With a medical loss ratio of 82.2%, insurer Cigna has felt less pressure around medical costs than its peers, allowing the company to pull in $1.3 billion in profit during the first quarter of the year.
While the medical loss ratio is higher than it was last year at this time (when it was 79.9%), its Medicare Advantage footprint is smaller than that of other insurers, allowing it to escape much of the elevated cost trend that has affected its competitors.
Medical costs were still slightly higher than expected, partially due to the sale of its Medicare business to Health Care Service Corporation during the quarter, which closed later than the insurer anticipated, "increasing the first quarter Cigna Healthcare [MLR] as the Medicare businesses operate at a higher [MLR] compared to the rest of the portfolio," the company said in an earnings release.
Higher-than-expected stop-loss costs also contributed to MLR performance, Cigna said.
"On March 19th, we completed the divestiture of our Medicare businesses to HCSC. This transaction closed about a month later than our financial planning assumptions," said Executive Vice President and CFO Ann Dennison during an earnings call Friday morning. "The timing of the closing modestly benefited our first quarter earnings, but had a greater impact on our medical care ratio as the Medicare businesses operate at a higher [MLR] compared to the rest of our portfolio. An additional month equates to an increase of approximately 100 basis points to our [MLR] in the first quarter"
WHAT'S THE IMPACT
Cigna brought in $65.5 billion in revenue during Q1, up from the $57.3 billion the company brought in a year ago at this time. Shareholders' net income for first quarter 2025 was $1.3 billion, or $4.85 per share.
During the call, CEO David Cordani emphasized the company's dual growth platforms, Evernorth (health services) and Cigna Healthcare (integrated benefits), noting their combined capabilities to address market needs, according to Seeking Alpha.
Adjusted revenue for Evernorth, which encompasses such Cigna businesses as pharmacy benefit manager Express Scripts, hit $57.3 billion, a 16% year-over-year (YOY) jump. Adjusted revenues at Express Scripts were up 14%.
Adjusted revenue for Cigna Healthcare was $14.5 billion, a 9% YOY increase, while medical membership decreased to 18 million, a 6% dip, which the company attributed to the sale of its Medicare business.
THE LARGER TREND
In March, former Cigna Healthcare CEO and Chief Financial Officer Brian Evanko was named president and chief operating officer of the Cigna Group as the company shuffled its top leadership.
The leadership changes, said Cigna, are designed to further drive the company's focus on patients and "accelerate its growth strategy."
Ann Dennison has been named executive vice president and chief financial officer, the Cigna Group, reporting to Cigna Group chairman and CEO David M. Cordani and joining the company's Enterprise Leadership Team. In that capacity, she'll have responsibility for all enterprise financial operations and functions.
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.