10-QPeriod: Q1 FY2020

Cigna Group Quarterly Report for Q1 Ended Mar 31, 2020

Filed May 7, 2020For Securities:CI

Summary

Cigna Group's (CI) Q1 2020 filing shows a slight increase in total revenues to $38.5 billion, up from $37.9 billion in the prior year's quarter. However, shareholders' net income saw a decline of 14% to $1.18 billion, translating to diluted earnings per share of $3.15, down from $3.56. This decrease was attributed to the absence of earnings from transitioning clients in 2019, costs related to a debt tender and redemption, and realized investment losses. Despite these challenges, the company reported growth in adjusted income from operations, up 17% to $1.76 billion, driven by strength in its Health Services and Integrated Medical segments. The company also provided an update on its response to the COVID-19 pandemic, highlighting initiatives to ensure affordability and access to care, support healthcare providers, and care for its workforce. The immediate financial impact of COVID-19 on the company's Q1 results was deemed immaterial, though future impacts remain uncertain. Cigna continued its strategic focus on divesting non-core assets, with the sale of its U.S. Group Disability and Life insurance business progressing towards an expected close in Q3 2020.

Financial Highlights

47 data points
Beta

Revenue

$38.47B

37.1% Gross Margin

Net Income

$1.18B

3.1% Net Margin

EPS (Diluted)

$3.15

Total Assets

$154.71B

Cash & Equivalents

$4.58B

Free Cash Flow

$1.89B

Financial Statements
Beta
Revenue$38.47B
Cost of Revenue$24.19B
Gross Profit$14.28B
SG&A Expenses$3.40B
Operating Income$2.06B
Net Income$1.18B
EPS (Basic)$3.19
EPS (Diluted)$3.15
Shares Outstanding (Diluted)374.64M

Key Highlights

  • 1Total revenues increased by 1% to $38.5 billion, while shareholders' net income decreased by 14% to $1.18 billion.
  • 2Diluted earnings per share (EPS) declined to $3.15 from $3.56 in the prior year's quarter.
  • 3Adjusted income from operations increased by 17% to $1.76 billion, indicating underlying business strength.
  • 4The company is actively managing its response to the COVID-19 pandemic, with immaterial immediate financial impact on Q1 results.
  • 5Cigna has initiated an organizational efficiency plan, incurring $31 million in charges in Q1 2020, aiming for annualized savings of approximately $200 million.
  • 6The sale of the U.S. Group Disability and Life insurance business to New York Life Insurance Company is on track for expected closure in Q3 2020.
  • 7The company repurchased approximately 5.8 million shares for $980 million during the quarter.

Frequently Asked Questions

In the first quarter of 2020, Cigna Group reported total revenues of $38.5 billion, a slight increase from $37.9 billion in Q1 2019. However, shareholders' net income decreased by 14% to $1.18 billion, resulting in diluted EPS of $3.15, down from $3.56. Adjusted income from operations, a non-GAAP measure, increased by 17% to $1.76 billion.

Cigna stated that the effects of the COVID-19 pandemic began to emerge at the end of the first quarter and were not material to the company's financial results for the three months ended March 31, 2020. The company has implemented various measures to support customers, providers, and employees. While the immediate impact was immaterial, the company acknowledges uncertainty regarding the full extent of future impacts.

Cigna is actively managing its response to COVID-19, continuing to focus on its 'Go Deeper, Go Local, Go Beyond' strategy. Key initiatives include progressing the sale of its U.S. Group Disability and Life insurance business, with an expected closing in Q3 2020, and implementing an organizational efficiency plan to reduce costs and improve alignment, expecting to realize annualized savings of approximately $200 million.

Cigna reported a debt-to-capitalization ratio of 44.7% as of March 31, 2020, down from 45.2% at the end of 2019. The company expects to further deleverage by the end of 2020 using operating cash flows and proceeds from the sale of its Group Disability and Life business. The company also repurchased approximately 5.8 million shares for $980 million during the quarter and has a significant amount of undrawn committed capacity under its credit agreements.