10-QPeriod: Q3 FY2020

Cigna Group Quarterly Report for Q3 Ended Sep 30, 2020

Filed November 5, 2020For Securities:CI

Summary

Cigna Group (CI) reported its third quarter 2020 financial results, showing continued revenue growth driven by its Evernorth segment and U.S. Medical premiums. Total revenues increased by 6% year-over-year to $40.96 billion for the three months ended September 30, 2020. Shareholders' net income saw a modest increase of 3% to $1.39 billion, or $3.78 per diluted share. The company's performance was influenced by the ongoing COVID-19 pandemic, which led to a deferral of care earlier in the year, followed by a return to more typical utilization levels in the third quarter. While this resulted in some increased medical costs and elevated life insurance claims, it also contributed to higher earnings in the U.S. Medical segment due to lower-than-expected utilization earlier in the period. Cigna also continues to progress with strategic initiatives, including the expected sale of its U.S. Group Disability and Life insurance business.

Financial Highlights

47 data points
Beta

Revenue

$40.95B

35.0% Gross Margin

Net Income

$1.39B

3.4% Net Margin

EPS (Diluted)

$3.78

Total Assets

$160.04B

Cash & Equivalents

$5.41B

Free Cash Flow

$895.00M

Financial Statements
Beta
Revenue$40.95B
Cost of Revenue$26.62B
Gross Profit$14.33B
SG&A Expenses$3.30B
Operating Income$2.11B
Net Income$1.39B
EPS (Basic)$3.81
EPS (Diluted)$3.78
Shares Outstanding (Diluted)367.19M

Key Highlights

  • 1Total revenues for Q3 2020 increased by 6% to $40.96 billion compared to the prior year's quarter.
  • 2Shareholders' net income for Q3 2020 rose by 3% to $1.39 billion, or $3.78 per diluted share.
  • 3The Evernorth segment showed strong performance with adjusted revenues up 20% year-over-year.
  • 4U.S. Medical segment saw adjusted revenues increase by 5%, driven by customer growth and higher premium rates.
  • 5The company reported a slight decrease in medical customers overall, primarily due to declines in the National Accounts market segment and increased disenrollment related to COVID-19 impacts.
  • 6Cigna received a $120 million payment resolving its risk corridors claim against the Federal Government.
  • 7The company is advancing its plan to sell its U.S. Group Disability and Life insurance business, expected to close in Q4 2020.

Frequently Asked Questions

The COVID-19 pandemic had a mixed impact. Initially, there was a significant deferral of medical care, leading to lower utilization and benefit expenses. In Q3, medical utilization returned to more typical levels, which, combined with costs for COVID-19 testing and treatment, increased medical expenses. However, the earlier deferral of care contributed to higher year-to-date earnings in the U.S. Medical segment. Elevated life insurance claims were noted in the Group Disability and Other segment.

Cigna has a definitive agreement to sell this business to New York Life Insurance Company for $6.3 billion. The sale was expected to close in the fourth quarter of 2020, subject to regulatory approvals and other closing conditions. Proceeds from the sale are expected to be used primarily for share repurchases and debt repayment.

The Evernorth segment demonstrated strong growth with adjusted revenues up 20% year-over-year, driven by increased pharmacy volumes and pricing. The U.S. Medical segment saw a 5% increase in adjusted revenues, attributed to customer growth and higher premium rates. The International Markets and Group Disability and Other segments also reported modest revenue increases.

Cigna maintained sufficient liquidity through cash and cash equivalents, operating cash flows, its commercial paper program, and credit agreements. As of September 30, 2020, the company had substantial undrawn capacity under its revolving credit agreements and significant cash and short-term investments. The company is focused on deleveraging its debt-to-capitalization ratio.