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CNBC
01-07-2025
- Business
- CNBC
Goldman says this newly public obesity play can surge nearly 60%
Newly public virtual care company Omada Health is a strong pick for investors seeking long-term growth, according to Goldman Sachs. Analyst David Roman initiated coverage of Omada Health with a buy rating and 12-month price target of $29. That suggests roughly 58.5% potential upside ahead for the stock, which made its public debut on the Nasdaq on June 6. "At current levels — considering the growth trajectory of the business, near-term path to profitability, and below peer valuation — we see OMDA offering compelling risk/reward," Roman wrote in a Monday note to clients. Roman is particularly bullish on Omada's clinical value proposition and growth trajectory driven by its programs. Omada employs what it describes as a "between-visit care model" to virtually support patients with chronic conditions tied to obesity— such as prediabetes, diabetes and hypertension — between their regular doctor's appointments. According to Roman, the Omada program has seen strong results from clinical and economic studies, adding to its growth trajectory and value proposition for stakeholders. The company's approach has "resulted in an engaging patient experience, robust clinical evidence which we believe will be increasingly important to employer-customer decision markers, and a strong ROI proposition that should resonate with payors," he said. Separately, Roman believes that Omada has significant room to grow given that roughly 156 million patients in the U.S. have 1 or more chronic conditions, and because the cost burden of chronic conditions in the U.S. sits at over $1 trillion annually. "The company sits within a large are growing market opportunity where there are significant unmet needs and secular drivers of growth," he said. The San Francisco-based company has seen skyrocketing growth , boasting a 57% increase in first-quarter revenue to $55 million from $35.1 million during the same period last year. Omada generated $169.8 million in revenue in 2024, up 38% from $122.8 million the previous year. Looking ahead, Roman is optimistic that Omada's partnerships with weight management program EncircleRx and CVS, along with its GLP-1 program, could drive higher revenue growth. Omada went public in early June, pricing its IPO at $19 per share. Since then, however, shares are down slightly.
Yahoo
16-05-2025
- Business
- Yahoo
CI Q1 Earnings Call: Cigna Delivers Revenue Beat and Focuses on Healthcare Innovation
Health insurance company Cigna (NYSE:CI) beat Wall Street's revenue expectations in Q1 CY2025, with sales up 14.4% year on year to $65.5 billion. Its non-GAAP profit of $6.74 per share was 6.2% above analysts' consensus estimates. Is now the time to buy CI? Find out in our full research report (it's free). Revenue: $65.5 billion vs analyst estimates of $60.42 billion (14.4% year-on-year growth, 8.4% beat) Adjusted EPS: $6.74 vs analyst estimates of $6.35 (6.2% beat) Adjusted EBITDA: $2.81 billion vs analyst estimates of $2.86 billion (4.3% margin, 1.7% miss) Operating Margin: 3%, in line with the same quarter last year Free Cash Flow Margin: 2.4%, down from 7.9% in the same quarter last year Customers: 16.36 million, down from 17.5 million in the previous quarter Market Capitalization: $82.51 billion Cigna's Q1 results were shaped by continued momentum in its core health services and integrated benefits businesses, with leadership attributing growth to double-digit expansion in specialty pharmacy, strong pharmacy benefit services performance, and notable customer gains in the under-500 employer segment. CEO David Cordani highlighted the company's dual-platform model—EverNorth and Cigna Healthcare—as key to capturing new opportunities in a rapidly evolving healthcare landscape. New CFO Ann Dennison and President Brian Evanko, both recently appointed, also played prominent roles in outlining operational progress and financial discipline. Looking ahead, management's guidance is underpinned by expectations for sustained demand in specialty drugs, increased biosimilar adoption, and continued investments in digital tools and clinical programs. Cordani stated, "We are confident in our ability to sustainably deliver 10% to 14% compounded EPS growth over the strategic horizon," while Evanko emphasized new product launches and service enhancements, particularly around GLP-1 treatments, as important contributors to future growth. Cigna's management discussed several operational and strategic themes that influenced Q1 performance, with an emphasis on leveraging its platform strengths and responding to industry shifts. The quarter's results were largely attributed to product innovation, customer growth in targeted segments, and disciplined capital deployment. Specialty Pharmacy Expansion: Management pointed to double-digit growth in EverNorth's specialty and care services, driven by rising demand for clinically intensive medications and expanded biosimilar offerings, such as the new Humira and Stelara alternatives. GLP-1 Clinical Solutions: The company introduced new programs (EncircleRx, inReachRx, and InGuide) aimed