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Cigna (CI) 4Q23 Earnings Recap

Cigna Group Surges on Strong Q4 Earnings, Analyst Upgrades, and Raised Outlook for 2024

The healthcare giant Cigna Group (CI) has once again demonstrated its prowess in the competitive health insurance and pharmacy benefit management (PBM) sectors with its latest financial results. The company reported a robust fourth quarter and full-year performance for 2023, significantly surpassing Wall Street expectations. This performance has led to a positive adjustment in its 2024 earnings outlook and sparked a series of analyst upgrades.

A Strong Finish to 2023

For the year ended December 31, 2023, Cigna reported total revenues of $195.3 billion, with shareholders' net income reaching $5.2 billion, or $17.39 per share. The adjusted income from operations stood at $7.4 billion, or $25.09 per share, underscoring the company's effective operational management and strategic focus. The fourth quarter was particularly strong, with shareholders' net income of $1.0 billion, or $3.49 per share, and an adjusted income from operations of $2.0 billion, or $6.79 per share.

Analysts Turn Bullish

The stellar earnings report prompted RBC Capital and Cantor Fitzgerald to upgrade Cigna's stock. RBC Capital moved its rating to Outperform from Sector Perform, with a new price target of $354.00, up from $327.00. Similarly, Cantor Fitzgerald upgraded Cigna to Overweight from Neutral, setting a new price target of $372.00, up from $334.00. These upgrades reflect a growing confidence in Cigna's market position and future growth prospects, particularly in its Evernorth segment, which is poised for potential earnings estimate increases in 2025/2026.

Key Drivers of Success

Several factors contributed to Cigna's success in the fourth quarter. Notably, the company saw significant growth in pharmacy revenues, which rose to $36.6 billion in Q4 2023 from $33.1 billion in the same quarter the previous year. Additionally, Cigna's total medical customers increased to 19.78 million, up from 18 million in 2022, highlighting its expanding reach and service demand.

Operational efficiency and effective cost management played critical roles in Cigna's performance. The company's medical care ratio, a key measure of efficiency, was 82.2% in the quarter, below the projected 84.2%. Strategic pricing of plans and the continued growth in both Evernorth and Cigna Healthcare further fueled earnings growth.

Looking Ahead to 2024

Buoyed by its strong performance, Cigna has revised its 2024 outlook upwards. The company now expects adjusted income from operations to be at least $8.025 billion, or at least $28.25 per share, and has declared a 14% increase in the quarterly dividend to $1.40 per share. This revised guidance reflects Cigna's confidence in its continued growth trajectory and its commitment to delivering shareholder value.

The Road Ahead

Cigna's robust Q4 earnings, coupled with favorable analyst upgrades and a positive 2024 outlook, underscore the company's strong market position and operational excellence. With a strategic focus on commercial business and pharmacy benefits, Cigna is well-positioned to capitalize on growth opportunities and navigate the complexities of the healthcare sector. Investors and stakeholders can look forward to continued growth and value creation from Cigna in the years ahead.