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Cigna (CI) Evernorth Business Ties Up With Kaiser Permanente

·3 min read

Cigna Corporation's CI health services business, namely Evernorth, recently entered a five-year deal with integrated health care organization Kaiser Permanente. Effective immediately, the extensive collaboration intends to provide seamless and affordable care to Kaiser Permanente members.

Evernorth will now act as the external pharmacy partner of Kaiser for certain drugs. Both the companies share the commitment to providing quality healthcare, which is expected to yield better health outcomes.

In the beginning, Kaiser Permanente members will have access to CI's PPO provider network of more than one million physicians and other providers when they need emergency care while outside Kaiser's service areas. Apart from this, they will be able to access specialty pharmacy services. Other aspects will be taken care of later by the companies.

The deal is expected to result in meaningful savings in time. Kaiser Permanente and its commercial plan members are expected to enjoy quality care at reduced costs.

CI's Evernorth unit has been contributing to its top line for several years now. For Evernorth, management projects 2022 adjusted earnings of $6.1 billion, suggesting an upside of 5% from 2021's reported figure. Management expects 2022 medical customers to grow by at least 575,000. Adjusted pretax income from operations from Evernorth is anticipated to be $6.1 billion for the current year.

In the last reported quarter, Evernorth's adjusted revenues improved 15% year over year to $35.1 billion , attributable to solid organic growth in specialty pharmacy services and higher retail network volumes.

Cigna is well-poised for growth on the back of its solid Evernorth unit, growing membership leading to better revenues and a streamlined portfolio. CI's prudent acquisition moves are driving inorganic growth. Buyouts like Express Scripts, OnePath Life Insurance and others are laudable. Its inorganic growth strategy has helped the company in expanding its geographical footprint.

Year to date, CI shares have gained 13.7%, compared with the industry's growth of 4.2%. Cigna carries a Zacks Rank #2 (Buy) currently.

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Other Stocks to Consider

Some other top-ranked stocks include Humana Inc. HUM, Centene Corporation CNC and UnitedHealth Group Incorporated UNH. Each company carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Humana is one of the largest health care plan providers in the United States. HUM has a trailing four-quarter earnings surprise of 3.10%, on average. Over the past 30 days, HUM has witnessed its 2022 and 2023 earnings estimates move north by 0.04% and 0.3%, respectively. HUM has a VGM Score of B.

Centene Corporation is a well-diversified, multi-national healthcare company that primarily provides a set of services to government-sponsored healthcare programs. CNC has a VGM Score of A. The consensus mark for CNC earnings estimate reflects an upside of 5.2%.

UnitedHealth Group provides a wide range of health care products and services, such as health maintenance organizations (HMOs), point of service plans (POS), preferred provider organizations (PPOs), and managed fee-for-service programs. UNH has a VGM Score of A. UNH has a trailing four-quarter earnings surprise of 3.73%, on average. Over the past seven days, UNH has witnessed its 2022 and 2023 earnings estimates move north by 0.1% and 0.2%, respectively.

Year to date, shares of Humana have lost 1.1%, while that of Centene and Unitedhealth Group have gained 4.4% and 25.8%, respectively.


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