Delaware
(State or other jurisdiction of incorporation)
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1-08323
(Commission File Number)
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06-1059331
(IRS Employer
Identification No.)
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Item 9.01
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Financial Statements and Exhibits.
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(d)
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Exhibits.
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Exhibit No.
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Description
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99.1
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Cigna Corporation
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Date: April 30, 2015
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By:
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/s/ Thomas A. McCarthy
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Thomas A. McCarthy
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Executive Vice President and
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Chief Financial Officer
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(Principal Financial Officer)
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NEWS RELEASE
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![]() |
Contact:
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Will McDowell, Investor Relations – (215) 761-4198
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Matt Asensio, Media Relations – (860) 226-2599
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o
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Consolidated revenues increased 11% to $9.5 billion in the first quarter
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o
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Adjusted income from operations1 for the first quarter was $513 million, or $1.96 per share
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o
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Shareholders’ net income for the first quarter was $533 million, or $2.04 per share
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o
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Projected adjusted income from operations1,2 for 2015 is now estimated to be in the range of $2.12 billion to $2.21 billion, or $8.15 to $8.50 per share.3
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Consolidated Financial Results (dollars in millions, customers in thousands):
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Three Months Ended
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March 31,
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December 31,
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2015
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2014
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2014
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Consolidated Revenues
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$ | 9,467 | $ | 8,496 | $ | 8,928 | ||||||
Consolidated Earnings
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||||||||||||
Adjusted income from operations1
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$ | 513 | $ | 533 | $ | 475 | ||||||
Net realized investment gains, net of taxes
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$ | 48 | $ | 27 | $ | 21 | ||||||
Amortization of other acquired intangible assets, net of taxes
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$ | (28 | ) | $ | (32 | ) | $ | (29 | ) | |||
Shareholders' net income
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$ | 533 | $ | 528 | $ | 467 | ||||||
Adjusted income from operations1, per share
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$ | 1.96 | $ | 1.94 | $ | 1.80 | ||||||
Shareholders' net income, per share
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$ | 2.04 | $ | 1.92 | $ | 1.77 | ||||||
As of the Periods Ended
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March 31,
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December 31,
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|||||||||||
2015
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2014
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2014
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Global Medical Customers
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14,654 | 14,168 | 14,456 |
·
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Cash and short term investments at the parent company were approximately $1.3 billion at March 31, 2015 and approximately $400 million at December 31, 2014. The March 31, 2015 balance includes proceeds from our recent issuance of long-term debt, which were used to redeem existing debt in the second quarter of 2015.
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·
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During the period from February 5, 2015 through April 29, 2015, the Company repurchased approximately 3.2 million shares of stock for approximately $400 million.
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·
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Year to date, as of April 29, 2015, the Company repurchased approximately 4.3 million shares of stock for approximately $515 million.
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Financial Results (dollars in millions, customers in thousands):
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Three Months Ended
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March 31,
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December 31,
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2015
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2014
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2014
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Premiums and Fees
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$ | 6,729 | $ | 5,994 | $ | 6,254 | ||||||
Adjusted Income from Operations1
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$ | 444 | $ | 467 | $ | 397 | ||||||
Adjusted Margin, After-Tax5
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6.0 | % | 7.1 | % | 5.7 | % | ||||||
As of the Periods Ended
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March 31,
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December 31,
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Customers:
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2015 | 2014 | 2014 | |||||||||
Commercial
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14,099 | 13,685 | 13,938 | |||||||||
Government
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555 | 483 | 518 | |||||||||
Medical
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14,654 | 14,168 | 14,456 | |||||||||
Behavioral Care
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23,865 | 22,717 | 23,853 | |||||||||
Dental4
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13,674 | 13,284 | 13,524 | |||||||||
Pharmacy
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7,909 | 7,197 | 7,542 | |||||||||
Medicare Part D
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1,468 | 1,241 | 1,188 |
·
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First quarter 2015 premiums and fees increased approximately 12% relative to first quarter 2014, driven by customer growth in our Commercial and Government businesses as well as specialty contributions and rate actions.
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·
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First quarter 2015 adjusted income from operations1 and adjusted margin, after-tax5, reflect medical and specialty business growth, continued effective medical cost management, and improving results in our individual business offset by increased spending for strategic investments as well as higher seasonal medical costs in our growing Medicare Part D business.
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·
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Adjusted income from operations1 for first quarter 2015 and first quarter 2014 included favorable prior year reserve development on an after-tax basis of approximately $25 million and $30 million respectively.
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Global Health Care net medical costs payable6 was approximately $2.16 billion at March 31, 2015 and $1.93 billion at December 31, 2014.
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Financial Results (dollars in millions, policies in thousands):
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Three Months Ended
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March 31,
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December 31,
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2015
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2014
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2014
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Premiums and Fees7
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$ | 735 | $ | 680 | $ | 726 | ||||||
Adjusted Income from Operations1
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$ | 69 | $ | 57 | $ | 36 | ||||||
Adjusted Margin, After-Tax5
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9.0 | % | 8.0 | % | 4.8 | % | ||||||
As of the Periods Ended
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March 31,
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December 31,
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2015 | 2014 | 2014 | ||||||||||
Policies7
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12,528 | 12,021 | 12,342 |
·
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First quarter 2015 premiums and fees grew 8% relative to first quarter 2014, reflecting customer growth and strong retention, partially offset by unfavorable foreign currency movements. Premiums and fees grew 12% excluding the impact of unfavorable foreign currency movements.
