic transactions and realization of the expected benefits of such transactions, as well as integration or separation difficulties or underperformance relative to expectations; dependence on success of relationships with third parties; risk of significant disruption within our operations or among key suppliers or third parties; potential liability in connection with managing medical practices and operating pharmacies, onsite clinics and other types of medical facilities; the substantial level of government regulation over our business and the potential effects of new laws or regulations or changes in existing laws or regulations; uncertainties surrounding participation in government-sponsored programs such as Medicare; the outcome of litigation, regulatory audits and investigations; compliance with applicable privacy, security and data laws, regulations and standards; potential failure of our prevention, detection and control systems; unfavorable economic and market conditions, the risk of a recession or other economic downturn and resulting impact on employment metrics, stock market or changes in interest rates and risks related to a downgrade in financial strength ratings of our insurance subsidiaries; the impact of our significant indebtedness and the potential for further indebtedness in the future; credit risk related to our reinsurers; as well as more specific risks and uncertainties discussed in our most recent report on Form 10-K and subsequent reports on Forms 10-Q and 8-K available through the Investor Relations section of www.thecignagroup.com. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made, are not guarantees of future performance or results, and are subject to risks, uncertainties and assumptions that are difficult to predict or quantify.
THE CIGNA GROUP |
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Exhibit 1 |
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COMPARATIVE SUMMARY OF FINANCIAL RESULTS (unaudited) |
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Three Months Ended |
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Three Months Ended |
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(Dollars in millions, except per share amounts) |
|
2024 |
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2023 |
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2023 |
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REVENUES |
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Pharmacy revenues |
|
|
|
|
|
|
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|
Premiums |
|
11,603 |
|
|
11,025 |
|
|
11,175 |
Fees and other revenues |
|
3,326 |
|
|
3,071 |
|
|
3,045 |
Net investment income |
|
290 |
|
|
277 |
|
|
290 |
Total Revenues |
|
57,255 |
|
|
46,517 |
|
|
51,114 |
Net realized investment results from certain equity method investments |
|
(8) |
|
|
(38) |
|
|
35 |
Adjusted revenues (1) |
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|
|
Shareholders' net (loss) income |
|
$ (277) |
|
|
$ 1,267 |
|
|
$ 1,029 |
Pre-tax adjusted income (loss) from operations by segment |
|
|
|
|
|
|
|
|
|
|
$ 1,360 |
|
|
$ 1,320 |
|
|
$ 1,890 |
|
|
1,340 |
|
|
1,115 |
|
|
969 |
Corporate and Other Operations |
|
(391) |
|
|
(399) |
|
|
(400) |
Consolidated pre-tax adjusted income from operations |
|
2,309 |
|
|
2,036 |
|
|
2,459 |
Adjusted income tax expense |
|
(434) |
|
|
(418) |
|
|
(460) |
Consolidated after-tax adjusted income from operations |
|
$ 1,875 |
|
|
$ 1,618 |
|
|
$ 1,999 |
|
|
|
|
|
|
|
|
|
Weighted average shares (in thousands) (2) |
|
289,717 |
|
|
298,999 |
|
|
294,565 |
Common shares outstanding (in thousands) |
|
284,014 |
|
|
296,249 |
|
|
292,504 |
SHAREHOLDERS' EQUITY at |
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SHAREHOLDERS' EQUITY PER SHARE at |
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Three Months Ended |
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Three Months Ended |
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2024 |
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2023 |
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2023 |
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(Dollars in millions, except per share amounts) |
Pre-tax |
After-tax |
|
Pre-tax |
After-tax |
|
Pre-tax |
After-tax |
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SHAREHOLDERS' NET (LOSS) INCOME |
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|
|
|
Shareholders' net (loss) income |
|
$ (277) |
|
|
$ 1,267 |
|
|
$ 1,029 |
Adjustments to reconcile adjusted income from operations |
|
|
|
|
|
|
|
|
Net realized investment losses (3) |
$ 1,828 |
1,827 |
|
$ 18 |
6 |
|
$ 69 |
58 |
Amortization of acquired intangible assets |
423 |
322 |
|
459 |
344 |
|
451 |
360 |
Special Items |
|
|
|
|
|
|
|
|
Integration and transaction-related costs |
37 |
29 |
|
1 |
1 |
|
25 |
20 |
Loss (gain) on sale of businesses |
19 |
(43) |
|
— |
— |
|
1,478 |
1,410 |
Deferred tax expenses (benefits), net |
— |
17 |
|
— |
— |
|
— |
(1,071) |
Charge for organizational efficiency plan |
— |
— |
|
— |
— |
|
252 |
193 |
Adjusted income from operations (5) |
|
$ 1,875 |
|
|
$ 1,618 |
|
|
$ 1,999 |
|
|
|
|
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DILUTED EARNINGS PER SHARE |
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|
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|
Shareholders' net (loss) income (4) |
|
$ (0.97) |
|
|
$ 4.24 |
|
|
$ 3.49 |
Adjustments to reconcile to adjusted income from operations |
|
|
|
|
|
|
|
|
Net realized investment losses (3) |
$ 6.31 |
6.31 |
|
$ 0.06 |
0.02 |
|
$ 0.23 |
0.20 |
Amortization of acquired intangible assets |
1.46 |
1.10 |
|
1.54 |
1.15 |
|
1.53 |
1.22 |
Special Items |
|
|
|
|
|
|
|
|
Integration and transaction-related costs |
0.12 |
0.10 |
|
— |
— |
|
0.08 |
0.07 |
Loss (gain) on sale of businesses |
0.07 |
(0.15) |
|
— |
— |
|
5.02 |
4.79 |
Deferred tax expenses (benefits), net |
— |
0.06 |
|
— |
— |
|
— |
(3.64) |
Charge for organizational efficiency plan |
— |
— |
|
— |
— |
|
0.86 |
0.66 |
Adjusted income from operations (2) (5) |
|
$ 6.47 |
|
|
$ 5.41 |
|
|
$ 6.79 |
|
(1) Adjusted revenues is defined as total revenues excluding the following adjustments: special items and |
(2) The calculation of weighted average shares includes the impact of potentially dilutive securities for the calculation of Adjusted income from operations per share. |
(3) Includes Net realized investment losses as presented in our Consolidated Statements of Income, as well as the Company's share of certain realized investment results of its joint ventures reported in the |
(4) For the three months ended |
(5) Adjusted income (loss) from operations is defined as shareholders' net income (loss) (or income (loss) before income taxes less pre-tax income (loss) attributable to noncontrolling interests for the segment metric) excluding the following adjustments: net realized investment results, amortization of acquired intangible assets and special items. |
INVESTOR RELATIONS CONTACT:
860-787-7968
Ralph.Giacobbe@TheCignaGroup.com
MEDIA CONTACT:
860-810-6523
Justine.Sessions@Evernorth.com
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