Cigna (CI) To Report Q2 Earnings: What's In The Offing?

Cigna Corp.’s (NYSE:CI) second-quarter 2019 results, scheduled to be reported on Aug 1, should reflect growth in contributions across each of its businesses including strong retention levels, continued expansion and deepening of its customer and client relationships, and solid growth across its portfolio.

The Zacks Consensus Estimate for earnings per share is pegged at $3.73, indicating 4% decline from the year-ago reported figure. Revenues are expected to be $33.4 billion, implying an increase of 190% from the year-ago reported figure.

Factors Affecting Q2 Results

Health Services segment is expected to witness organic growth in pharmacy customers and pharmacy scripts fulfilled and strong performance in specialty pharmacy care. The segment should benefit from the Express Scripts (NASDAQ:ESRX) business, which was acquired in December 2018. Total revenues for this segment is expected at $24.7 billion

We expect increased contribution from Cigna’s Integrated Medical segment, driven by Commercial customer growth, expansion of specialty relationships, and increase in premium.

The company’s International business is likely to see continued business growth, partially offset by some impact from unfavorable foreign currency movements. Total revenues for this segment is expected at $1.4 billion

Cigna has been growing its membership for the past many quarters. The same was up 1.3% in the first quarter of 2019. We expect a rise in membership in the second quarter, given Cigna’s diversified product portfolio, a wide agent network and superior service and the acquisition of Express Scripts

We expect to see some debt reduction in the to-be-reported quarter as the company remains committed in accelerating debt repayment with the objective of returning its debt-to-capitalization ratio to the upper 30s by the end of 2020. Its debt-to-capitalization ratio was 48.8% as of Mar 31.
Also, share repurchases made by Cigna will provide an additional cushion to its bottom line.

Earnings Surprise

Cigna boasts an impressive earnings surprise history, having surpassed estimates in three of the four reported quarters, with average positive surprise of 7.4%.

Cigna Corporation Price and EPS Surprise

What Our Model Says

Our proven model does not conclusively show that Cigna is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Earnings ESP: The Earnings ESP of Cigna is -2.01%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter

Zacks Rank: Cigna currently has a Zacks Rank #3, which makes our surprise prediction inconclusive.

Stocks to Consider

Here are a few healthcare stocks worth considering as these have the right combination of elements to beat on earnings in the upcoming quarterly results.

Humana Inc. (NYSE:HUM) has an Earnings ESP of +1.57% and a Zacks Rank of 3. You can see the complete list of today's Zacks #1 Rank stocks here.

DaVita, Inc. (NYSE:DVA) has an Earnings ESP of +15.58% and a Zacks Rank of 1.

CVS Health Corp. (NYSE:CVS) has an Earnings ESP of +4.90% and is a Zacks #3.

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