By Josh Nathan-Kazis

The health insurer Cigna reported a better-than-expected first quarter on Friday, making UnitedHealth Group's earnings blowup last month look less and less like a sector-wide problem.

Cigna reported non-GAAP adjusted income from operations of $6.74 per share for the quarter, better than the consensus estimate of $6.35 among analyst tracked by FactSet.

Behind that earnings beat was a medical-loss ratio of 82.2%, better than the 82.6% consensus estimate. The ratio tracks the proportion of premiums paid out to cover medical expenses.

Cigna raised its forecast for full-year adjusted income from operations to at least $29.60 a share, from its prior projection of at least $29.50. Analysts had been anticipating $29.59.

The stock was up 1.7% early Friday. "We believe this quarter came in above investor expectations," Mizuho analyst Ann Hynes wrote in a morning note.

UnitedHealth's first-quarter report, the first from a major insurer, cast gloom across the sector and pushed down shares of many rivals. As earnings season has progressed, however, it is looking more like what went wrong at UnitedHealth was a UnitedHealth problem.

Before Cigna reported, the question was whether its first quarter had gone the way of UnitedHealth's on the one hand, or CVS Health's on the other.

Cigna, last big health insurer to report how its business fared during the first quarter, announced its results after a few weeks of wild swings in the managed-care industry.

UnitedHealth dragged the sector into a steep selloff when it reported its first-quarter results on April 17. Management slashed its financial forecasts, saying people on Medicare Advantage, a huge business for the company, were using more medical services than expected, among other related issues. The stock fell 27% over two days.

Shares of Cigna and CVS lost 1.4% and 4.9%, respectively, over the same period.

In the weeks since, however, other managed-care companies have turned in far sunnier reports. Humana, which specializes in Medicare Advantage, outperformed expectations when it released earnings on April 30. The stock ended the day up 1.1%.

CVS, meanwhile, closed up 4.1% on Thursday afternoon. Shares gained in response to a first-quarter earnings report in which all three of its divisions crushed Wall Street expectations.

Cigna is leaving the Medicare Advantage business, which insulates it from the turmoil that has hit Medicare Advantage providers like UnitedHealth. Still, the stock has been volatile.

Cigna shares are up 21% this year, but down 2.7% over the past 12 months. The stock plunged more than 20% in the first weeks of December in response to new political threats to pharmacy-benefit managers such as the one Cigna owns. A surge in negative attention on the major health insurers that followed the killing of a top UnitedHealth executive weighed on the shares as well.

The stock plunged in late January after the company reported higher-than-expected medical costs in the fourth quarter of last year, though it has recovered from that dip.

Cigna reported total revenue of $65.5 billion, beating the $60.2 billion consensus estimate. Adjusted operating income from operations from Evernorth Health Services, a division that includes its pharmacy-benefit manager and its specialty pharmacy, was $1.4 billion. For its insurance division, Cigna Healthcare, adjusted income from operations was $1.3 billion.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com

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May 02, 2025 09:02 ET (13:02 GMT)

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