By Sriparna Roy
(Reuters) -Cigna surpassed quarterly profit estimates on Thursday, driven by strong demand for its specialty drugs and new clients for its pharmacy benefit management unit, sending the company's shares up more than 2% to $319.02 in premarket trading.
It saw an increased adoption of biosimilars, or close copies, of AbbVie (NYSE:ABBV)'s blockbuster arthritis drug, Humira, in the third quarter, Cigna (NYSE:CI) said.
The company started distributing Humira biosimilars at no out-of-pocket cost to patients using its specialty pharmacy, Accredo, it said in June.
Pharmacy benefit managers help negotiate drug prices and coverage as middlemen. Total adjusted revenue at the Evernorth healthcare services unit, which houses its PBM unit, rose 36% to $52.64 billion.
"All in, we see this as a fairly solid quarter that should leave the company with a reasonable set-up into the fourth quarter and 2025," J.P.Morgan analyst Lisa Gill said.
Unlike its peers, Cigna has a smaller presence in the Medicare Advantage market, where insurers have been experiencing pressures due to increased medical costs. It relies more on employer-sponsored healthcare management.
The company is in the process of selling its Medicare Advantage business, which manages plans to cover older Americans, to Health Care Service Corp.
It saw its medical care ratio - the percentage of premiums spent on medical care - rise to 82.8% from 80.5% a year earlier. Analysts expected a ratio of 82.43% for the reported quarter, according to data compiled by LSEG.
Cigna maintained its annual forecast and expects to report adjusted profit of at least $28.40 per share.
Quarterly net income fell 47.5% to $739 million, or $2.63 per share, including a non-cash after-tax investment loss of $1 billion related to its minority ownership of primary care provider, VillageMD.
Total revenue for the third quarter was $63.7 billion, beating an estimate of $59.4 billion.
The company posted adjusted quarterly profit of $7.51 per share, beating analysts' estimate of $7.20 per share.