By Sneha S K and Kunal Das
July 30 (Reuters) – Cigna on Thursday raised its annual profit forecast, after beating quarterly earnings estimates on growth in its pharmacy and specialty drug businesses.
The company has been reducing its exposure to government-backed health insurance businesses due to elevated medical costs, exiting Medicare Advantage last year and announcing it will stop offering plans under the Affordable Care Act, or Obamacare, at the end of 2026.
Instead, it has shifted focus toward its core traditional employer-sponsored healthcare business and its pharmacy benefits management unit.
Second-quarter adjusted revenue at its Evernorth Health Services unit — which includes the pharmacy benefit management unit and specialty pharmacy — rose 6% to $61.47 billion.
Pharmacy benefit managers help negotiate drug prices and coverage with manufacturers on behalf of employers and health plan clients.
Specialty pharmacy was boosted by higher use of specialty drugs for complex conditions such as cancer, multiple sclerosis and rheumatoid arthritis, the company said.
Shares of the company were down 2.7% in morning trading.
SPECIALTY DRUGS BOOST
The company said the Evernorth unit’s results exceeded expectations, driven by a faster-than-expected adoption of biosimilars and specialty generic drugs, which are lower-cost alternatives to branded medicines. It expects the trend will support growth through the year.
Cigna plans to use AI to improve efficiency at its Accredo specialty pharmacy, with Evernorth earlier this month announcing a $100 million investment to establish its Pharmacy Forward program.
The results are “unlikely to reverse course on investor sentiment looking for a growth engine within Cigna, but we’re encouraged by a clean beat and raise,” Cantor Fitzgerald analyst Sarah James said.
The company’s medical loss ratio, or the percentage of premiums spent on medical care, stood at 84.5% for the quarter, higher than 83.2% last year, but largely in line with analysts’ estimates, according to data compiled by LSEG.
The prior-year quarter had benefited from higher risk-adjustment payments in its individual and family plans under Obamacare, Cigna said. Those payments compensate insurers that cover a disproportionate share of sicker members.
The company raised its 2026 adjusted profit forecast by 10 cents to at least $30.45 per share. Analysts, on average, estimate the company’s annual earnings at $30.41 per share.
On an adjusted basis, the company earned $7.78 per share in the second quarter, beating estimates of $7.60 per share.
(Reporting by Kunal Das and Sneha S K in Bengaluru and Amina Niasse in New York; Editing by Leroy Leo)
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