at supporting GLP-1 medication access and affordability, addressing both employer cost concerns and patient adherence challenges. Customer Growth in Select Segment: Cigna Healthcare's under-500 employer group saw 9% year-over-year customer growth, attributed to flexible funding models and consultative client engagement, with management noting significant market share headroom. Medicare Business Divestiture: The completion of the Medicare business sale modestly benefited Q1 earnings and reflects Cigna's ongoing portfolio optimization, enabling a greater focus on core growth platforms. Capital Management Discipline: The company reaffirmed its capital allocation priorities: supporting business growth, pursuing bolt-on acquisitions, and returning excess capital to shareholders through repurchases and dividends. No major capability gaps were identified for near-term M&A focus. Management's outlook for the next quarter and full year centers on specialty drug growth, biosimilar adoption, and continued operational investments, while acknowledging ongoing industry cost pressures and regulatory change. Specialty Drug and Biosimilar Uptake: Management believes that expanding use of specialty medications and biosimilars, particularly GLP-1s and new interchangeable drugs, will underpin revenue and margin growth in both EverNorth and Cigna Healthcare. Digital and Clinical Program Investments: Ongoing rollout of digital tools and personalized clinical programs is expected to enhance patient experience, support client retention, and drive differentiation in the pharmacy benefits market. Regulatory and Cost Trend Risks: The company cited persistent medical cost trends, evolving drug pricing dynamics, and regulatory changes (e.g., state-level PBM legislation) as key variables that could affect future performance, with planning assumptions remaining prudent. Lisa Gill (JP Morgan): Asked about Cigna's strategy for negotiating better GLP-1 pricing and employer coverage trends. Management highlighted competition among manufacturers and comprehensive solution design, noting stable coverage rates and the potential for greater employer adoption as prices decline. A.J. Rice (UBS): Inquired about demand drivers in the pharmacy benefit selling season and employer focus areas. Management cited affordability, specialty drug growth, and personalized clinical programs as current priorities, with strong retention in Express Scripts and customer gains in the select segment. Justin Lake (Wolfe Research): Requested detail on stop-loss margin recovery and client feedback. Management reiterated that the margin improvement plan is on track, with revised pricing incorporated into renewals and retention levels holding steady. Charles Rhyee (TD Cowen): Asked about the impact of Arkansas legislation targeting PBM-pharmacy integration. Management opposed the bill, emphasizing the value of integrated capabilities for savings and access, and advocated for enhanced transparency and client choice instead of regulatory restrictions. Ann Hynes (Mizuho Securities): Queried Cigna's capital deployment and M&A priorities. Leadership reaffirmed a focus on supporting core growth, disciplined bolt-on acquisitions, and no immediate need for new capabilities in either health insurance or EverNorth. In the coming quarters, the StockStory team will monitor (1) the pace of specialty drug and biosimilar adoption, especially in GLP-1 and Stelara categories, (2) the effectiveness of new digital and clinical support tools in driving client retention and patient satisfaction, and (3) the company's execution on stop-loss margin improvement plans. Additional attention will be paid to regulatory developments affecting pharmacy benefit management and the competitive response to Cigna's evolving product portfolio. Cigna currently trades at a forward P/E ratio of 10.1×. Should you load up, cash out, or stay put? See for yourself in our free research report. Donald Trump's victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs. While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years. Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
03-05-2025
- Business
- Yahoo
Cigna doubles down on GLP-1 support programs with 2 new launches
This story was originally published on Healthcare Dive. To receive daily news and insights, subscribe to our free daily Healthcare Dive newsletter. Cigna is building on client demand for tools to support patients on GLP-1 weight loss drugs, announcing two new programs on Friday meant to improve clinical care around the dispensing of GLP-1s and provide home delivery of the medications. The programs come as payers that contract with Cigna's massive pharmacy benefit manager Express Scripts for their drug benefits want to offer GLP-1s but are put off by the medications' steep list prices and unpredictable long-term outcomes, according to Cigna. The programs were announced in tandem with Cigna's first quarter results, which came in well above analysts' expectations. Revenue of $65.5 billion was up more than 14% year over year, while net income of $1.3 billion compares to a loss of $277 million same time last year. Cigna raised its 2025 profit outlook following the results. Fresh