Cigna reaffirms guidance despite elevated medical costs

Cigna reaffirmed its guidance on Thursday, logging a strong second quarter despite persistently high medical costs that are causing headaches for insurers.

Brian Evanko, president and CEO of Cigna Healthcare and Cigna’s chief financial officer, said the company expects elevated medical costs to continue throughout the year. 

But the 83.2% medical care ratio Cigna posted in Q2 was in line with expectations, helped by the lack of exposure to Medicare and Medicaid, as the organization primarily services patients through its own healthcare portfolio.

In January, Cigna agreed to sell its Medicare Advantage, Supplemental Benefits, Medicare Part D and CareAllies business to Health Care Service Corporation (HCSC) for about $3.7 billion, a move the organization said would drive value for stakeholders.

“We see eroding health status, affordability and access challenges as the key challenges to the healthcare system,” said Cigna President and CEO David Cordani on the Thursday earnings call. “But we have a number of differentiators which enable us to lead, including our orientation – anticipating and sometimes causing constructive disruption. This is a fundamental part of our strategy.”

Cordani also alluded to the insurance industry’s push for prior authorization reform, with Cigna joining Humana, Elevance and others to simplify, streamline and reduce prior authorizations nationwide. Last month Dr. Mehmet Oz, administrator for the Centers for Medicare and Medicaid Services, stressed that the insurance industry's push for reform is not the result of legislation, executive orders or other compulsory governmental mandate, but rather an industry-led effort with guidance from the federal government.

According to Cordani, Cigna is leaning into the arrangement in a “partnership orientation.”

“We continue to lean into and embrace public-private partnerships,” said Cordani. “We’re proactively working to bring forward new solutions with the current administration. This signals a commitment from Cigna to build a better future.”

Shareholders' net income for Q2 was $1.5 billion, or $5.71 per share, and compares to $1.5 billion, or $5.45 per share, for Q2 2024.

WHAT’S THE IMPACT

The Cigna Group's adjusted income from operations for Q2 was $1.9 billion, or $7.20 per share, compared with $1.9 billion, or $6.72 per share, for Q2 2024.

Total revenues increased 11% relative to Q2 2024, primarily driven by Evernorth Health Services. Adjusted income from operations increased 1% from the same period last year, again attributable to Evernorth, though it was mitigated somewhat by higher stop-loss medical costs in Cigna Healthcare.

Evernorth saw adjusted revenues and adjusted income from operations, pre-tax, increase 17% and 5%, respectively, relative to Q2 2024.

Cigna boasted 182.2 million total customers as of June 30, a 2% increase since December. Pharmacy customers totaled 121.9 million, a 3% increase over that same period, and total medical customers clocked in at about 18 million, a 6% decrease.

THE LARGER TREND

The prior authorization commitments made by insurers this year are being implemented across insurance markets, including for those with commercial coverage, Medicare Advantage and Medicaid managed care consistent with state and federal regulations, and stand to benefit about 257 million Americans, according to AHIP.

Insurers are promising faster and more direct access to appropriate treatments for patients, and for providers, more efficient and transparent prior authorization workflows.

Participating health plans have signaled that they're implementing common, transparent submissions for electronic prior authorization. This commitment includes the development of standardized data and submission requirements (using FHIR APIs) that will support streamlined processes and faster turnaround times. The goal is to have a new framework up and running by Jan. 1, 2027.

Individual plans will also commit to specific medical prior authorization reductions, as appropriate for each plan's local market, with demonstrable results by Jan. 1, 2026.