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·
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First quarter 2015 adjusted income from operations1 and adjusted margin, after-tax5 reflect business growth and strong operating expense management as well as some favorable operating expense timing.
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Financial Results (dollars in millions):
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Three Months Ended
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March 31,
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December 31,
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2015
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2014
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2014
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Premiums and Fees
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$ | 976 | $ | 916 | $ | 920 | ||||||
Adjusted Income from Operations1
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$ | 51 | $ | 67 | $ | 85 | ||||||
Adjusted Margin, After-Tax5
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4.8 | % | 6.7 | % | 8.4 | % |
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First quarter 2015 premiums and fees grew 7% relative to first quarter 2014, driven by business growth across the disability, life and accident product lines.
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·
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Adjusted income from operations1 and adjusted margin, after-tax5 for the first quarter 2015 include unfavorable claims experience in our life insurance business and higher operating expenses.
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Financial Results (dollars in millions):
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Three Months Ended
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March 31,
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December 31,
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2015
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2014
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2014
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Corporate & Other Operations
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$ | (51 | ) | $ | (58 | ) | $ | (43 | ) |
(dollars in millions, except where noted and per share amounts)
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Full-Year Ending
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December 31, 2015
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Projected Adjusted Income (Loss) from Operations1,2
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Global Health Care
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$ | 1,750 to 1,800 | ||
Global Supplemental Benefits
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$ | 230 to 250 | ||
Group Disability and Life
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$ | 320 to 340 | ||
Ongoing Businesses
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$ | 2,300 to 2,390 | ||
Corporate & Other Operations
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$ | (180) | ||
Consolidated Projected Adjusted Income from Operations1,2
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$ | 2,120 to 2,210 | ||
Consolidated Projected Adjusted Income from Operations, per share1,2,3
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$ | 8.15 to 8.50 | ||
2015 Projected Operating Metrics and Ratios Outlook
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Consolidated Revenue Growth
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8% to 10%
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Full Year Total Commercial Medical Care Ratio8
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78% to 79%
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Full Year Total Government Medical Care Ratio8
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84.5% to 85.5%
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Full Year Global Health Care Operating Expense Ratio8
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21% to 22%
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Global Medical Customer Growth9
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2% to 4%
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1.
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Effective January 1, 2015, adjusted income (loss) from operations is defined as shareholders’ net income (loss) excluding the following after-tax adjustments: net realized investment results, amortization of other acquired intangible assets and special items. Prior year amounts have been adjusted for the exclusion of amortization of other acquired intangible assets. Special items (if applicable) are identified in Exhibit 2 of this earnings release.
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2.
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Management is unable to provide a forward-looking reconciliation of adjusted income (loss) from operations to shareholders’ net income for full year 2015 because future net realized investment results, amortization of other acquired intangible assets and special items, with the exception of a $65 million after-tax charge in second quarter 2015 from the early extinguishment of debt, cannot be identified or reasonably estimated at this time.
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3.
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The Company may repurchase shares of its common stock from time to time. The Company’s outlook excludes the potential effects of any share repurchases or business combinations that may occur after the date of this earnings release.
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4.
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Prior period dental customers have been revised to conform to current presentation.
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5.
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Adjusted margin, after-tax, is calculated by dividing adjusted income (loss) from operations by operating revenues for each segment.
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6.
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Global Health Care medical costs payable are presented net of reinsurance and other recoverables. The gross Global Health Care medical costs payable balance was $2.41 billion as of March 31, 2015 and $2.18 billion as of December 31, 2014.
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7.
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Cigna owns a 50% noncontrolling interest in its China joint venture. Cigna's 50% share of the joint venture’s earnings is reported in Other Revenues using the equity method of accounting under GAAP. As such, the premiums and fees and policy counts for the Global Supplemental Benefits segment do not include the China joint venture.
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8.
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Operating ratios are defined as follows:
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·
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Total Commercial medical care ratio represents medical costs as a percentage of premiums for all commercial risk products, including medical, pharmacy, dental, stop loss and behavioral products provided through guaranteed cost or experience-rated funding arrangements in both the United States and internationally.
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Total Government medical care ratio represents medical costs as a percentage of premiums for Medicare Advantage, Medicare Part D, and Medicaid products.
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Global Health Care Operating Expense Ratio represents operating expenses excluding acquisition related amortization expense as a percentage of operating revenue in the Global Health Care segment.
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9.
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Global medical customers include individuals who meet any one of the following criteria: are covered under a medical insurance policy, managed care arrangement, or service agreement issued by Cigna; have access to Cigna's provider network for covered services under their medical plan; or have medical claims and services that are administered by Cigna.
