UPDATE 4-Cigna profit misses Street; outlook raised

Thu May 3, 2012 11:35am EDT

* Q1 EPS $1.28 vs $1.30 Wall Street view
    * Raises full-year EPS to $5.20-$5.55
    * Rosier view of 2012 healthcare profit
    * Shares fall 1.4 percent


    By Lewis Krauskopf	
    May 3 (Reuters) - Insurer Cigna Corp posted a
lower-than-expected first-quarter profit on Thursday, as
spending weighed on its  disability and life coverage segment,
but the company raised its full-year profit outlook.	
    Cigna expects an increased profit from its main healthcare
segment for 2012, helping drive its higher earnings projections
for the year. It now expects to enroll 1.2 million more members
this year, up from prior expectations of an increase of 900,000,
 as the insurer adds to its plans serving employers.	
    "We believe the update to guidance should more than offset
any (disappointment) around the modest earnings shortfall,"
Susquehanna Financial Group analyst Chris Rigg said in a
research note.	
    Shares of Cigna slipped 1.4 percent in morning trading. 	
    Cigna's report closes a mixed reporting season for major
U.S. health insurers. Aside from Cigna, Aetna Inc,
Coventry Health Care and Humana Inc all missed
Wall Street profit targets during the period. 	
    Separately on Thursday, smaller insurer Health Net Inc
 reported weak quarterly results and slashed its
full-year earnings forecast, sending its shares tumbling 28
percent.  	
    Cigna's quarterly results surpassed the company's
expectations, Chief Executive Officer David Cordani said.	
    "The result of that and the underlying performance of our
diversified portfolio of businesses actually is enabling us to
increase our earnings outlook," Cordani said in an interview. 	
    Cigna's net income fell to $371 million, or $1.28 per share,
from $413 million, or $1.51 per share, a year earlier.	
    Excluding special items, Cigna's earnings of $1.28 per share
fell 2 cents below the analysts' average estimate, according to
Thomson Reuters I/B/E/S.	
    Revenue jumped 25 percent to $6.79 billion, helped by the
acquisition of Medicare specialist HealthSpring, which closed at
the end of January.	
    The $3.8 billion acquisition jump-started Cigna's business
selling privately administered Medicare plans for senior
citizens, as the insurer seeks to capitalize on the wave of baby
boomers becoming eligible for the federal health program.	
    "It's a critical set of capabilities for us to have,"
Cordani said in the interview, noting that 10,000 people a day
are expected to become eligible for Medicare over the next
couple of decades.	
    Profit in the main healthcare segment rose 6.5 percent to
$262 million. Enrollment in its plans stood at 12.22 million at
the end of March, up more than 7 percent.	
    "Enrollment growth in the quarter was stronger than
expected," Leerink Swann analyst Jason Gurda said.	
    The company's profit also benefited from $38 million it had
set aside to pay for medical claims in prior periods, because
those claims did not materialize.    	
    Earnings in its disability and life segment fell 16 percent
to $65 million. The company cited strategic investments in its
disability management programs as a factor pushing down profit.
Leerink's Gurda was expecting earnings of $68 million for the
segment.	
    Profit jumped 31 percent to $80 million in its international
 segment, in which it sells supplemental insurance to
individuals in Asia and elsewhere and offers coverage to
employees working abroad. 	
    Cigna forecast 2012 earnings of $5.20 to $5.55 per share. It
previously projected $5.00 to $5.40. Analysts have been looking
for $5.41.	
    Cigna shares fell 1.4 percent to $45.92 in morning trading
on the New York Stock Exchange. Through Wednesday, Cigna shares
had climbed nearly 11 percent this year, compared with a 9
percent rise for the Morgan Stanley Healthcare Payor index
 of health insurers.
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.