Beating analysts’ expectations, the Cigna Group reported strong profits of $1.3 billion and revenues of $46.5 billion for the first quarter of 2023. Cigna revenues were stronger than analysts expected in all market segments, but were particularly strong in its health insurance business, Cigna Healthcare. Cigna Healthcare’s first quarter revenues of $12.7 billion were up 12% year-over-year. Cigna Healthcare attributed the strong revenue growth to an increase of 1.5 million medical members in the first quarter, with increases in both its commercial and Medicare Advantage membership.
Cigna’s first quarter profits were driven, in part, by a lower than expected medical cost ratio (“MCR”) of 81.3%, down from 81.5% in the prior year quarter. Cigna attributed the decrease in its MCR to “favorable cost trends,” meaning lower payments to providers. A health insurer’s MCR represents the insurer’s spending on claims compared with its earnings from premiums. Cigna’s MCR is one of the lowest in the industry. Other health insurers have also reported lower than anticipated MCRs for the first quarter, fueling their profits.
As a result of its strong earnings, Cigna increased its annual profit forecast by 10 cents to at least $24.70 a share.
Cigna’s press release announcing its earnings is linked here. Whatley Kallas, LLP’s previous article on health insurers’ lower than expected MCRs fueling strong profits is linked here.