Cigna Expects Headwinds As Coronavirus Hits Employer Health Benefits

Cigna is expecting “headwinds” in its commercial health insurance business as employer clients struggle to maintain medical benefits in a U.S. economy hit hard by the coronavirus strain COVID-19.

Like other health plans selling health insurance coverage to large and small businesses, Cigna is bracing investors for the potential employer clients won’t maintain their benefits. That is expected to hit health insurers hard and Cigna’s commercial medical plan business is sizable with more than 14 million members.

Cigna chief executive officer David Cordani said the diverse portfolio of the health insurer’s businesses, which include the large pharmacy benefit manager (PBM) Express Scripts, will help the company through the recession. Client businesses both small and large hit hard by stay at home orders that have shut down operations to prevent the spread of COVID-19 have been shedding workers who may lose their health benefits in the future.

But the “wild card” impact of the pandemic depends on how long it lasts and how serious it continues to be, Cordani said Thursday on a call with analysts.

In the first quarter, Cigna’s revenue increased slightly to $38.4 billion in the first quarter compared to $37.9 billion last year thanks to increased enrollment in health plans, particularly Medicare Advantage, the private coverage for seniors. Cigna reported first quarter net income of nearly $1.2 billion.

Cigna’s solid first quarter financial report comes as cases of the coronavirus strain COVID-19 surged past 1 million this week in the U.S. in what will eventually impact the health benefits of Cigna members. The impact was minimal in the first quarter, Cigna said.

“We recognize the dynamics of the environment,” Cordani told analysts on a conference call Thursday morning to discuss earnings and the impact of the coronavirus pandemic.

Still, Cigna Thursday re-affirmed its financial outlook for 2020 that forecasts “adjusted revenues” of $154 billion to $156 billion and “consolidated adjusted income from operations on a per share basis in the range of $18 to $18.60 per share.”