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Cigna reports USD 300 million Q1 loss as VillageMD investment sputters

The Cigna Group reported a $300 million first quarter loss as the company’s Evernorth health services business grapples with the loss in value of its investment in doctor-staffed clinic operator VillageMD.

On Thursday, Cigna reported a “non-cash investment loss” of $1.8 billion, or $6.31 per share, “related to the impairment of VillageMD equity securities.” That turned an otherwise profitable quarter into a bottom line loss of $300 million, or 97 cents a share, compared to the first quarter of 2023 when Cigna reported net income of $1.3 billion, or $4.24 per share.

Cigna’s Evernorth holds a minority stake in VillageMD, a Chicago-based startup now scaling back on the expansion of doctor practices and clinics the company attached to Walgreens. In late March, Walgreens reported a $6 billion loss in its second quarter thanks to the loss in value of its controlling stake in VillageMD.

Tim Wentworth, who took over as Walgreens chief executive last October from Roz Brewer, has described VillageMD’s expansion effort as needing to go on “a diet.” Wentworth has said Walgreens and partner VillageMD have slowed the number clinic openings in part because the operators haven’t been able to fill their so-called “patient panels,” which are a certain number of individual patients under the care of a specific provider.

Aside from the loss due to its clinic investment, Cigna’s underlying businesses performed well with total revenue up 23% to $57.3 billion in the first quarter compared to $46.5 billion in the year-ago period.

Cigna said its adjusted income from operations for first quarter 2024 was $1.9 billion, or $6.47 per share, compared with $1.6 billion, or $5.41 per share, for first quarter 2023, reflecting “strong contributions” from both Cigna Healthcare, which includes an array of commercial and government health insurance plans, and Evernorth Health Services, which operates the Express Scripts pharmacy benefit management company and the Accredo specialty pharmacy business as well as certain other medical care provider services.

Across all of its businesses, customers and health plan members were on the rise.

“Total pharmacy customers at March 31, 2024 increased 25% from December 31, 2023 to 122.8 million due to new sales and the continued expansion of relationships,” Cigna said in its report . “Total medical customers at March 31, 2024 were 19.2 million, primarily reflecting a year-to-date decrease in individual and family plans customers, driven by targeted pricing actions in certain geographies.”

Unlike rival health insurance companies that are seeing profits negatively impacted due to seniors using more healthcare services in Medicare Advantage health plans an increasing number of insurers administer, Cigna didn’t report such problems. In fact, Cigna said it remains on track to sell its Medicare Advantage business to Health Care Service Corp., the parent of Blue Cross and Blue Shield plans in five states.

“The sale of our Medicare businesses to HCSC remains on track with the expiration of the waiting period under the Hart-Scott Rodino Act having occurred on April 17,” Cigna said. “The transaction is expected to close in the first quarter of 2025.”

Meanwhile, the performance of Cigna’s businesses in the first quarter figured in Cigna management’s decision to increase its outlook for the rest of this year for adjusted income from operations to “at least $28.40 per share,” the company said.

“Our strong first quarter results reflect the performance of our Evernorth and Cigna Healthcare businesses, as well as our leadership in addressing the evolving needs of those we serve with the breadth of our differentiated capabilities,” David M. Cordani, chairman and CEO of The Cigna Group said in a statement included in the company’s earnings release. “Building on our track record of growth and continued momentum in 2024, we are pleased to increase our outlook for full-year earnings.” Forbes

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