Cigna (CI) Down 7.7% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Cigna (CI). Shares have lost about 7.7% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Cigna due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Cigna Q4 Earnings Beat Estimates

Cigna Corp. came up with adjusted earnings of $4.54 per share in fourth-quarter 2019, surpassing the Zacks Consensus Estimate by 2.9%. Quarterly earnings were up 75% year over year.

Cigna’s revenues of $36.6 billion beat the Zacks Consensus Estimate by 3.7%. Revenues grew 167% year over year owing to the acquisition of Express Scripts (NASDAQ:ESRX).

Among the revenue components, pharmacy revenues were $25.6 billion compared with $3.3 billion in the year-ago quarter, premiums were up 9.8% year over year to $10 billion while fees increased 50.2% to $2.2 billion. The growth in pharmacy revenues was backed by the acquisition of pharmacy benefit manager Express Scripts.

The company’s medical enrollment grew by 184,000 lives from the prior-year quarter to 17.15 million customers, driven by growth in Commercial and International markets.

Segment Details

Health Services – Adjusted revenues of $25.6 billion were up from $3.3 billion in the year-ago quarter, primarily due to the acquisition of Express Scripts completed in December 2018.

Integrated Medical – Adjusted revenues of $9.2 billion were up 11% year over year, driven by increase in Commercial customer as well as premium growth.

International Markets – Adjusted revenues of $1.43 billion were up 5.5% year over year, reflecting continued business growth.

Capital Position

Cigna’s debt-to-capitalization ratio improved to 45.2% as on Dec 31, 2019, from 50.9% as of Dec 31, 2018.

Shareholders’ equity as of Dec 31, 2019 was $45.3 billion, up 10.5% year over year.

2020 Guidance

The company expects earnings per share in the range of $18-$18.6; adjusted revenues in the range of $154 billion to $156 billion. Medical customers are projected to grow between 150,000 and 250,000.
Medical care ratio is expected in the range of 80.2-81.2%.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month. The consensus estimate has shifted -5.62% due to these changes.

VGM Scores

At this time, Cigna has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Cigna has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.