Cigna Reports Strong Second Quarter 2022 Results, Raises 2022 Outlook
04 Aug 2022
Total revenues in the second quarter were $45.5 billion
Shareholders' net income for the second quarter was $1.6 billion, or $4.90 per share
Adjusted income from operations2 for the second quarter was $2.0 billion, or $6.22 per share
Adjusted income from operations2,3 for 2022 is now projected to be at least $22.90 per share3
BLOOMFIELD, Conn., Aug. 4, 2022 /PRNewswire/ -- Global health services company Cigna Corporation (NYSE: CI) today reported strong second quarter 2022 results reflecting revenue and earnings growth across its businesses.
"Our focus on our customers, patients and clients continues to resonate in the market as our strong results and positive momentum reinforce the value we are delivering," said David M. Cordani, chairman and chief executive officer. "Evernorth and Cigna Healthcare continue driving our strong performance, and our focus on ongoing innovation positions us for sustained, differentiated growth."
Total revenues for second quarter 2022 were $45.5 billion. Adjusted revenues1 were $45.4 billion and reflect strong contributions from each of Cigna's ongoing businesses.
Shareholders' net income for second quarter 2022 was $1.6 billion, or $4.90 per share, compared with $1.5 billion, or $4.25 per share, for second quarter 2021.
Cigna's adjusted income from operations2 for second quarter 2022 was $2.0 billion, or $6.22 per share, compared with $1.8 billion, or $5.24 per share, for second quarter 2021 reflecting strong earnings contributions across the Company's businesses.
Reconciliations of total revenues to adjusted revenues1 and of shareholders' net income to adjusted income from operations2 are 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 revenues1 and shareholders' net income to adjusted income from operations2:
Adjusted income from operations2 for the second quarter 2022 increased 9.6% from second quarter 2021 with strong contributions from Evernorth and Cigna Healthcare.
The adjusted SG&A expense ratio4 was 7.1% for second quarter 2022 compared to 6.9% for second quarter 2021.
The debt-to-capitalization ratio was 42.1% at June 30, 2022, in line with first quarter 2022.
Year to date through June 30, 2022, the Company repurchased 9.7 million shares of common stock for approximately $2.3 billion. Additionally, in July 2022, the Company received an initial delivery of 10.4 million shares of our common stock in accordance with the Accelerated Share Repurchase Agreements announced in June.
The following table summarizes Cigna's medical customers and overall customer relationships:
Total customer relationships5 at second quarter 2022 grew by 3% year to date to 191.3 million.
The total medical customer base5,6 at second quarter 2022 grew to 17.8 million, an increase of 725,000 customers year to date, driven by growth in U.S. Commercial fee-based client relationships, partially offset by a decrease in U.S. Government inclusive of the divestiture of the Medicaid business.
HIGHLIGHTS OF SEGMENT RESULTS
See Exhibit 1 for a reconciliation of adjusted income (loss) from operations2 to shareholders' net income.
Evernorth
This segment includes a broad range of coordinated and point solution health services and capabilities, including pharmacy benefits services, specialty pharmacy and care services, which are provided to health plans, employers, government organizations, and health care providers.
Second quarter 2022 adjusted revenues1 increased 7% relative to second quarter 2021 reflecting strong organic growth in specialty pharmacy services.
Second quarter 2022 adjusted income from operations, pre-tax2 increased 4% relative to second quarter 2021, reflecting continued affordability improvements, growth in specialty pharmacy and specialty distribution businesses and expense favorability. These were partially offset by strategic investments in expanding our services portfolio and digital capabilities as well as lower network and home delivery volumes.
6
This segment includes Cigna's U.S. Commercial, U.S. Government, and International Health businesses that provide comprehensive medical and coordinated solutions to clients and customers. U.S. Commercial products and services include medical, pharmacy, behavioral health, dental, vision, health advocacy programs and other products and services for insured and self-insured customers. U.S. Government solutions include Medicare Advantage, Medicare Supplement, and Medicare Part D plans for seniors, and individual health insurance plans both on and off the public exchanges. International Health solutions include health care coverage in our international markets, as well as health care benefits for globally mobile individuals and employees of multinational organizations.
Second quarter 2022 adjusted revenues1,8 grew 4% over second quarter 2021 absent the divestiture of our Medicaid business11. This reflects increased specialty contributions, premium increases to cover underlying cost trends and U.S. Commercial customer growth.
Second quarter 2022 adjusted income from operations, pre-tax2 and adjusted margin, pre-tax7 increased 18% relative to second quarter 2021 primarily due to a lower MCR4 and increased specialty contributions, partially offset by the absence of favorable non-recurring items recorded in second quarter 2021.
The Cigna Healthcare MCR4 of 80.7% for second quarter 2022 compares to 84.4% for second quarter 2021, reflecting moderated medical costs, including lower direct COVID-19 costs and effective execution in pricing and affordability initiatives in our U.S. Commercial business, as well as improved Medicare Advantage risk adjustment revenues.
Cigna Healthcare net medical costs payable9 was $4.29 billion at June 30, 2022, $4.02 billion at June 30, 2021, and $4.00 billion at December 31, 2021. Favorable prior year reserve development on a gross pre-tax basis was $268 million and $228 million through second quarter 2022 and 2021, respectively.
