Post Earnings Coverage as Cigna Sees Strong Performance in the Global Health Care Segment

LONDON, UK / ACCESSWIRE / August 1, 2016 / Active Wall St. announces its post-earnings coverage on Cigna Corp. (NYSE: CI). The company announced its financial results for the second quarter of fiscal 2016 (Q2 FY16) on July 29, 2016, with a strong performance in the Global Health Care segment, but misses Wall Street’s expectations amid a decline in group disability and life segment. Register with us now for your free membership at: http://www.activewallst.com/register/.

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Earnings Reviewed

For the three months ended on June 30, 2016, Cigna posted earnings of $510 million, or $1.97 per share, as compared to earnings of $588 million, or $2.26 per share, in the year ago period. Earnings for Q2 FY16 included a charge of $26 million after-tax, or $0.10 per share, for transaction costs related to Cigna’s proposed combination with Anthem Inc. The company’s adjusted earnings of $1.98 per share in Q2 FY16 were down from $2.55 per share in Q2 FY15, missing analysts’ estimate of $2.40 per share. Total revenue for Q2 FY16 rose 5% to $9.96 billion from $9.49 billion in Q2 FY15, slightly missing Wall Street’s expectations of $9.97 billion in revenue.

Cigna President and CEO, David Cordani, said:

“Cigna’s second quarter financial results reflect solid performance in Global Health Care and Global Supplemental Benefits, with a current headwind in Group Disability and Life that pressured overall results.”

Segment Performance

For Q2 FY16, the Bloomfield, Connecticut headquartered company recorded a 2.98% growth in its total premiums to $7.65 billion from $7.43 billion in Q2 FY15. Premiums and fees from its Global Health Care division increased 3.1% on y-o-y basis to $6.9 billion driven by growth in customer enrolment, specialty contributions, and rate actions for the unit that delivers services to Commercial and Government businesses. However, the increase was partially offset by a lesser number of Medicare Part D and Individual customers.

Premiums and fees from Cigna’s Global Supplemental Benefits, which includes services to global businesses in individual supplemental health, life, and accident insurance mainly in Asia as well as other Medicare services in the US, increased to $800 million in Q2 FY16 from $749 million in Q2 FY15 driven by strong new sales in the company’s target markets.

The Group Disability segment posted a 3% growth in premiums and fees on y-o-y basis to $1.01 billion, primarily driven by consistent strong persistency and new sales. At the end of Q2 FY16, Cigna had 15.1 million global medical customers, up 2.5% from 14.8 million members in the year earlier period.

Anthem Merger

Cigna did not provide any update on its proposed merger with Anthem Inc. In July 2015, Anthem signed an agreement to acquire Cigna for $54.2 billion capping months of merger frenzy among top US health insurers. The proposed deal would have combined the second- and fifth-largest health insurers by revenue, creating the largest US health insurer by membership.

However, on July 21, 2014, the U.S department of Justice filed lawsuits challenging Anthem’s proposal to acquire Cigna, alleging the merger would raise health-care costs and reduce choice for consumers. These lawsuits were also targeted towards the planned merger of Aetna Inc. with Humana Inc.

Share Repurchase & Guidance

For FY 2016, Cigna anticipates earnings of $7.75 to $8.10 per share, down from its prior guidance of $8.95 to $9.35 per share.

Stock Performance

Following its earnings release, Cigna’s shares slumped 5.17% to finish July 29, 2016, trading session at $128.96, with a total of 5.45 million shares changing hands. The company’s stock was up 0.10% in the last month.

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