Cigna 1Q profit falls but beats estimates
The good news is Cigna beat Wall Street expectations on its first-quarter profits.
The bad news is those profits fell some 19 percent from the same quarter a year ago.
For the quarter ended March 31, the health insurance giant posted a net income of $352 million, or $2.87 per share, compared with $436 million, or $3.28 per share, in the first quarter of 2005.
First-quarter revenue was $4.12 billion, down more than 5 percent from $4.35 billion from the same quarter a year ago.
However, financial analysts had forecast adjusted earnings per share of $1.89 on revenue of $4.1 billion.
The company attributed the decreased profits primarily to lower earnings in the company’s health-care unit, which posted an 18 percent drop in revenue to $156 million from $191 million a year ago. A one-time gain from the sale of its retirement benefits business in 2005 also contributed to the wider gap between quarters as well as a gain of $169 million from after-tax deferrals and $33 million after-tax charge from restructuring in its health-care unit.
Membership growth in the first quarter was negligible, increasing by just 12,000 members, to 9,018,000, up from 9,006,000 a year ago.
The company currently estimates second-quarter 2006 income from operations to be in the range of $210 million to $230 million, or $1.75 to $1.90 per diluted share.
Full-year estimates for income from operations are anticipated to be in the range of $920 million to $980 million, or $7.50 to $8 per share.
Investors weren’t happy with the results, sending Cigna’s shares down $15.50, or 14.69 percent, to finish at $90 at the close of trading on Wednesday. — CINDY KIBBE