Cigna Reports Strong First Quarter 2022 Results, Raises 2022 Outlook

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Global health services company Cigna Corporation (NYSE: CI) today reported strong first quarter 2022 results reflecting revenue and earnings growth across its businesses.

“We’ve had a strong start to the year as we advance our growth strategy and support the health and well-being of our clients and customers,” said David M. Cordani, chairman and chief executive officer. “We’re taking decisive steps forward with innovation, new partnerships and re-investing in our company so we can achieve greater impact for the customers and communities we’re privileged to serve.”

Total revenues for first quarter 2022 were $44.0 billion. Adjusted revenues1 were $44.1 billion and reflect strong contributions from each of Cigna’s ongoing businesses.

Shareholders’ net income for first quarter 2022 was $1.2 billion, or $3.68 per share, compared with $1.2 billion, or $3.30 per share, for first quarter 2021.

Cigna’s adjusted income from operations2 for first quarter 2022 was $1.9 billion, or $6.01 per share, compared with $1.7 billion, or $4.73 per share, for first 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:

Consolidated Financial Results (dollars in millions):

Three Months Ended

March 31,

December 31,

2022

2021

2021

Total Revenues

$           44,005

$           40,971

$           45,688

Net Realized Investment (Gains) Losses from
Equity Method Investments1

103

14

(12)

Adjusted Revenues1

$           44,108

$           40,985

$           45,676

Consolidated Earnings, net of taxes

Shareholders’ Net Income

$             1,183

$             1,161

$             1,116

Net Realized Investment (Gains) Losses2

355

13

(59)

Amortization of Acquired Intangible Assets2

356

388

326

Special Items2

37

102

189

Adjusted Income from Operations2

$             1,931

$             1,664

$             1,572

Shareholders’ Net Income, per share 

$               3.68

$               3.30

$               3.39

Adjusted Income from Operations2, per share 

$               6.01

$               4.73

$               4.77

  • Year to date through May 5, 2022, the Company repurchased 7.6 million shares of common stock for approximately $1.8 billion.
  • The debt-to-capitalization ratio was 41.9% at March 31, 2022, in line with fourth quarter 2021.
  • The adjusted SG&A expense ratio4 was 7.4% for first quarter 2022 compared to 8.0% for first quarter 2021, driven by revenue growth and continued expense efficiency.

CUSTOMER RELATIONSHIPS

The following table summarizes Cigna’s medical customers and overall customer relationships:

Customer Relationships (in thousands):

As of the Periods Ended

March 31,

December 31,

2022

2021

2021

Total Customer Relationships5

190,370

177,607

185,672

Total Pharmacy Customers

107,440

101,002

107,298

U.S. Commercial

14,621

13,552

13,854

U.S. Government

1,402

1,464

1,510

International Health

1,756

1,655

1,717

Total Medical Customers5,6

17,779

16,671

17,081

Behavioral Care

44,078

38,950

40,380

Dental

18,169

17,800

17,731

Medicare Part D

2,904

3,184

3,182

  • Total customer relationships5 at first quarter 2022 grew by 3% year to date to 190.4 million.
  • The total medical customer base5,6 at first quarter 2022 grew to 17.8 million, an increase of 698,000 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 solutions, benefits management solutions, care delivery and care management solutions, and intelligence solutions, which are provided to health plans, employers, government organizations, and health care providers.

Financial Results (dollars in millions):

Three Months Ended

March 31,

December 31,  

2022

2021

2021

Adjusted Revenues1

$           33,586

$           30,620

$           35,086

Adjusted Income from Operations, Pre-Tax2

$             1,302

$             1,223

$             1,634

Adjusted Margin, Pre-Tax7

3.9%

4.0%

4.7%

  • First quarter 2022 adjusted revenues1 increased 10% relative to first quarter 2021 reflecting strong organic growth in specialty pharmacy services.
  • First quarter 2022 adjusted income from operations, pre-tax2 increased 6% relative to first quarter 2021, reflecting continued affordability improvements and business growth, partially offset by strategic investments in expanding our services portfolio and digital capabilities.

Cigna Healthcare6

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.

Financial Results (dollars in millions):

Three Months Ended

March 31,

December 31,  

2022

2021

2021

Adjusted Revenues1,8

$            11,392

$            11,067

$            11,214

Adjusted Income from Operations, Pre-Tax2

$              1,279

$              1,042

$                472

Adjusted Margin, Pre-Tax7

11.2%

9.4%

4.2%

  • First quarter 2022 adjusted revenues1,8 grew 3% over first quarter 2021, reflecting increased specialty contributions and premium increases to cover underlying cost trends, partially offset by the divestiture of the Medicaid business.
  • First quarter 2022 adjusted income from operations, pre-tax2 and adjusted margin, pre-tax7 increased relative to first quarter 2021 primarily due to increased specialty contributions.
  • The Cigna Healthcare MCR4 of 81.5% for first quarter 2022 compares to 80.9% for first quarter 2021, reflecting risk adjustment updates related to prior years and higher medical costs in the Individual business, partially offset by lower direct COVID-19 costs.
  • Cigna Healthcare net medical costs payable9 was $4.29 billion at March 31, 2022, $3.79 billion at March 31, 2021, and $4.00 billion at December 31, 2021. Favorable prior year reserve development on a gross pre-tax basis was $276 million and $233 million through first quarter 2022 and 2021, respectively.

Corporate and Other Operations6

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 businesses held for sale pending divestiture6, Corporate Owned Life Insurance (“COLI”), our interest in a joint venture in Turkey and the Company’s run-off operations.

Financial Results (dollars in millions):

Three Months Ended

March 31,

December 31,

2022

2021

2021

Adjusted (Loss) from Operations, Pre-Tax2

$              (117)

$              (123)

$              (115)

  • First quarter 2022 adjusted loss from operations, pre-tax2 was favorable to first quarter 2021 primarily reflecting lower interest expense.

2022 OUTLOOK

Cigna’s outlook for full year 2022 adjusted revenues1,3 is projected to be at least $177 billion. Cigna’s outlook for full year 2022 consolidated adjusted income from operations2,3 is projected to be at least $7.05 billion, or at least $22.60 per share3. Additionally, this outlook includes the impact of expected future share repurchases, anticipated 2022 dividends, and assumes that the previously announced divestiture of our international life, accident, and supplemental benefits businesses6 will close in the second quarter of 2022.

(dollars in millions, except where noted and per share amounts)

2022 Consolidated Metrics

Projection for Full Year Ending

December 31, 2022

Change from

Prior Projection

Adjusted Revenues1,3

at least $177,000

Adjusted Income from Operations2,3

at least $7,050

+$100

Adjusted Income from Operations, per share2,3

at least $22.60

+$0.20

Adjusted SG&A Expense Ratio3,4

6.9% to 7.3%

Adjusted Tax Rate3,10

22.0% to 22.5%

Cash Flow from Operations3

at least $8,250

Weighted Average Shares Outstanding (millions)3

310 to 314

+2.0 at the midpoint

2022 Evernorth Metrics

Adjusted Income from Operations, Pre-Tax2,3

~$6,100

2022 Cigna Healthcare Metrics

Adjusted Income from Operations, Pre-Tax2,3

~$3,950

+$50

Medical Care Ratio3,4

82.0% to 83.5%

Total Medical Customer Growth (lives)3,5

at least 725,000

+150,000

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 first 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: 562022

Replay
            (866) 357-1405   (Domestic)
            (203) 369-0111   (International)

It is strongly suggested you dial in to the conference call by 8:15 a.m. ET.