Cigna Group raised its annual profit forecast on Thursday, helped by lower-than-expected medical costs and strength in its pharmacy benefit management unit.
The health insurer’s second forecast raise this year is in sharp contrast to some rivals that are struggling with increasing costs due to a much larger presence in the government-backed Medicare Advantage (MA) market for adults aged 65 and older.
Cigna is in the process of exiting that business, with its $3.3 billion sale to Health Care Service Corp that is expected to complete early next year.
The company now expects an adjusted profit of at least $28.40 per share in 2024, up 15 cents from its previous forecast.
UBS analyst AJ Rice said Cigna has “one of the better track records” among insurers in posting consistent earnings growth.
In the first quarter, Cigna’s medical care ratio, a percentage of premiums spent on medical care, came in at 79.9%, beating LSEG estimates of 81.87%.
Adjusted sales in its pharmacy benefit management unit, which manages drug benefits for clients such as insurers and large employers, jumped nearly 28% to $46.23 billion.
In the quarter, the company wrote off about $650 million owing to disruptions in processing claims and payments following a cyberattack at rival UnitedHealth’s technology unit Change Healthcare.
The hack at Change, a key player in the U.S. healthcare system, has impacted insurers, pharmacies and healthcare providers across the country.
Cigna swung to a net loss of 97 cents per share, as it recorded an impairment charge of $1.8 billion, or $6.31 per share, related to its minority ownership of clinic operator VillageMD.
Excluding the charge, Cigna reported a quarterly profit of $6.47 per share, topping LSEG estimates of $6.22.
Shares of the company fell 2% to $349.74.