By Sriparna Roy and Sneha S K
April 30 (Reuters) – Cigna slightly raised its 2026 profit forecast on Thursday after reporting first-quarter earnings that topped Wall Street estimates on lower-than-expected medical costs, and the health insurer said it will stop offering Obamacare plans.
Chief Operating Officer Brian Evanko, who is set to take over as CEO when Chief Executive David Cordani retires, effective July 1, said the company would exit subsidized plans offered under the Affordable Care Act, also known as Obamacare, at the end of this year.
It intends to focus on the traditional employer-sponsored healthcare business and pharmacy benefits management, he said.
“We did not make this decision lightly, and appreciate the importance of ensuring patients have continuity through the transition,” Evanko said during a call to discuss results.
“There are no changes to coverage or networks related to this announcement, and we will support members through their open enrollment transitions into 2027,” he added.
Cigna had exited government-backed Medicare Advantage health plans for Americans aged 65 and older and those with disabilities last year.
Financial expectations for the Obamacare business in 2026 were unchanged, the company said.
Cigna is also shifting some customers to a new model that excludes after-market discounts, known as rebates, a move it says will squeeze margins over the next two years.
Shares of Cigna were marginally down in morning trading.
PRIOR AUTHORIZATION CHANGES
The medical loss ratio, or the percentage of premiums spent on medical care, stood at 79.8% in the quarter, representing lower costs than the 81.56% estimated by analysts, according to LSEG data.
That was primarily due to Cigna’s sale of its Medicare business to Health Care Service Corp for $3.3 billion.
First-quarter adjusted revenue at its Evernorth health services unit, which includes the pharmacy benefit management unit and specialty pharmacy, rose nearly 9% to $58.44 billion.
The company said it is streamlining prior authorizations, the process some patients need to go through before receiving treatments, and is reviewing its current management of the approvals. The U.S. health insurance industry has faced massive criticism over costs to patients and hoops people must jump through to receive needed care.
Evanko said the changes could result in a new partnership between EviCore, Cigna’s prior authorization manager, and other existing benefit management businesses.
Insurers, including UnitedHealth’s UnitedHealthcare and CVS Health’s Aetna, made commitments last year to automate the majority of approvals by 2027.
Pharmacy benefit managers help negotiate drug prices and coverage with manufacturers on behalf of employers and health plan clients.
“This was a solid quarter for Cigna driven by pricing discipline in healthcare and PBM margins modestly better than expected, and in line with the guidance direction we had expected,” said Bernstein analyst Lance Wilkes.
Cigna now sees 2026 adjusted profit per share of $30.35, up 10 cents from its previous forecast. Analysts expected $30.33 per share.
The company earned adjusted quarterly profit of $7.79 per share, surpassing analysts’ estimates by 18 cents.
(Reporting by Sriparna Roy and Sneha S K in Bengaluru and Amina Niasse in New York; Editing by Pooja Desai and Bill Berkrot)
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