Total revenues in the third quarter were $49.0 billion
Shareholders' net income for the third quarter was $1.4 billion, or $4.74 per share
Adjusted income from operations1 for the third quarter was $2.0 billion, or $6.77 per share
2023 outlook2 for adjusted income from operations1,2 increased to at least $24.75 per share2
BLOOMFIELD, Conn., Nov. 2, 2023 /PRNewswire/ -- Global health company The Cigna Group (NYSE: CI) today reported strong third quarter results reflecting revenue and earnings growth across its diversified portfolio of businesses.
"We continued to drive growth in the third quarter by harnessing our deep clinical expertise and service capabilities across our company, supporting high-quality care, improved affordability and better outcomes," said David M. Cordani, chairman and chief executive officer. "With disciplined execution and continued innovation across Evernorth Health Services and Cigna Healthcare, we're meeting the evolving needs of those we serve."
Shareholders' net income for the third quarter 2023 was $1.4 billion, or $4.74 per share, compared with $2.8 billion, or $8.97 per share, for the third quarter 20223, which included an after-tax gain of $1.4 billion, or $4.52 per share, from the Chubb Transaction4.
The Cigna Group's adjusted income from operations1 for the third quarter 2023 was $2.0 billion, or $6.77 per share, compared with $1.9 billion, or $6.05 per share, for the third quarter 20223, reflecting strong contributions from both Evernorth Health Services and Cigna Healthcare.
A reconciliation of shareholders' net income to adjusted income from operations1 is 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 revenues5 and shareholders' net income to adjusted income from operations1:
Total revenues and adjusted revenues5 for the third quarter 2023 each increased 8% from the third quarter 2022, reflecting strong growth across Evernorth Health Services and Cigna Healthcare.
Shareholders' net income for the third quarter 2023 was $1.4 billion, or $4.74 per share, compared with $2.8 billion, or $8.97 per share, for the third quarter 20223, which included an after-tax gain of $1.4 billion, or $4.52 per share, from the Chubb Transaction4.
Adjusted income from operations1 for the third quarter 2023 increased 8% from the third quarter 2022, reflecting strong contributions from Evernorth Health Services and Cigna Healthcare.
The SG&A expense ratio6 and adjusted SG&A expense ratio6 were 7.7% and 7.3%, respectively, for the third quarter 2023 compared to 7.0% and 6.9%, respectively, for the third quarter 2022, reflecting increased investments to support business growth and expand our capabilities.
The debt-to-capitalization ratio was 40.5% at September 30, 2023 compared to 41.9% at June 30, 2023.
Year to date through November 1, 2023, the Company repurchased 7.7 million shares of common stock for approximately $2.2 billion.
CUSTOMER RELATIONSHIPS
The following table summarizes The Cigna Group's medical customers and overall customer relationships:
Customer Relationships (in thousands):
Total pharmacy customers7 at September 30, 2023 increased 5% from December 31, 2022 to 98.3 million due to new sales and the continued expansion of relationships.
Total medical customers7 at September 30, 2023 grew 9% from December 31, 2022 to 19.6 million, an increase of 1.6 million customers, primarily driven by growth in U.S. Commercial fee-based customers as well as in Individual and Medicare Advantage customers.
Customer relationships7 were impacted by the non-renewal of a supplemental behavioral coverage contract with New York Life, which was insignificant to total revenues and adjusted income from operations1. Excluding the impact of this contract7, behavioral care and total customer relationships7 at September 30, 2023 increased 2% and 4%, respectively, from December 31, 2022.
HIGHLIGHTS OF SEGMENT RESULTS
See Exhibit 1 for a reconciliation of adjusted income (loss) from operations1 to shareholders' net income.
Evernorth Health Services
This segment offers a broad range of coordinated and point solution health services and capabilities, as well as those from partners across the health care system, in Pharmacy Benefits, Home Delivery Pharmacy, Specialty Pharmacy, Distribution and Care Delivery and Management Solutions to health plans, employers, government organizations and health care providers.
Third quarter 2023 adjusted revenues5 increased 8% relative to third quarter 2022, reflecting strong organic growth in specialty and care delivery and management solutions.
Third quarter 2023 adjusted income from operations, pre-tax1, increased 6% relative to third quarter 2022, reflecting growth in specialty and continued affordability improvements, partially offset by increased strategic investments in technology to support the onboarding of new clients and continued advancement of our digital capabilities and care solutions.
Third quarter 2023 adjusted margin, pre-tax8, was 4.4% compared to 4.6% for third quarter 2022, reflecting continued strategic investments in technology to support the onboarding of new clients and expansion of existing client relationships.
