Health insurer Cigna Corp reported a 16.4% fall in second-quarter profit on Wednesday, hurt by higher medical costs, and said it expects a negative earnings impact from COVID-19 of about $2.50 per share for 2021.
The company, which also has a pharmacy benefits management business, said its medical costs in the reported quarter grew as demand for non-COVID healthcare services normalized.
Health insurers have largely benefited from a decline in patient use of discretionary healthcare services due to the ongoing pandemic, but demand for these services is recovering as more Americans get vaccinated.
Cigna raised the full-year forecast for negative earnings impact due to the pandemic from its previous outlook of about $1.25 per share, but stuck to its annual adjusted income from operations target of at least $20.20 per share.
The company's medical care ratio, the amount spent on medical claims versus the income from premiums, worsened to 85.4% in the second quarter, from 70.5% a year earlier, compared with an estimate of 81.04%, according to five analysts polled by Refinitiv.
Cigna said it now expects its medical care ratio for the full year to be between 83.0% and 84.0%, compared with its prior forecast of 81.0% to 82.0%.
Net income attributable to shareholders fell to $1.47 billion, or $4.25 per share, in the quarter ended June 30, from $1.75 billion, or $4.73 per share, a year earlier.
(Reporting by Manojna Maddipatla in Bengaluru; Editing by Shounak Dasgupta) ((firstname.lastname@example.org; +91 8061822700))