Shares of Cigna (NYSE:CI) surged to a 52-week high on Thursday after the health insurer revealed a stronger-than-expected 52% jump in first-quarter profit, fueled by higher fee costs and membership growth in its healthcare plans.
The quarterly results end a strong reporting season among the largest U.S. health insurers, which experienced an uptick in demand as consumers started revisiting doctors, all rebounding from shaky results during the sluggish economy.
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The Philadelphia-based company posted net income of $429 million, or $1.57 a share, compared with $283 million, or $1.02 a share, in the same quarter last year. Excluding special items, the company earned $1.37 a share, ahead of average analyst estimates polled by Thomson Reuters of $1.09 a share.
Memberships rose across-the-board, particularly in Cigna's behavioral, dental and primary medical plans, further cushioned by a 6% slump in medical claims expenses. Its smaller disability and life, and international segments also contributed with growth of 10% and 7%, respectively.
Revenue for the three months ended March 31 was $5.41 billion, up 8% from $5.2 billion a year ago, virtually matching the Street’s view of $5.45 billion. Along with more members, sales were assisted by premium and fee increases of 6% in health care, 4% in disability and life, and 32% in its international segment.
“Our first quarter results represent a strong start towards achieving our full year 2011 goals, with good revenue growth and strong earnings contributions from each of our ongoing businesses,” Cigna CEO David Cordani said in a statement. “These results reflect continued effective execution of our strategy for the benefit of our customers, health care partners and shareholders.”
In light of the impressive performance, Cigna updated its fiscal earnings outlook to a range of $4.65 to $5 a share from its earlier view of $4.30 to $4.70 a share, in line with analyst estimates of $4.73 a share.
The company also sweetened its membership outlook, predicting a rise of 1% to 3%. It had earlier predicted flat memberships.