Cigna surpassed Wall Street estimates for third-quarter profit on Thursday, driven by high demand for biosimilars of a blockbuster arthritis drug and its pharmacy benefit management unit gaining new clients.
The conglomerate said in June it started distributing close copies of AbbVie's arthritis drug, Humira, at no out-of-pocket cost to patients using its specialty pharmacy Accredo.
Cigna expects the biosimilar opportunity to go beyond Humira and sees an additional $100 billion of annual specialty drug spend to be subject to biosimilar and generic competition in the U.S. by 2030.
Pharmacy benefit managers are companies that handle prescription drug benefits for health insurance companies, large employers and Medicare prescription drug plans - a group often referred to as payers.
Total adjusted revenue at the Evernorth healthcare services unit rose 36% to $52.64 billion.
Along with its PBM unit, Cigna also operates a health insurance business that relies more on employer-sponsored healthcare management. It is in the process of selling its Medicare Advantage business, which manages plans to cover older Americans, to Health Care Service Corp.
The company saw its medical care ratio - the percentage of premiums spent on medical care - rise to 82.8% from 80.5% a year earlier. Analysts expected a ratio of 82.43% for the quarter, according to data compiled by LSEG.
It maintained its annual forecast and expects to report adjusted profit of at least $28.40 per share.
Quarterly net income fell 47.5% to $739 million, or $2.63 per share, due to a non-cash after-tax investment loss of $1 billion related to its minority ownership of primary care provider, VillageMD.
Total revenue for the third quarter was $63.7 billion, beating an estimate of $59.4 billion.
Cigna posted adjusted quarterly profit of $7.51 per share, beating analysts' estimate of $7.20 per share.
https://finance.yahoo.com/news/cigna-tops-quarterly-profit-estimates-101711156.html
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