Cigna 2022 profits swelled thanks to Evernorth subsidiary

The growth of Cigna’s healthcare services subsidiary helped fuel a 24% increase in net income to $6.7 billion last year, the health insurance reported Friday.

Revenue rose 4% to $180.5 billion in 2022, according to Cigna’s financial report. The company’s Evernorth operations, which include pharmacy benefit management, specialty pharmacy and care delivery, generated $140.3 billion last year, a 6% improvement over 2021.

Evernorth contributed $2.5 billion to Walgreens Boots Alliance subsidiary VillageMD’s acquisition of Summit Health-CityMD, which created a broad network of primary, specialty and urgent care providers.

“We continue to invest an outsized amount of money in areas such as our Evernorth care services platform to enable things like VillageMD alongside our specialty pharmacy business, which continues to grow at very attractive rates,” Cigna Chief Financial Officer Brian Evanko told investors during a briefing Friday.

Insurance membership grew 5.4% to 18 million in 2022, driven by commercial customers. Government-sponsored insurance enrollment slightly contracted, in part because Cigna sold its Texas Medicaid operations to Molina Healthcare for $60 million last January.

Lower expenses for COVID-19 care and “effective execution in pricing and affordability initiatives in its U.S. commercial business” led to a decline in Cigna’s medical loss ratio from 84% in 2021 to 81.7% last year, the company reported.

Cigna expects Medicare Advantage membership growth in the high single digits this year. The program continues to represent a significant growth opportunity, CEO David Cordani said.

On Wednesday, the Centers for Medicare and Medicaid Services announced that Medicare Advantage rates would rise by 2.09% in 2024. If the agency implements that policy as proposed, it would create “revenue dislocation” that would prompt Cigna to leverage its value-based payment arrangements, which cover about three-quarters of its Medicare Advantage enrollees, Cordani said.

“The initial rate letter that came out does have lower or somewhat anemic revenue. We’ll await the final rate letter that comes forward relative to that,” Cordani said.