Cigna(CI) - 2024 Q3 - Quarterly Results

Financial and Operational Highlights The Cigna Group reported strong Q3 2024 results with a 30% revenue increase to $63.7 billion, though net income was impacted by a $1.0 billion investment loss Q3 2024 Key Financial Metrics | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $63.7 billion | $49.0 billion | +30% | | Shareholders' Net Income | $0.7 billion | $1.4 billion | -50% | | Shareholders' Net Income per Share | $2.63 | $4.74 | -44.5% | | Adjusted Income from Operations | $2.1 billion | $2.0 billion | +5% | | Adjusted Income from Operations per Share | $7.51 | $6.77 | +11% | - Shareholders' net income for Q3 2024 included a significant non-cash after-tax investment loss of $1.0 billion, or $3.69 per share, related to VillageMD[2] - The SG&A expense ratio improved to 5.6% from 7.7% in Q3 2023, reflecting a shift in business mix, strong revenue growth, and continued operating efficiency[6] Customer Relationships Total customer relationships grew 12% to 183.5 million, driven by pharmacy customer growth, while medical customers decreased due to pricing actions Customer Relationships (in thousands) | Customer Type | Sep 30, 2024 | Dec 31, 2023 | Change YTD | | :--- | :--- | :--- | :--- | | Total Pharmacy Customers | 119,996 | 98,570 | +21.7% | | Total Medical Customers | 19,048 | 19,780 | -3.7% | | Total Customer Relationships | 183,514 | 164,399 | +11.6% | - The significant increase in total pharmacy customers was attributed to new sales and the continued expansion of existing relationships[8] - The year-to-date decrease in total medical customers was primarily driven by a reduction in Individual and Family Plans customers following targeted pricing actions in certain geographies[8] Segment Performance Analysis Overall growth was driven by Evernorth Health Services' 36% revenue increase, while Cigna Healthcare saw modest growth but lower income due to a higher medical care ratio Evernorth Health Services Evernorth Health Services reported strong Q3 2024 results with adjusted revenues up 36% to $52.6 billion and pre-tax adjusted income up 9% Evernorth Health Services Financial Results (in millions) | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Adjusted Revenues | $52,637 | $38,596 | +36% | | Adjusted Income from Operations, Pre-Tax | $1,876 | $1,716 | +9% | - Pharmacy Benefit Services' adjusted revenues surged 50% YoY, reflecting new client wins and organic growth[13] - Specialty and Care Services' adjusted revenues and pre-tax adjusted income both grew 23% YoY, driven by organic growth in specialty businesses, clinical care services, and increased adoption of Humira biosimilars[14] Cigna Healthcare Cigna Healthcare's adjusted revenues rose 3% to $13.2 billion, but pre-tax adjusted income declined 4% due to a higher Medical Care Ratio Cigna Healthcare Financial Results (in millions) | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Adjusted Revenues | $13,163 | $12,768 | +3% | | Adjusted Income from Operations, Pre-Tax | $1,174 | $1,222 | -4% | | Adjusted Margin, Pre-Tax | 8.9% | 9.6% | -70 bps | - The Medical Care Ratio (MCR) increased to 82.8% in Q3 2024 from 80.5% in Q3 2023, reflecting business mix changes and one extra business day in the quarter[18] - Favorable prior year reserve development on a gross pre-tax basis was $422 million for the first nine months of 2024, compared to $237 million for the same period in 2023[19] Corporate and Other Operations Corporate and Other Operations' pre-tax adjusted loss widened to $431 million in Q3 2024, primarily due to higher interest expenses Corporate and Other Operations Financial Results (in millions) | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Adjusted (Loss) from Operations, Pre-Tax | $(431) | $(409) | +5.4% | - The increase in the adjusted pre-tax loss compared to Q3 2023 was primarily due to the impact of higher interest expense[21] 2024 Full-Year Outlook The Cigna Group reaffirmed its full-year 2024 guidance, projecting consolidated adjusted income from operations of at least $28.40 per share 2024 Full-Year Outlook | Metric | Projection for Full Year 2024 | | :--- | :--- | | Adjusted Income from Operations, per share | at least $28.40 | | Evernorth Adjusted Income from Operations, Pre-Tax | at least $7,000 million | | Cigna Healthcare Adjusted Income from Operations, Pre-Tax | at least $4,775 million | | Cigna Healthcare Medical Care Ratio | 81.7% to 82.5% | - The company's outlook for full-year 2024 consolidated adjusted income from operations remains at least $28.40 per share[22] Appendix The appendix provides definitions of non-GAAP financial measures, a cautionary note on forward-looking statements, and detailed financial reconciliations - The appendix defines key non-GAAP metrics used by management to present the underlying results of operations, such as 'Adjusted income (loss) from operations' and 'Adjusted revenues'[28][32] - Exhibit 1 provides a detailed comparative summary of financial results, including reconciliations of GAAP measures like Shareholders' Net Income to non-GAAP measures like Adjusted Income from Operations[40][42][43] - The report includes a standard 'Cautionary Note Regarding Forward-Looking Statements' outlining potential risks and uncertainties that could cause actual results to differ from projections[38][39]