Cigna 4th-Quarter Profit Falls 8.8% -- Update
February 04 2016 - 9:56AM
Dow Jones News
By Anne Steele
Cigna Corp. on Thursday said its fourth-quarter profit fell 8.8%
as the health-care provider took a hit from charges related to its
proposed merger with Anthem Inc., though revenue increased.
The company also gave full-year guidance below analysts'
expectations, saying it expects earnings of $8.85 to $9.25 a share,
compared with estimates of $9.30 a share, according to Thomson
Reuters.
In the most recent quarter, the Bloomfield, Conn., insurer said
it had 15 million total medical customers at the end of the
quarter, compared with 14.46 million a year earlier and 14.85
million in the previous quarter.
In Cigna's global health-care business, premiums and fees
revenue grew 7.5% to $6.72 billion, reflecting growth in
self-funded programs, specialty products and government
businesses.
Over all, Cigna reported earnings of $426 million, or $1.64 a
share, down from $467 million, or $1.77 a share, a year earlier.
Income in the 2015 quarter included a charge of $28 million, or 11
cents a share, for transaction costs related to Cigna's proposed
merger with Anthem.
Excluding certain items, earnings from operations rose to an
adjusted $1.87 a share from $1.80 a share a year earlier.
Revenue rose 6.7% to $9.53 billion.
In November, the company issued guidance for earnings of $1.61
to $1.81 a share. Analysts polled by Thomson Reuters forecast
revenue of $9.52 billion.
Cigna said its medical-loss ratio, or the share of premiums paid
out for members' health expenses, was 83.1% for its
government-based business, which the company said included some
"unfavorable medical cost variability in a specific market." The
medical-loss ratio for commercial members was 80.4%, reflecting
expected higher seasonal medical costs.
In July, Anthem agreed to buy Cigna for $48 billion, capping
months of merger frenzy among top U.S. health insurers. The deal
combines the second- and fifth-largest health insurers by revenue
and would create a company with a huge footprint in commercial
insurance, the type of coverage provided to employers and
consumers.
The biggest companies are seeking more cost efficiency and scale
as the health-care landscape changes because of the Affordable Care
Act and other factors.
Shares of the company, which have risen 2.7% over the past three
months, edged up 0.9% to $133.63 in early trading.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
February 04, 2016 10:41 ET (15:41 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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