Cigna Q4 Profit Declines, Guides 2014 EPS Below View

(RTTNews) - Health insurer Cigna Corp. (CI) reported Thursday a profit for the fourth quarter that declined from last year, despite revenue growth. The result was hurt by lower operating margins amid higher medical costs and strategic investments for long term customer growth. The company also provided earnings guidance for the full-year 2014, below Street view.

The Philadelphia, Pennsylvania-based company reported shareholders' net income of $361 million or $1.29 per share for the fourth quarter, lower than $406 million or $1.41 per share in the prior-year quarter.

Results for the latest quarter include a special item which resulted in losses of $0.15 per share related to costs associated with an organizational efficiency plan, while the year-ago quarter results included a special item which resulted in losses of $0.24 per share for litigation matters.

Excluding special items, adjusted income from operations for the quarter was $387 million or $1.39 per share, compared to $452 million or $1.57 per share in the year-ago quarter.

Total revenues for the quarter grew to $8.15 billion from $7.62 billion in the same quarter last year. Eight Wall Street analysts had a consensus revenue estimate of $7.37 billion for the quarter.

Premiums and fees increased to $7.28 billion from $6.83 billion a year ago, and mail order pharmacy revenues rose to $494 million from $434 million a year ago.

Net investment income totaled $291 million, edging up from $290 million and other revenues grew to $61 million from $58 million in the year-ago quarter, while net realized investment declined to $21 million from $24 million last year.

Segment wise, global health-care premiums and fees rose 6 percent to $5.72 billion, and global supplemental benefits premiums and fees totaled $662 million, up 12 percent from last year. Group disability and life premiums and fees increased 9 percent to $873 million from a year ago.

As of the end of the fourth quarter, global medical customers grew to 14.22 million from 14.05 million, and policies increased to 11.87 million from 11.44 million at the end of the year-ago quarter.

"Cigna's operating performance in 2013 was strong, driven by the continued effective execution of our strategy which resulted in improved health outcomes and productivity for our customers and clients," President and CEO David Cordani said in a statement.

For fiscal 2013, Cigna's net income for the year declined to $1.48 billion or $5.18 per share from $1.62 billion or $5.61 per share in the prior year.

Excluding special items, adjusted income from operations was $1.93 billion or $6.79 per share, compared to $1.73 billion or $5.99 per share in the year ago. Total revenues for the full year increased 11 percent to $32.38 billion from $29.12 billion posted in the previous year. Street was looking for full-year 2013 revenues of 28.96 billion.

Looking forward to fiscal 2014, Cigna expects consolidated adjusted income from operations in a range of $6.80 to $7.20 per share. Street analysts are looking for full-year 2014 earnings of $7.32 per share.

"In the midst of an environment undergoing rapid change and disruption, our focused strategy and differentiated capabilities will enable us to deliver continued future growth," Cordani added.

CI closed Thursday's regular trading session at $85.37, down $0.14 on a volume of 1.55 million shares. In the past 52-week period, the shares have been trading in a broad range of $55.97 to $90.63.