By Leslie Small
Both Cigna Corp. and WellCare Health Plans, Inc. delivered third-quarter 2019 earnings results that beat Wall Street’s expectations and largely impressed analysts — particularly in light of other insurers’ recent issues with medical loss ratio (MLR) results.
In its quarterly earnings report posted on Oct. 31, Cigna said its strong financial results were driven primarily by its health services and integrated medical segments.
The health services segment, which includes the company’s PBM business, reported a pretax operating profit of $1.4 billion, beating Wall Street’s consensus of $1.36 billion. The insurer’s integrated medical segment, which includes its health insurance business, saw its pretax operating profit increase from $932 million to $953 million year over year.
Cigna’s MLR of 80.5% was higher than it was in the third quarter of 2018, as the company expected, but it beat the 80.8% consensus estimate, “bucking the trend seen from peers,” Citi analyst Ralph Giacobbe observed in an Oct. 31 research note. Anthem, Inc., for instance, said during its recent third-quarter earnings conference call that its full-year 2019 MLR will likely be higher than it originally estimated due to issues with Medicaid eligibility redeterminations that it’s experienced this year.
Across its books of business, Cigna reported an adjusted earnings per share of $4.54, beating the consensus $4.36, and it raised its full-year EPS estimate to a range of $16.80 to $17.00.
WellCare, which reported its financial results on Oct. 30, “delivered impressive 3Q results,” with its adjusted EPS of $5.50 beating the consensus estimate by 43%, Jefferies analysts David Windley and David Styblo wrote in a research note.
WellCare’s third-quarter 2019 MLR of 87.0% beat the consensus estimate by 130 basis points, which Windley and Styblo described as a “pretty clean result.”