Cigna (CI) told Wall Street something plain on Thursday, Nov. 5. Revenue at its health-plan arm rose 8.9%, to $11.71 billion. The main reason, in the company's words, was premium rate increases to cover the medical costs it expects. It's open-enrollment season for many workplace plans. That line from Cigna is really about your next pay stub.
The whole company grew 5.6%, to $73.68 billion in revenue, ahead of the $72.64 billion analysts expected. Profit was $1.44 billion, or $5.47 a share, down from $1.87 billion a year earlier. Strip out one-time items and earnings were $7.98 a share, well above the $7.52 FactSet estimate. Cigna lifted its full-year outlook to at least $30.60 a share. Analysts had $30.51. The Journal's Connor Hart covered the report. The stock still slipped $3.93 to $301.48 on Thursday, by the paper's stock table. A beat and a raise didn't buy it a better day in a market where nearly everything fell.
What the numbers say about next year
Evernorth, the pharmacy-benefit and care-services arm, grew 4.6%, to $63.77 billion. Total customer relationships fell 2.7%, to 177.6 million, as Cigna had fewer pharmacy and behavioral customers. Read the two together. Fewer customers, more revenue. The health-plan arm grew mainly by raising premiums, because it expects each member to cost more to cover. Insurers price next year's medical bills this year. Cigna just told you what it thinks those bills look like. Its own words, as the Journal reports them, were "premium rate increases to cover expected increases in medical costs." There's no softer way to read that line.
Our read
This is a Health Costs story with a Cash Flow point, M5 in our map. We wrote in No. 193 about health costs as the quiet inflation in a household budget. Cigna's quarter is that idea in a company's own numbers. Cigna isn't held in any of our model books, so this is a WATCH for what it says about premiums. The premium line on your pay stub is where an insurer's expected costs show up first.
Your check is the enrollment packet on the counter. Line up the plans two ways. Take the yearly premium of the low-deductible plan and subtract the premium of the high-deductible one. The deductible is what you pay before the plan pays. Then compare that premium saving to the gap in deductibles. If the saving covers most of the gap, the high-deductible plan with an HSA often comes out ahead in a healthy year. An HSA is a health savings account, money set aside before tax for medical bills, and it stays yours. If you had big bills this year, the math can flip. Do it before the window closes. The premium you pick now is a bill you'll pay all through 2027. Bring the packet to a planning review if you want a second set of eyes on it.