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CIGNA CORPORATION
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COMPARATIVE SUMMARY OF FINANCIAL RESULTS (unaudited)
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(Dollars in millions, except per share amounts)
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Three Months Ended
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March 31,
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2015
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2014
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REVENUES
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Premiums
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$ | 7,402 | $ | 6,676 | ||||
Fees
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1,066 | 940 | ||||||
Net investment income
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276 | 277 | ||||||
Mail order pharmacy revenues
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578 | 495 | ||||||
Other revenues
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72 | 66 | ||||||
Total operating revenues
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9,394 | 8,454 | ||||||
Net realized investment gains
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73 | 42 | ||||||
Total
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$ | 9,467 | $ | 8,496 | ||||
ADJUSTED INCOME (LOSS) FROM OPERATIONS (1)
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Global Health Care
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$ | 444 | $ | 467 | ||||
Global Supplemental Benefits
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69 | 57 | ||||||
Group Disability and Life
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51 | 67 | ||||||
Ongoing Operations
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564 | 591 | ||||||
Corporate and Other
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(51 | ) | (58 | ) | ||||
Total
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$ | 513 | $ | 533 | ||||
After-tax adjustments to reconcile to shareholders' net income:
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Realized investment gains
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48 | 27 | ||||||
Amortization of other acquired intangible assets
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(28 | ) | (32 | ) | ||||
Shareholders' net income
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$ | 533 | $ | 528 | ||||
DILUTED EARNINGS PER SHARE
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Adjusted income from operations (1)
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$ | 1.96 | $ | 1.94 | ||||
After-tax adjustments to reconcile to shareholders' net income:
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Realized investment gains
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0.18 | 0.10 | ||||||
Amortization of other acquired intangible assets
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(0.10 | ) | (0.12 | ) | ||||
Shareholders' net income
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$ | 2.04 | $ | 1.92 | ||||
Weighted average shares (in thousands)
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261,246 | 274,467 | ||||||
Common shares outstanding (in thousands)
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257,724 | 268,717 | ||||||
SHAREHOLDERS' EQUITY at March 31,
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$ | 10,942 | $ | 10,556 | ||||
SHAREHOLDERS' EQUITY PER SHARE at March 31,
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$ | 42.46 | $ | 39.28 | ||||
(1) Adjusted income (loss) from operations is defined as shareholders' net income (loss) excluding the following after-tax adjustments: realized investment results; amortization of other acquired intangible assets; and special items (identified and quantified on Exhibit 2).
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CIGNA CORPORATION
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RECONCILIATION OF ADJUSTED INCOME (LOSS) FROM OPERATIONS TO SHAREHOLDERS' NET INCOME
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(Dollars in millions, except per share amounts)
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Diluted
Earnings |
Consolidated
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Global
Health Care
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||||||||||||||||||||||||||||||||||
Three Months Ended,
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1Q15 | 1Q14 | 4Q14 | 1Q15 | 1Q14 | 4Q14 | 1Q15 | 1Q14 | 4Q14 | |||||||||||||||||||||||||||
Adjusted income (loss) from operations
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$ | 1.96 | $ | 1.94 | $ | 1.80 | $ | 513 | $ | 533 | $ | 475 | $ | 444 | $ | 467 | $ | 397 | ||||||||||||||||||
After-tax adjustments to reconcile to shareholders' net income:
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||||||||||||||||||||||||||||||||||||
Realized investment gains (losses)
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0.18 | 0.10 | 0.08 | 48 | 27 | 21 | 32 | 11 | 14 | |||||||||||||||||||||||||||
Amortization of other acquired intangible assets
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(0.10 | ) |
(0.12
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) | (0.11 | ) | (28 | ) | (32 | ) | (29 | ) | (23 | ) | (28 | ) | (26 | ) | ||||||||||||||||||
Shareholders' net income
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$ | 2.04 | $ | 1.92 | $ | 1.77 | $ | 533 | $ | 528 | $ | 467 | $ | 453 | $ | 450 | $ | 385 | ||||||||||||||||||
Global
Supplemental
Benefits |
Group Disability
and Life |
Corporate
and Other
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||||||||||||||||||||||||||||||||||
Three Months Ended,
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1Q15 | 1Q14 | 4Q14 | 1Q15 | 1Q14 | 4Q14 | 1Q15 | 1Q14 | 4Q14 | |||||||||||||||||||||||||||
Adjusted income (loss) from operations
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$ | 69 | $ | 57 | $ | 36 | $ | 51 | $ | 67 | $ | 85 | $ | (51 | ) | $ | (58 | ) | $ | (43 | ) | |||||||||||||||
After-tax adjustments to reconcile to shareholders' net income:
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||||||||||||||||||||||||||||||||||||
Realized investment gains (losses)
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3 | - | 3 | 14 | 7 | (1 | ) | (1 | ) | 9 | 5 | |||||||||||||||||||||||||
Amortization of other acquired intangible assets
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(5 | ) | (4 | ) | (3 | ) | - | - | - | - | - | - | ||||||||||||||||||||||||
Shareholders' net income
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$ | 67 | $ | 53 | $ | 36 | $ | 65 | $ | 74 | $ | 84 | $ | (52 | ) | $ | (49 | ) | $ | (38 | ) |
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