Cigna's stock leaps toward a 13-month high after earnings beat, raised dividend

By Tomi Kilgore

Quarterly dividend raised by 14%, to boost the implied yield above 1.8%

Shares of Cigna Group shot up toward a 13-month high Friday, after the health care services company reported a fourth-quarter earnings beat and raised its dividend by 14%, as pharmacy and medical customers increased.

The stock (CI) rallied 6.2% in premarket trading, to put it on track to open at the highest price seen during regular-session hours since Jan. 3, 2023.

Net income came in at $2 billion, or $3.49 a share, after $1.53 billion, or $3.91 a share, in the same period a year ago, as shares outstanding declined 3.6%. Excluding nonrecurring items, adjusted earnings per share rose to $6.79 from $5.02 to beat the FactSet consensus of $6.54.

Revenue grew 11.7% to $51.11 billion, well above the FactSet consensus of $48.9 billion.

Pharmacy customers increased 5% to 98.6 million and medical customers rose 10% to 19.8 million, while customer relationships fell 7.7% to 164.4 million, due to the nonrenewal of a supplemental behavioral coverage contract with New York Life.

Separately, the company raised its quarterly dividend to $1.40 a share from $1.23 a share. Based on Thursday's stock closing prices, the new annual dividend rate implies a dividend yield of 1.82%, above the implied yields for the Health Care Select Sector SPDR ETF XLV of 1.53% and the S&P 500 of 1.44%.

Looking ahead, Cigna adjusted EPS of "at least" $28.25, which compares with the FactSet consensus of $28.29.

Cigna's stock had soared 13.9% in December, the best monthly performance in 14 months, amid reports the company had walked away from talks to merge with health insurer Humana Inc. (HUM).

But the stock has still lost 3.6% over the past three months through Thursday, while the health care ETF has climbed 12.2% and the S&P 500 has gained 13.6%.

-Tomi Kilgore

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02-02-24 0753ET

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