Cigna Q1 Earnings Beat Estimates on Evernorth Health Strength

Core Viewpoint - Cigna Group reported strong first-quarter 2025 results with adjusted EPS of $6.74, exceeding estimates by 5.5% and showing a year-over-year increase of 4.2% [1] - Adjusted revenues rose to $65.5 billion from $57.2 billion, beating consensus estimates by 7.7% [1] Financial Performance - The first-quarter results were driven by strong client relationships and growth in Evernorth Health Services, despite rising total benefits and expenses [2] - Cigna's medical customer base decreased by 6% year over year to 18 million, below the consensus estimate of 18.3 million due to the divestiture of Medicare businesses [3] - Total benefits and expenses increased by 16% year over year to $63.5 billion, primarily due to higher pharmacy and medical costs [4] - Adjusted income from operations fell by 2% year over year to $1.8 billion [4] Segment Performance - Evernorth Health Services saw adjusted revenues grow by 16% year over year to $53.7 billion, surpassing estimates of $50.1 billion [5] - Cigna Healthcare segment recorded total revenues of $14.5 billion, a 9% year-over-year increase, exceeding estimates of $12.2 billion [7] - The medical care ratio (MCR) deteriorated by 230 basis points year over year to 82.2% due to increased stop-loss medical costs [8] Financial Position - As of March 31, 2025, Cigna had cash and cash equivalents of $8.3 billion, up from $7.6 billion at the end of 2024 [9] - Total assets decreased to $150.7 billion from $155.9 billion at the end of 2024 [9] - Long-term debt reduced to $26.5 billion from $28.9 billion, while total equity decreased to $40.4 billion from $41.2 billion [9] Cash Flow and Capital Deployment - Cigna generated operating cash flows of $1.9 billion in Q1 2025, a decline of 60.3% from Q1 2024 [10] - The company repurchased shares worth approximately $1.5 billion in the first quarter of 2025, totaling 8.2 million shares for $2.6 billion year to date [12] Outlook - Adjusted EPS for 2025 is now estimated to be at least $29.60, indicating growth of at least 8.3% from 2024 [13] - MCR is projected to be in the range of 83.2-84.2% [13] - Adjusted revenues are forecasted to be a minimum of $252 billion, reflecting an improvement of at least 2% from 2024 [14]