off of reshuffling its C-suite and following a turbulent year for health insurers and pharmacy benefit managers, Cigna is doubling down on a reliable growth area: assuaging client concerns around covering GLP-1s, medications that have shown clear efficacy in helping patients shed pounds but can cost more than $1,000 each month. High list prices, coupled with the fact that many patients go off the medications and regain lost weight, have created an unclear return on investment for payers. However, employers and insurers are still looking for avenues to provide GLP-1s to their members, given steep consumer demand. Cigna's strategy is to provide wraparound programs to help patients make lifestyle changes to ensure any health benefits from GLP-1s stick, and provide financial guarantees to protect payers from unexpected GLP-1 cost hikes. Evernorth's initial program, called EncircleRx, launched early 2024 and has since ramped to cover 9 million patients, Cigna executives said on a Friday morning call with investors. Now, Evernorth is introducing EnReachRx, a GLP-1 support program that leans on pharmacists to optimize doses, detect any fraud or waste and help consumers manage any side effects; and EnGuide Pharmacy, a home delivery pharmacy that specializes in GLP-1s. Both programs will go live next month. 'We saw an opportunity to create new value in the GLP-1 space through the combination of addressing access, affordability, clinical safety and long-term lifestyle changes,' Cigna COO Brian Evanko said on the call. Evanko sought to differentiate Cigna's approach to GLP-1s from tactics taken by other PBMs to help clients manage surging costs while increasing patient access. CVS, which owns PBM Caremark, announced on Thursday that it had inked a deal with Danish drugmaker Novo Nordisk, which manufactures the GLP-1 Wegovy, to give Wegovy preferred placement on its standard formulary. That means Wegovy will be available to Caremark members at a lower price, but that other GLP-1s, such as Eli Lilly's Zepbound, could be more expensive. 'We don't necessarily see formulary placement or choosing one drug over another in this class as being sufficient to generate the societal impact that these drugs can have,' Evanko said, adding that competition, including among drugmakers and different brands of medications, 'tends to improve affordability.' Overall, Evernorth brought in $1.4 billion in adjusted income from operations in the quarter, up 5% year over year. Growth in the division's specialty and care business, which includes Evernorth's specialty pharmacy Accredo, was especially strong, with revenue swelling 19% year over year in the quarter — well above analyst expectations. The specialty segment also accounted for 30% of Cigna's entire income in the quarter, according to Evanko. Cigna chalked the growth in part up to increased adoption of biosimilars for Humira, AbbVie's blockbuster drug that treats a variety of inflammatory conditions like arthritis and Crohn's disease. Offering the copycats is potentially a quite lucrative play for Evernorth, giving the growing addressable market and that switching members to biosimilars is generally more profitable for Accredo. This month, Accredo also began offering a biosimilar for immunosuppressant Stelara, also at $0 out of pocket for eligible patients. Cigna executives cautioned investors that the new offering may not take off at the same rate as the Humira biosimilars but should bolster Evernorth's earnings over time. 'Each biosimilar will have different rates of adoption,' Evanko said. 'But that said we do expect to see gradual growth in Stelara biosimilars over the balance of the year ... and we expect a further step up in 2026.' Meanwhile, Cigna Healthcare, the company's health insurance division covering 18 million members, reported adjusted income from operations of $1.3 billion, down 4% year over year despite premium rate increases meant to cover higher medical costs. Its medical loss ratio, a key marker of spending on patient care, was 82.2%, compared to 79.9% same time last year. Executives chalked the increase up to higher costs in Cigna's stop-loss insurance segment that first hit the payer in the fourth quarter. Stop-loss insurance protects self-funded employers from health insurance costs above a certain amount. More workers utilizing pricey specialty medications and receiving high-acuity surgeries drove stop-loss costs significantly higher for Cigna, though the company is making progress on initiatives to improve margins starting in the back half of 2025, Evanko said. In addition, Cigna's $3.7 billion sale of its Medicare business to Health Care Service Corporation closed later than expected in the quarter, saddling Cigna with that business' higher costs and moderately boosting its MLR. But overall, medical costs were elevated but not more than the insurer had predicted, Cigna CFO Amy Dennison said. Cigna's MLR was around what analysts had expected, while the division's income was better. It was Dennison's first earnings call with investors after being appointed to the CFO role in March. Recommended Reading Cigna to tie executive compensation to customer satisfaction Sign in to access your portfolio
