Cigna Profits Hit $1.3 Billion As Health Insurer Gets Handle On Costs
Cigna, which includes Evernorth Health Services and one of the nation's largest pharmacy benefit management companies, said first quarter net income was $1.3 billion, or $4.85 per share, compared with a net loss of $277 million, or 97 cents per share, in the first quarter of last year.
Total revenues for the first quarter jumped 14% to $65.5 billion 'reflecting growth of existing client relationships and strong specialty pharmacy growth in Evernorth Health Services,' Cigna said in its first quarter earnings report released Friday.
The potential for future growth and a health insurance business with potentially lower costs thanks to a divestiture of Medicare-related businesses figured in Cigna's newly disclosed financial outlook released Friday showing more promising earnings for the rest of 2025.
Like other health insurers, Cigna has been grappling with rising medical costs and the first quarter was no different. Cigna's medical cost ratio (MCR), which is the percentage of premium revenue that goes toward medical costs, was 82.2% for the first quarter of 2025 compared to 79.9% for first quarter of last year.
'The increase for the first quarter was primarily driven by expected higher stop loss medical costs,' Cigna said in its report. Meanwhile, Cigna said its sale of its Medicare health benefits businesses to Health Care Service Corp. in late March 'closed later than the company's financial planning assumptions, increasing the first quarter Cigna Healthcare MCR as the Medicare businesses operate at a higher MCR compared to the rest of the portfolio.'
Looking ahead, however, Medicare costs won't be an issue for Cigna like its rivals that operate Medicare Advantage plans for seniors. Operators of Medicare Advantage have been hit hard in the last year with higher costs that have spilled over on to their stock prices.
Medicare Advantage plans contract with the federal government to provide extra benefits and services to seniors, such as disease management and nurse help hotlines with some also offering vision, dental care and wellness programs.
During the first quarter, Cigna closed the sale of its Medicare health benefits businesses and a medical care provider services operation for $3.3 billion to Health Care Service Corp., the parent of five Blue Cross and Blue Shield health insurance plans. Health Care Service, which operates Blue Cross and Blue Shield health plans in five states, now owns Cigna's Medicare Advantage plans, Cigna supplemental benefits, Medicare Part D drug benefits and CareAllies, a business that helps medical care providers with various administrative services and contracting.
Cigna's focus is now on its businesses that include commercial health plans, administration of health benefits for employers and its Evernorth health services business that includes the large pharmacy benefit manager, Express Scripts.
'We are building a more sustainable health care model by successfully delivering on our series of commitments and actions to improve transparency and support for our customers and patients,' said Cigna chairman and chief executive officer David M. Cordani. 'Our strong first quarter results and increase in outlook for full-year earnings reflects the strength of our Evernorth Health Services and Cigna Healthcare growth platforms in a dynamic environment.'
Cigna said its outlook for full year 2025 consolidated adjusted income from operations is $29.60 per share.
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