Cigna Expands Stakeholder and Community Support, Reports Second Quarter 2020 Performance
BLOOMFIELD, Conn., July 30, 2020 /PRNewswire/ --
- Total revenues in the second quarter were $39.3 billion. Adjusted revenues1 were $39.2 billion.
- Shareholders' net income for second quarter was $1.8 billion, or $4.73 per share
- Adjusted income from operations2 for the second quarter was $2.2 billion, or $5.81 per share
- Adjusted income from operations2,3 is projected to be in the range of $18.00 to $18.60 per share in 20203
Global health service company Cigna Corporation (NYSE: CI) continues to expand stakeholder and community support and today reported second quarter 2020 performance.
"Cigna's mission to improve the health, well-being and peace of mind of those we serve continues to guide us as we remain relentlessly focused on supporting the needs of our customers, clients, and communities," said David M. Cordani, President and Chief Executive Officer. "Our stakeholders are facing unprecedented challenges from the pandemic, uncertainty of a disrupted economy, and pain of racial tensions and inequality. We are proud of the actions we have taken to provide innovative programs and services and expanded financial support, all while delivering sustained, attractive financial performance and generating substantial cash flows that fuel our offerings for the benefit of all we serve."
Total revenues for second quarter 2020 were $39.3 billion. Adjusted revenues1 were $39.2 billion and reflect strong contributions from each of Cigna's ongoing businesses.
Shareholders' net income for second quarter 2020 was $1.8 billion, or $4.73 per share, compared with $1.4 billion, or $3.70 per share, for second quarter 2019.
Cigna's adjusted income from operations2 for second quarter 2020 was $2.2 billion, or $5.81 per share, compared with $1.6 billion, or $4.30 per share, for second quarter 2019 reflecting the impact of deferred medical utilization due to the COVID-19 pandemic as well as ongoing focused execution across our 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 | Six Months | ||||||||||||||||||
June 30, | March 31, | June 30, | |||||||||||||||||
2020 | 2019 | 2020 | 2020 | ||||||||||||||||
Total Revenues | $ | 39,265 | $ | 38,819 | $ | 38,469 | $ | 77,734 | |||||||||||
Net Realized Investment (Gains) Losses from | (60) | 6 | 10 | (50) | |||||||||||||||
Special Items1 | — | — | (87) | (87) | |||||||||||||||
Transitioning Client Contributions1 | — | (4,450) | — | — | |||||||||||||||
Adjusted Revenues1 | $ | 39,205 | $ | 34,375 | $ | 38,392 | $ | 77,597 | |||||||||||
Consolidated Earnings, net of taxes | |||||||||||||||||||
Shareholders' Net Income | $ | 1,754 | $ | 1,408 | $ | 1,181 | $ | 2,935 | |||||||||||
Net Realized Investment (Gains) Losses2 | (88) | (13) | 77 | (11) | |||||||||||||||
Amortization of Other Acquired Intangible Assets2 | 376 | 572 | 309 | 685 | |||||||||||||||
Special Items2 | 110 | 179 | 191 | 301 | |||||||||||||||
Transitioning Client Contributions1,2 | — | (506) | — | — | |||||||||||||||
Adjusted Income from Operations2 | $ | 2,152 | $ | 1,640 | $ | 1,758 | $ | 3,910 | |||||||||||
Shareholders' Net Income, per share | $ | 4.73 | $ | 3.70 | $ | 3.15 | $ | 7.88 | |||||||||||
Adjusted Income from Operations2, per share | $ | 5.81 | $ | 4.30 | $ | 4.69 | $ | 10.49 | |||||||||||
- Cigna's second quarter results reflect revenue and earnings growth due to strong fundamental performance and lower medical costs from deferred care related to the COVID-19 pandemic.
- Year to date through July 29, 2020, the Company repurchased 8.3 million shares of common stock for approximately $1.5 billion.
- The debt to capitalization ratio decreased to 43.5% at June 30, 2020 from 45.2% at December 31, 2019.
