By Sneha S K, Kunal Das and Amina Niasse
Nov 5 (Reuters) - Cigna on Thursday raised its annual profit forecast after beating third-quarter estimates, driven by growth in its US health insurance business, specialty pharmacy and health services.
The company also said it expects its adjusted profit to grow at least 10% in 2027.
"We have a clear strategic growth framework for creating long-term value and will continue to execute with discipline," said CEO Brian Evanko.
Evernorth Health Services, which includes Cigna's pharmacy-benefit, specialty-pharmacy and care-services businesses, posted adjusted revenue of $63.77 billion in the third quarter, up about 6% from a year earlier.
Profit for specialty pharmacy and care services grew 15% during the quarter to $1.06 billion, while its pharmacy benefit services division saw profit fall 22% to $765 million.
The company's healthcare unit, which includes its fee-based business of managing corporate-sponsored health plans and includes Affordable Care Act plans, reported adjusted revenue of $11.71 billion, up about 9% from a year ago.
"The insurance business drove the results, and medical costs, while still elevated, were in line with what Cigna had priced for. Specialty pharmacy remains a source of growth," said Daniel Barasa, portfolio manager at Gabelli.
Its medical loss ratio, or the percentage of premiums spent on patient care, rose to 85% in the third quarter from 84.8% a year earlier, due to changes in its US-employer insurance business. The loss ratio affects its margins on ACA plans.
Analysts had expected a medical cost ratio of 85.18%, according to data compiled by LSEG.
Cigna exited its Medicare Advantage business last year, and plans to exit ACA coverage at the end of 2026.
The company in September announced a new program that aims to deliver about $3 billion in cost savings by 2030. The program will focus on streamlining workflows with AI-enabled insights and tools.
The company said it expects a boost to customer growth and margin improvement in certain employer-backed plans next year, even as it faces other challenges, including those arising from its exit from the ACA market, lower drug rebates, reduced employer coverage of weight-loss drugs and fewer launches of lower-cost versions of specialty medicines.
Julie Utterback, an analyst at Morningstar, said costs associated with Cigna's transition to a fee-based model from a rebate model for its pharmacy benefit business are largely being incurred this year, which could help profit growth pick up in 2027.
The company said it is actively transitioning contracts with drugmakers and network pharmacies.
Cigna now expects 2026 adjusted profit of at least $30.60 per share, 15 cents higher than its previous forecast and above analysts' expectations of $30.51.
Its quarterly adjusted revenue of $73.79 billion beat analysts' estimates of $72.72 billion, while adjusted profit of $7.98 per share exceeded market consensus of $7.50.
(Reporting by Kunal Das and Sneha S K in Bengaluru; Reporting by Amina Niasse in New York; Editing by Shinjini Ganguli and Tasim Zahid)