Cigna Healthcare
This segment includes U.S. Commercial, U.S. Government and International Health businesses, which provide comprehensive medical benefits and coordinated solutions to clients and customers. U.S. Commercial products and services include medical, pharmacy, behavioral health, dental, and other products and services for insured and self-insured clients. U.S. Government solutions include Medicare Advantage, Medicare Supplement and Medicare Part D plans for seniors, and individual health insurance plans. 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.
Third quarter 2023 adjusted revenues5,9 grew 14% over third quarter 2022, reflecting customer growth and premium rate increases to cover underlying medical cost trends.
Third quarter 2023 adjusted income from operations, pre-tax1 increased 16% relative to third quarter 2022, primarily driven by a lower U.S. Commercial MCR6 and higher net investment income.
The Cigna Healthcare MCR6 was 80.5% for third quarter 2023 compared to 80.8% for third quarter 2022, reflecting continued strong performance in our U.S. Commercial business driven by affordability initiatives and effective pricing execution, partially offset by business mix, reflecting higher customer growth in U.S. Government.
Cigna Healthcare net medical costs payable10 was $5.09 billion at September 30, 2023, $4.05 billion at September 30, 2022, and $3.96 billion at December 31, 2022. The increases are primarily driven by customer growth and business mix. Favorable prior year reserve development on a gross pre-tax basis was $237 million and $278 million for the nine months ended September 30, 2023 and September 30, 2022, respectively.
Corporate and Other Operations
Corporate reflects interest expense, amounts not allocated to operating segments and includes intersegment eliminations. Additionally, this discussion includes items reported in Other Operations, which is comprised of Corporate Owned Life Insurance ("COLI") and the Company's run-off operations.
Third quarter 2023 adjusted loss from operations, pre-tax1, was $409 million compared to $295 million for third quarter 2022, primarily reflecting the impact of higher interest rates on interest expense and pension costs.
2023
OUTLOOK2
The Cigna Group's outlook2 for full year 2023 adjusted revenues2,5 increased to at least $192.0 billion. The Cigna Group's outlook2 for full year 2023 consolidated adjusted income from operations1,2 is at least $7.36 billion, or at least $24.75 per share2. Additionally, this outlook includes the impact of expected future share repurchases and anticipated 2023 dividends.
The foregoing statements represent the Company's current estimates of The Cigna Group's 2023 consolidated and segment adjusted income from operations1,2 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 The Cigna Group's website in the Investor Relations section (). Management will be hosting a conference call to review third quarter 2023 results and discuss full year 2023 outlook beginning today at 8:30 a.m. ET. A link to the conference call is available in the Investor Relations section of The Cigna Group's website located at .
The call-in numbers for the conference call are as follows:
Live Call
(888) 566-1889 (Domestic)
(773) 799-3989 (International)
Passcode: 11022023
Replay
(800) 839-1171 (Domestic)
(203) 369-3030 (International)
It is strongly suggested you dial in to the conference call by 8:15 a.m. ET.
About The Cigna Group
The Cigna Group (NYSE: CI) is a global health company committed to creating a better future built on the vitality of every individual and every community. We relentlessly challenge ourselves to partner and innovate solutions for better health. The Cigna Group includes products and services marketed under Evernorth Health Services, Cigna Healthcare, or its subsidiaries. The Cigna Group maintains sales capabilities in more than 30 countries and jurisdictions, and has approximately 165 million customer relationships around the world. Learn more at thecignagroup.com.
Notes:
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 The Cigna Group'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 2023 on a consolidated, per share, and segment basis; projected adjusted revenue outlook for 2023; projected total medical customer growth over year end 2022; projected medical care and adjusted SG&A expense ratios; projected consolidated adjusted effective 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, predictable and simple solutions for our customers and clients; future growth, business strategy and 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 and interest rate pressures; capital deployment plans and amounts available for future deployment; our prospects for growth in the coming years; the impact of revised accounting rules related to accounting for long-duration contracts; and other statements regarding The Cigna Group'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; our ability to invest in and properly maintain our information technology and other business systems; our ability to prevent or contain effects of potential cyberattack or other privacy or data security incidents; political, legal, operational, regulatory, economic and other risks that could affect our multinational operations, including currency exchange rates; risks related to strategic transactions and realization of the expected benefits of such transactions, 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; 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, the risk of a recession or other economic downturn and resulting impact on employment metrics, stock market or changes in interest rates 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; 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 . 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. The Cigna Group 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]
MEDIA CONTACT:
Justine Sessions
860-810-6523
[email protected]
SOURCE The Cigna Group