5. The Cigna Group (NYSE:CI)
Number of Hedge Fund Investors: 61
The Cigna Group (NYSE:CI) is a leading player in the global health services market, offering a wide range of health insurance products and services. Its diverse revenue streams, spanning health insurance, pharmacy services, and international operations, help spread risk and create various growth opportunities. The increasing demand for healthcare and insurance coverage supports a positive outlook for The Cigna Group (NYSE:CI)’s long-term growth.
The Cigna Group (NYSE:CI)’s focus on “services-only” commercial memberships, which are fee-based rather than risk-based, helps protect it from rising medical costs. The Cigna Group (NYSE:CI)’s Evernorth segment, which includes Healthcare Services and the specialty pharmacy Accredo, is expected to grow at a high single-digit rate shortly. According to analyst Marcel Knoop, given the stock’s low valuation and expected mid-single-digit earnings growth, The Cigna Group (NYSE:CI) appears attractive at its current price.
David Cordani, CEO of Cigna, shared the following during their latest earnings call:
“For the second quarter, I’m pleased to report that the Cigna Group delivered total revenue of $60.5 billion and adjusted earnings per share of $6.72. We achieved these positive overall results in a dynamic environment, and I’m proud of our team for continuing to focus on those we serve, ensuring that they get care of the need, to get their medications at an affordable cost and they get the support they need in order to make the best decisions about their health and vitality.
All of this requires a relentless focus on innovation, disciplined execution and a passionate commitment to our mission. During the quarter, our Evernorth Health Service businesses demonstrated continued strength with our market-leading specialty and pharmacy benefit services capabilities. Within Evernorth, I’ll start with our accelerated growth specialty and care businesses, which provides specialty drugs for the treatment of complex and rare diseases, distribution of specialty pharmaceuticals as well as clinical programs to help clients improve health and vitality. We saw strong growth in the quarter with adjusted income growing 12% year-over-year, reflecting continued demand for our services while we also continue to invest in broadening our offerings and expanding our reach.
In Accredo, our specialty business, our growth continues to be fueled by secular tailwinds as well as Accredo’s differentiated strength which makes us the market leader in the space. Biosimilars, for example, represent a force of change and a substantial opportunity for continued growth and impact. At the end of June, we began dispensing our interchangeable biosimilar for Humira. Our program has zero dollar out-of-pocket cost for patients, saving them on average $3,500 per year. To deliver these savings, we have agreements in place with multiple manufacturers that will produce biosimilars for Evernorth pharmaceutical distributor, Quallent Pharmaceuticals. Now the biosimilar opportunity goes well beyond Humira. By 2030, we expect an additional $100 million of annual specialty drug spend in the U.S. will be subject to biosimilar and generic competition.
And Accredo is well positioned to deliver differentiated value for our clients, customers and patients. In our care services businesses, we are continuing to grow and expand in key areas of increased demand, including behavioral health, virtual and home care. For example, in summer, we further expanded Evernorth behavioral care group to an additional seven states. We are seeing positive patient outcomes from our unique clinician matching capabilities based on individual needs and preferences with fully 84% of patients experiencing clinically significant reductions in the depression and anxiety symptoms. Now shifting to Express Scripts, our foundational pharmacy benefit services businesses, we are seeing continued strong client demand given our breadth of clinical and supply chain expertise as well as our proven partnership orientation.”
