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Cigna confident of meeting 2021 profit target despite virus-led crisis

A screen displays the logo fro Cigna Corp. on the floor at the NYSE in New York

By Manojna Maddipatla

(Reuters) - Cigna Corp <CI.N> on Thursday reaffirmed its profit goals for this year and the next, expecting its $52 billion acquisition of pharmacy benefits manager Express Scripts to tide over the COVID-19-triggered global economic meltdown.

Shares of the health insurer were up 1.1% at $198.

Cigna's Express Scripts business though modestly vulnerable to job losses during a recession, is well diversified to weather the hit, Chief Financial Officer Eric Palmer said.

The company said while the impact of the pandemic is still developing, the recession could affect enrollment in employer-sponsored health plans. But for now some of its employer customers are maintaining employees' health benefits.

Corporations see this as a more temporary dislocation of their business, and hence, want to maintain positive ties with their workers, Chief Executive Officer David Cordani said.

Cordani also said medical costs from the COVID-19 pandemic could be offset by deferred health care procedures due to the health crisis.

Despite meaningful pressure on employer-sponsored health plans and cost pressures due to phased recovery in health care utilization, Cigna can still meet its 2021 profit goal, Stephens analyst Scott Fidel said.

Rivals including UnitedHealth Group Inc <UNH.N>, Anthem Inc <ANTM.N> and Humana Inc <HUM.N> have also reaffirmed their profit estimates for 2020, even as they warned of higher costs from resumption in elective surgeries deferred due to the COVID-19 pandemic.

While health insurers benefit from the deferred health care in the first half of the year, the gains could be short lived, depending on how quickly the virus outbreak subsides and the healthcare business returns to near normal, according to a Reuters analysis.

Some U.S. states such as Ohio and Florida have already disclosed plans to resume elective surgeries and procedures.

Cigna said it continues to expect 2020 adjusted income from operations to be between $18 and $18.60 per share. Analysts were expecting $18.32 per share, according to Refinitiv IBES data.

The company also reaffirmed its 2021 adjusted profit target of between $20 and $21 per share.

Excluding items, the company earned $4.69 per share in the first quarter, beating the average analyst estimate of $4.35, according to IBES data from Refinitiv.

Cigna said growth in its adjusted sales for the first quarter was boosted by higher enrollment in its Medicare Advantage health plans, meant for people older than 65 or those with disabilities, as well as a jump in the premiums collected.

(Reporting by Manojna Maddipatla in Bengaluru; Editing by Shinjini Ganguli)