Cigna increased its full-year profit target on Thursday after lower medical costs and higher premium revenue drove profit growth in the third quarter.
Total revenue at the Philadelphia-based insurer – which recently obtained federal approval for its merger with Express Scripts – rose 9.2 percent to $11.4 billion. Profit excluding some investment losses and other items climbed 32 percent to $945 million, or $3.84 per share, higher than analysts’ expectations.
Cigna raised its full-year earnings estimate as much as 60 cents to $14.40 per share.
The company had 15.7 million commercial customers at the end of the quarter, a 3 percent year-over-year increase, while enrollment in its federal business was little changed. Revenue from insurance premiums grew 11.4 percent to $9 billion.
Chief Executive Officer David Cordani said the company expects to continue driving innovation, growth and value” in its merger with Express Scripts, which has been approved by the Justice Department and should be completed by the end of this year. The companies are awaiting approval from six states. The pharmacy benefit manager on Wednesday reported sales of $25.6 billion and a 27 percent increase in profit.
The new entity is expected to aggressively pay down its debt in the first 18-24 months, but will still have additional available capital to reinvest back into the company, Cordani told investors.
Cigna will participate in the individual exchange in seven states next year, Cordani said, but the insurer is only expecting mid-single digit growth due to a more competitive market in 2019.
Cigna’s stock was up 3.11 percent to $220.45 per share in New York pre-market trading.
