Cigna Stock Falls on Earnings Even as It Sidesteps the Managed-Care Crisis

Cigna has no exposure to the Medicare Advantage business, a source of trouble for its peers. (Dreamstime)

Shares of Cigna Group were sliding on Thursday, even though the health insurer issued a decent second-quarter financial report that came in slightly ahead of consensus estimates.

Concern about medical costs could be responsible.

The company’s report came at the tail end of an earnings season that has been remarkably bad for most of its peers. Higher-than-expected medical spending, troubles with health insurance marketplace plans, and other issues have weighed on the sector.

Cigna is insulated from some of the biggest problem areas. It has no exposure to the volatile Medicare Advantage business and covers relatively few patients through plans sold on the health insurance exchanges.

That has allowed Cigna to avoid the significant cuts to financial guidance and earnings disappointments that have hit its peers. Elevance Health dropped nearly 20% over two days in mid-July after lowering its forecasts, and Centene dropped 40% on a single day early in the month after it did the same. UnitedHealth Group, the largest of the insurers, fell early this week after management issued disappointing guidance.

Cigna said early Thursday that adjusted income from operations was $7.20 per share in the second quarter, a bit better than the $7.16 per share FactSet consensus estimate. Revenue was $67.2 billion, ahead of the $62.7 billion consensus estimate.

T he insurance division’s medical-cost ratio, which reflects the proportion of premiums paid out to cover medical expenses, was 83.2% for the quarter. The consensus call on Wall Street was for 83.4%.

The company maintained its prior full-year guidance, saying it continues to anticipate adjusted income of at least $29.60 per share in 2025, just short of the FactSet consensus estimate of $29.67 per share.

While analysts said that Cigna had performed relatively well, compared with the rest of the sector, investors weren’t pleased. The stock opened in the red and slid through the first hour of trading.

On a call with investors, Cigna executives said that they were expecting patients’ medical spending to remain high throughout the year. “Our planning assumption within Cigna Healthcare for 2025 is that we will continue to experience elevated medical costs,” the company’s chief operating officer, Brian Evanko, said on the call.

Cigna shares had been up 7.9% on the year as of the close of trading on Wednesday. It was up 1.8% on the year following the Thursday selloff.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com