(Reuters) – Cigna Corp, which is awaiting a ruling on the U.S. government’s lawsuit to block its acquisition by Anthem Inc, reported a better-than-expected quarterly profit, helped by strength in its commercial business.
Cigna manages insurance plans for large corporations and sells health plans on the government exchanges created under Obamacare.
The health insurer said it expects 2017 adjusted earnings to be $ 9.00-$ 9.50 per share.
Analysts on average estimated earnings of $ 9.54 per share, according to Thomson Reuters I/B/E/S.
Cigna’s results come a day after Anthem said it expected to break even or make a small profit in the Obamacare individual market in 2017 even as it considers pulling out of that business next year.
Individual insurance created by former President Barack Obama’s health reform law, often called Obamacare, has been a difficult business for large insurers.
U.S. President Donald Trump has vowed to repeal and replace the program, and Republican-led Congress has begun the process.
Last week, a U.S. judge blocked Aetna Inc’s proposed $ 34 billion deal to buy smaller rival Humana Inc, raising the stakes for Anthem’s $ 54 billion deal to buy Cigna.
Cigna’s net income fell to $ 382 million, or $ 1.47 per share, in the fourth quarter ended Dec. 31, from $ 426 million, or $ 1.64 per share, a year earlier.
Excluding items, Cigna earned $ 1.87 per share, above analysts’ average estimate of $ 1.74.
Cigna’s commercial medical care ratio – the amount it spends on medical claims compared to income from premiums – came in at 83.1 percent in the quarter compared with 80.4 percent a year earlier.
The company said the ratio reflected ongoing strength in its commercial employer business and continued high medical costs in its individual business.
Cigna said its government medical care ratio of 83.2 percent in the quarter reflected increased costs in its Medicaid business. Its government medical cost ratio came in at 83.1 percent a year earlier.
Consolidated operating revenue increased 3 percent to $ 9.89 billion, below analysts’ average estimate of $ 9.91 billion. (Reporting by Ankur Banerjee in Bengaluru; Editing by Martina D’Couto)
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