- The SG&A expense ratio4 was 8.4% for second quarter 2020, a decrease from 9.0% for second quarter 2019, driven by significant 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 | ||||||||
June 30, | March 31, | December 31, | ||||||
2020 | 2019 | 2020 | 2019 | |||||
Total Pharmacy Customers5 | 84,919 | 75,171 | 78,804 | 75,903 | ||||
Commercial | 14,000 | 14,026 | 14,140 | 14,187 | ||||
Government | 1,415 | 1,382 | 1,412 | 1,361 | ||||
International Markets | 1,668 | 1,589 | 1,666 | 1,597 | ||||
Total Medical Customers5 | 17,083 | 16,997 | 17,218 | 17,145 | ||||
Behavioral Care | 37,061 | 28,577 | 37,231 | 30,361 | ||||
Dental | 17,850 | 17,077 | 18,018 | 17,231 | ||||
Medicare Part D | 3,300 | 3,266 | 3,295 | 3,276 | ||||
International Markets Supplemental Policies5,6 | 12,098 | 12,500 | 12,453 | 12,444 | ||||
Group Disability and Life Covered Lives5 | 15,900 | 15,400 | 15,900 | 15,400 | ||||
Total Customer Relationships | 188,211 | 168,988 | 182,919 | 171,760 | ||||
- The pharmacy customer base5 at second quarter 2020 grew to 84.9 million, an organic increase of 9.0 million customers year to date, driven by strong new health plan sales.
- The total medical customer base5 at second quarter 2020 was 17.1 million, a decrease of 62,000 customers year to date, driven by a decline in National Accounts, partially offset by growth in Medicare Advantage and the Select and International Markets segments.
HIGHLIGHTS OF SEGMENT RESULTS
See Exhibit 1 for a reconciliation of adjusted income (loss) from operations2 to shareholders' net income.
Health Services
This segment includes a broad range of services, including benefits management, specialty pharmacy services, clinical solutions, home delivery, and health management services.
Financial Results (dollars in millions): | ||||||||||||
Three Months Ended | Six Months | |||||||||||
June 30, | March 31, | June 30, | ||||||||||
2020 | 2019 | 2020 | 2020 | |||||||||
Adjusted Revenues1 | $ | 28,602 | $ | 23,537 | $ | 27,168 | $ | 55,770 | ||||
Adjusted Income from Operations, Pre-Tax2 | $ | 1,249 | $ | 1,162 | $ | 1,082 | $ | 2,331 | ||||
Adjusted Margin, Pre-Tax7 | 4.4% | 4.9% | 4.0% | 4.2% |
- Second quarter 2020 adjusted revenues1 increased 22% relative to second quarter 2019 driven by the insourcing of Integrated Medical pharmacy volumes and strong organic growth, including continued growth in specialty pharmacy services, partially offset by reduced retail script volumes due to the COVID-19 pandemic.
- Second quarter adjusted income from operations, pre-tax2 increased 7% relative to second quarter 2019, reflecting customer growth, higher adjusted pharmacy scripts volumes, benefits from the effective management of the supply chain, and continued strong performance in specialty pharmacy services, partially offset by an increase in operating expenses to support growth.
- Health Services fulfilled 364 million adjusted pharmacy scripts8 in second quarter 2020, an increase of 24% over second quarter 2019 driven by the insourcing of Integrated Medical pharmacy volumes and strong organic growth, partially offset by reduced retail script volumes.
Integrated Medical
This segment includes Cigna's U.S. Commercial and Government businesses that provide comprehensive medical 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 to insured and self-insured customers. Government solutions include Medicare Advantage, Medicare Supplement, and Medicare Part D plans for seniors, Medicaid plans, and individual health insurance coverage both on and off the public exchanges.
Financial Results (dollars in millions): | ||||||||||||
Three Months Ended | Six Months | |||||||||||
June 30, | March 31, | June 30, | ||||||||||
2020 | 2019 | 2020 | 2020 | |||||||||
Adjusted Revenues1 | $ | 9,237 | $ | 8,968 | $ | 9,860 | $ | 19,097 | ||||
Adjusted Income from Operations, Pre-Tax2 | $ | 1,523 | $ | 990 | $ | 1,199 | $ | 2,722 | ||||
Adjusted Margin, Pre-Tax7 | 16.5% | 11.0% | 12.2% | 14.3% |
- Second quarter 2020 adjusted revenues1 grew 3% over second quarter 2019, reflecting customer growth in Medicare Advantage and in the Select segment, as well as premium increases, partially offset by premium relief programs for clients that were delivered in response to the COVID-19 pandemic. The sequential decline in adjusted revenues1 was primarily due to premium relief programs for clients, lower net investment income, and a modest decline in medical customers.
