Health insurer Cigna posted better-than-expected quarterly profit Friday, helped by its Great West acquisition and operating expense controls, but cut the outlook for its main health-care segment.
The company reduced its full-year enrollment forecast, while standing by its overall earnings-per-share projection for 2008.
Shares of U.S. health insurers have declined this year on a raft of profit warnings and fears of a downturn. The stocks have rebounded somewhat on second-quarter reports from UnitedHealth Group, WellPoint and Aetna.
Cigna has benefited from the performance of its nonhealth-care businesses, namely its life and disability, and international units.
Second-quarter net income rose to $272 million, or 97 cents per share, from $198 million, or 68 cents per share, a year earlier, when the company took a charge related to a reinsurance business.
Excluding items, earnings were $1.08 per share, 11 cents more than the analysts' average expectation, according to Reuters Estimates.
Revenue rose 11 percent to $4.86 billion. Enrollment in Cigna's health plans jumped 23 percent to nearly 12.1 million members. The company gained 1.8 million members in the Great West acquisition, which was completed in April. Cigna said the deal added $16 million in aftertax earnings to its quarterly health-care segment earnings.
But the company lowered projected full-year earnings for the health-care segment to a range of $700 million to $730 million from $735 million to $775 million.
It forecast full-year membership growth, excluding the Great West deal, increasing about 1 percent. Previously, it expected growth of 2 percent to 2.5 percent.
The weakening U.S. economy appears to be hitting Cigna's enrollment, Oppenheimer analyst Carl McDonald said. The company's guaranteed cost loss ratio, a closely watched measure of premiums spent on medical costs, worsened to 85.7 percent from 84.7 percent a year ago.
The company projected full-year earnings of $4.05 to $4.25 per share, excluding items, repeating its forecast from May.
Cigna shares fell 2 cents to $37 in premarket trading from its Thursday close of $37.02 on the New York Stock Exchange.
Through Thursday, Cigna shares have dropped 31 percent this year, slightly better than the 33 percent decline in the Morgan Stanley Healthcare Payor index .