Big insurer Cigna took in $44 billion in the first 3 months of 2022. 75% came from its drug business.
75% of Cigna’s total revenues came from Evernorth during the first three months of 2022.
While many investors have seen a decline in the value of their stock portfolio over the past year, Cigna shareholders became significantly richer today after the company announced that it made far more in profits during the first three months of this year than Wall Street financial analysts had expected.
Cigna, the giant health insurer that also operates one of the country’s biggest pharmacy benefit managers–and my former employer–reported making $1.9 billion in profits during the first quarter of 2022, 12% more than the $1.7 billion it made during the same quarter last year.
That translates into $6.01 a share, way higher than Wall Street analysts’ average expectation of $5.18 a share–and much more than the $4.73 the company reported for the first quarter of 2021.
To put that in an even broader perspective, earnings per share ten years ago, at the end of the first quarter of 2012, came in at just $1.28.
Cigna is a massively bigger company today than it was back then, thanks largely to its 2018 acquisition of Express Scripts, the big PBM that Cigna now markets under the name Evernorth.
At the end of the first quarter of 2012, Cigna reported $6.9 billion in total revenues. As a result of that acquisition–and relentless increases in health plan premiums and out-of-pocket requirements over the past decade–the company’s revenues have increased more than sixfold, to $44 billion.
Most of that, by far, is, shall we say, drug money.
In fact, 75% of Cigna’s total revenues came from Evernorth during the first three months of 2022. The company said Evernorth contributed $33.6 billion in revenues, up 10% from the $30.6 billion during the first quarter of 2021.
Cigna Healthcare, which operates the company’s health insurance plans (and which was Cigna’s biggest division before the Express Scripts acquisition), contributed only $11.3 billion in revenues during the quarter, up just 2 percent over the same period last year.
Unlike some of its competitors–UnitedHealthcare in particular–Cigna has seen modest growth in enrollment in the insurance plans it administers for employers. Enrollment in its commercial insurance plans increased 8% over the past year from 13.6 million to 14.6 million. Ten years ago, 12.2 million were enrolled in Cigna’s commercial plans.
All of United’s enrollment growth over the past decade has come from the taxpayer-financed Medicare Advantage and Medicaid programs. That company has 35,000 fewer private-paying customers today than it had in 2012.
Cigna had very little Medicare Advantage business prior to its 2012 acquisition of Nashville-based Healthspring and is still a relatively small player in the Medicare Advantage space. Enrollment in Cigna’s Medicare Advantage and other government programs actually declined from 1.46 million last year to 1.4 million on March 31 of this year. But that book of business is still quite profitable for Cigna.
Here are two other reasons why Wall Street is so bullish on Cigna today:
It told investors it expects to make more in profits this year than it previously had expected, and
It has spent close to $2 billion buying back its own shares, which boosts earnings per share for all investors.
Meanwhile, many Americans enrolled in Cigna’s health insurance plans–like cancer patient Jill Eicher–have to pay so much money in deductibles and other out-of-pocket expenses before their coverage kicks in they are begging for money on GoFundMe.
And as Mark Kreidler wrote for Capital & Main this week, high-deductible health plans make income inequality worse. They make insurers’ shareholders richer at the expense of the rest of us.