By Austen Hufford
Cigna Corp. said profit fell in its latest quarter as its government business continued to drag on results, even as enrollment rose.
Results were helped by its commercial and specialty businesses, and hurt by its government business and costs related to a Centers for Medicare and Medicaid Services audit. In January, the government regulator halted enrollment into Cigna's Medicare Advantage and prescription-drug plans.
The Bloomfield, Conn., insurer said it had 15.18 million total medical customers at the end of the September quarter, up 2.2% from a year prior. Commercial medical customers increased 2.1% as government customers rose 4.5%.
Last year, Anthem Inc. agreed to buy Cigna for $48 billion, a deal that would combine the second- and fifth-largest health insurers by revenue. The combination faces an antitrust challenge by the Justice Department, with the first trial set to begin later this month.
In all for the quarter, Cigna posted earnings of $456 million, or $1.76 a share, down from $547 million, or $2.10 a share, a year ago. The third quarter included a $71 million charge related to the proposed Cigna-Anthem merger and a litigation matter, and the prior year's quarter included a $29 million charge related to the deal.
Excluding certain items, earnings from operations fell to an adjusted $1.94 a share from $2.28 a share. Revenue grew 5.2% to $9.88 billion. Operational revenue was $9.81 billion.
Analysts polled by Thomson Reuters had projected earnings of $1.91 a share on $9.83 billion in operational revenue.
Cigna said its medical-loss ratio, or the share of premiums paid out for members' health expenses, increased to 85.3% from 83.6% for its government-based business on increased medical costs in its Medicaid business. The medical-loss ratio for commercial members also increased, to 79.4% from 79.3%.
For 2016, the company now expects earnings of $7.80 to $8.05 per share, narrowing the forecast by 5 cents on the top and bottom.
Shares of Cigna were inactive in premarket trading and have fallen 5.4% over the past three months.
Write to Austen Hufford at email@example.com
(END) Dow Jones Newswires
November 03, 2016 07:26 ET (11:26 GMT)
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