Cigna quarterly profit falls, missing Wall St. view
NEW YORK (Reuters) - Insurer Cigna Corp (CI.N) on Thursday reported a lower-than-expected quarterly profit on weakness in its main health care segment.
The company affirmed its full-year earnings-per-share forecast, but slightly lowered its projection for health care profit. It also cut the top end of its targeted range for health care membership growth.
Although Cigna's shares were down 20 percent this year at Wednesday's close, the stock had outperformed rival U.S. health insurers, which have largely posted disappointing results this quarter and cut their 2008 outlooks.
"In somewhat of a recurring theme in Cigna's reports, other non-core businesses offset weakness in core health care results," JPMorgan analyst William Georges wrote in a research note.
Cigna shares fell 4 percent to $41 in light trading before the market opened.
Net income slumped to $58 million, or 21 cents per share, from $289 million, or 98 cents per share, a year earlier. The latest results include charges for litigation and a change in accounting for the company's reinsurance business.
Excluding items, earnings were 94 cents per share, 2 cents below the analysts' average forecast, according to Reuters Estimates.
Revenue rose 4.5 percent to $4.57 billion.
Health care earnings fell nearly 18 percent to $138 million, hurt by weaker margins and lower-than-expected membership. Health care membership stood at nearly 10.4 million at the end of the quarter, up 5.5 percent from a year earlier.
"While our Health Care results did not meet our expectations, we are taking actions to improve the profitability of the Health Care business over the balance of the year," Chief Executive Edward Hanway said in a statement.
Goldman Sachs analyst Matthew Borsch said health care results were under pressure, "consistent with the sector trend."
Cigna's other businesses posted higher earnings. Profit rose 13 percent to $68 million in the disability and life segment and increased 37 percent to $52 million in the international segment.
The Philadelphia-based company forecast full-year income from operations of $4.05 to $4.25 per share, excluding one-time items. Analysts are looking for $4.14.
Cigna said it expected adjusted health care earnings of $735 million to $775 million for 2008, compared with its prior outlook of $740 million to $780 million.
The company now projects full-year membership growth of 2 percent to 2.5 percent, compared with 2 percent to 5 percent previously.
Cigna shares have outperformed a 31 percent decline this year for the Morgan Stanley Healthcare Payor index .HMO.
(Reporting by Lewis Krauskopf; Editing by Lisa Von Ahn and Derek Caney)
