Health insurer Cigna Corp doubled its estimate of the hit to full-year earnings from the pandemic as it reported a better-than-expected quarterly profit and maintained its annual adjusted earnings forecast.
The company's shares were down 3.9% at $222.50 in premarket trading on Thursday.
Cigna said it now expects full-year earnings to take a hit of about $2.50 per share due to COVID-19, compared with its previous forecast of about $1.25 per share. The company stuck to its annual adjusted income from operations target of at least $20.20 per share.
The insurer, which also has a pharmacy benefits management business, said medical costs in the second quarter grew as demand for non-COVID healthcare services normalized.
Health insurers have largely benefited from a decline in patient use of discretionary healthcare services due to the pandemic, but demand for these services is recovering as more Americans get vaccinated.
Cigna's medical care ratio (MCR), the amount spent on medical claims versus income from premiums, worsened to 85.4% in the quarter, from 70.5% a year earlier, compared with an estimate of 81.04%, according to analysts polled by Refinitiv.
The company now expects 2021 MCR to be between 83.0% and 84.0%, compared with its prior forecast of 81.0% to 82.0%.
A lower medical expense ratio is better for health insurers as it signals a tight rein on medical costs.
Rivals Anthem Inc and Centene Corp recently warned about a potential increase in coronavirus-related costs in the second half of 2021 due to the impact of the Delta variant.
The increase in Cigna's MCR outlook and higher quarterly medical costs may reflect greater Delta variant impact than other health insurers, which reported quarterly results earlier, Bernstein analyst Lance Wilkes said.
Excluding items, Cigna earned $5.24 per share in the quarter ended June 30, beating estimates of $4.96.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.