Corporate and Other Operations
6
Corporate reflects interest expense, as well as amounts not allocated to operating segments and includes intersegment eliminations. Additionally, this discussion includes items reported in Other Operations which is comprised of the international life, accident, and supplemental benefits businesses6, Corporate Owned Life Insurance ("COLI"), our interest in a joint venture in Türkiye and the Company's run-off operations.
Second quarter 2022 adjusted loss from operations, pre-tax2 was unfavorable to second quarter 2021 primarily reflecting an increase in operating expenses for enterprise-wide initiatives.
On July 1, 2022, the Company completed the sale of its life, accident and supplemental benefits businesses in six countries (Hong Kong, Indonesia, New Zealand, South Korea, Taiwan and Thailand) to Chubb for approximately $5.4 billion in cash.
2022 OUTLOOK
Cigna's outlook for full year 2022 adjusted revenues1,3 is projected to be at least $178 billion. Cigna's outlook for full year 2022 consolidated adjusted income from operations2,3 is projected to be at least $7.165 billion, or at least $22.90 per share3. Additionally, this outlook includes the impact of expected future share repurchases and anticipated 2022 dividends.
The foregoing statements represent the Company's current estimates of Cigna's 2022 consolidated and segment adjusted income from operations2,3 and other key metrics as of the date of this release. Actual results may differ materially depending on a number of factors. Investors are urged to read the Cautionary Note Regarding Forward-Looking Statements included in this release. Management does not assume any obligation to update these estimates.
This quarterly earnings release and the Quarterly Financial Supplement are available on Cigna's website in the Investor Relations section (https://investors.cigna.com/home/default.aspx). Management will be hosting a conference call to review second quarter 2022 results and discuss full year 2022 outlook beginning today at 8:30 a.m. ET. A link to the conference call is available in the Investor Relations section of Cigna's website located at https://investors.cigna.com/events-and-presentations/default.aspx.
The call-in numbers for the conference call are as follows:
Live Call
(888) 455-5036 (Domestic)
(773) 799-3981 (International)
Passcode: 842022
Replay
(800) 934-9697 (Domestic)
(203) 369-3395 (International)
It is strongly suggested you dial in to the conference call by 8:15 a.m. ET.
About Cigna
Cigna Corporation (NYSE: CI) is a global health services company dedicated to improving the health, well-being and peace of mind of those we serve. Cigna delivers choice, predictability, affordability and access to quality care through integrated capabilities and connected, personalized solutions that advance whole person health. All products and services are provided exclusively by or through operating subsidiaries of Cigna Corporation, including Cigna Health and Life Insurance Company, Connecticut General Life Insurance Company, Evernorth companies or their affiliates, and Express Scripts companies or their affiliates. Such products and services include an integrated suite of health services, such as medical, dental, behavioral health, pharmacy, vision, supplemental benefits, and other related products.
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 Cigna's current expectations and projections about future trends, events and uncertainties. These statements are not historical facts. Forward-looking statements may include, among others, statements concerning our projected adjusted income from operations outlook for 2022 on a consolidated, per share, and segment basis; projected adjusted revenue outlook for 2022; projected total medical customer growth over year end 2021; projected medical care and adjusted SG&A expense ratios; projected consolidated adjusted tax rate; projected cash flow from operations; future dividends; projected weighted average shares outstanding; future financial or operating performance, including our ability to deliver affordable, personalized and innovative solutions for our customers and clients, including in light of the challenges presented by the COVID-19 pandemic; future growth, business strategy, strategic or operational initiatives; economic, regulatory or competitive environments, particularly with respect to the pace and extent of change in these areas and the impact of the developing inflationary pressures; the ongoing Russia-Ukraine conflict; financing or capital deployment plans and amounts available for future deployment; our prospects for growth in the coming years; strategic transactions, including the sale of our international life, accident and supplemental benefits businesses; and other statements regarding Cigna's future beliefs, expectations, plans, intentions, liquidity, cash flows, financial condition or performance. You may identify forward-looking statements by the use of words such as "believe," "expect," "project," "plan," "intend," "anticipate," "estimate," "predict," "potential," "may," "should," "will" or other words or expressions of similar meaning, although not all forward-looking statements contain such terms.
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; political, legal, operational, regulatory, economic and other risks that could affect our multinational operations; the scale, scope and duration of the COVID-19 pandemic and its potential impact on our business, operating results, cash flows or financial condition; risks related to strategic transactions and realization of the expected benefits of such transactions, including with respect to the sale of our international life, accident and supplemental benefits businesses, 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; our ability to invest in and properly maintain our information technology and other business systems; our ability to prevent or contain effects of a potential cyberattack or other privacy or data security incident; 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 including the risk of a recession or other economic downturn and resulting impact on employment metrics, stock market or interest rate declines 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; unfavorable industry, economic or political conditions; 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.cigna.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. Cigna undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by law.
INVESTOR RELATIONS CONTACT:
Ralph Giacobbe
860-787-7968
[email protected]
Justine Sessions
860-810-6523
[email protected]
SOURCE Cigna
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