- Second quarter 2020 adjusted income from operations, pre-tax² and adjusted margin, pre-tax7 reflect significantly lower medical utilization in both the Commercial and Government segments compared to historic patterns, as individuals deferred care due to the COVID-19 pandemic, partially offset by premium relief programs for clients and cost share waivers for customers.
- The medical care ratio4 ("MCR") of 70.5% for second quarter 2020 reflects significantly lower medical utilization in both the Commercial and Government segments compared to historic patterns, as individuals deferred care due to the COVID-19 pandemic, partially offset by premium relief programs for clients and cost share waivers for customers.
- Integrated Medical net medical costs payable9 was $2.80 billion at June 30, 2020, $2.64 billion at June 30, 2019, and $2.59 billion at December 31, 2019. Year to date, favorable prior year reserve development on a gross pre-tax basis was $130 million and $149 million through second quarter 2020 and 2019, respectively.
International Markets
This segment includes supplemental health, life and accident insurance products and health care coverage in Cigna's 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 | Six Months | |||||||||||
June 30, | March 31, | June 30, | ||||||||||
2020 | 2019 | 2020 | 2020 | |||||||||
Adjusted Revenues1,6 | $ | 1,432 | $ | 1,389 | $ | 1,470 | $ | 2,902 | ||||
Adjusted Income from Operations, Pre-Tax2 | $ | 319 | $ | 207 | $ | 282 | $ | 601 | ||||
Adjusted Margin, Pre-Tax7 | 22.3% | 14.9% | 19.2% | 20.7% |
- Second quarter 2020 adjusted revenues1,6 grew 3% over second quarter 2019, reflecting continued business growth, partially offset by adverse foreign currency movement.
- Second quarter 2020 adjusted income from operations, pre-tax2 and adjusted margin, pre-tax7 reflect lower claim levels driven by the COVID-19 pandemic, continued business growth and operational efficiency.
Group Disability and Other Operations
This segment includes Cigna's Group Disability and Life business which offers group long-term and short-term disability, and group life, accident, voluntary and specialty insurance products and services. Additionally, this segment includes Corporate Owned Life Insurance ("COLI") and the Company's run-off operations.
Financial Results (dollars in millions): | ||||||||||||
Three Months Ended | Six Months | |||||||||||
June 30, | March 31, | June 30, | ||||||||||
2020 | 2019 | 2020 | 2020 | |||||||||
Adjusted Revenues1 | $ | 1,328 | $ | 1,309 | $ | 1,339 | $ | 2,667 | ||||
Adjusted Income from Operations, Pre-Tax2 | $ | 132 | $ | 149 | $ | 77 | $ | 209 | ||||
Adjusted Margin, Pre-Tax7 | 9.9% | 11.4% | 5.8% | 7.8% |
- Second quarter 2020 adjusted income from operations, pre-tax2 and adjusted margin, pre-tax7 reflect elevated claims in Cigna's Life business primarily related to the COVID-19 pandemic, partially offset by favorable performance within the Disability business.
- On December 18, 2019, Cigna announced a definitive agreement whereby New York Life will acquire Cigna's Group Disability and Life business for $6.3 billion. Cigna expects the transaction to close in the third quarter of 2020, subject to applicable regulatory approvals and other customary closing conditions.
Corporate
Corporate reflects interest expense, as well as amounts not allocated to operating segments and includes intersegment eliminations.
Financial Results (dollars in millions): | ||||||||||||
Three Months Ended | Six Months | |||||||||||
June 30, | March 31, | June 30, | ||||||||||
2020 | 2019 | 2020 | 2020 | |||||||||
Adjusted (Loss) from Operations, Pre-Tax2 | $ | (400) | $ | (453) | $ | (405) | $ | (805) | ||||
- Second quarter 2020 adjusted loss from operations, pre-tax2 decreased relative to second quarter 2019 as a result of lower interest expense.
COVID-19 Response
From the onset of the COVID-19 pandemic, Cigna has focused on delivering peace of mind for the people and businesses we serve, and our employees and their families. We've taken bold actions to drive affordability, remove uncertainty, and make health care easier. To date, these actions include:
Making Health Care Affordable
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