Cigna Exits Obamacare Marketplace; Q1 EPS Beats as PBM Income Falls 28%
Cigna will exit the Affordable Care Act marketplace by year-end after serving under 400,000 customers, focusing instead on higher-margin segments. Q1 adjusted earnings of $7.79 per share beat forecasts as pharmacy benefits pretax income fell 28%, triggering an eviCore strategic review and lifting full-year EPS target to $30.35.
1. ACA Market Exit Decision
Cigna will exit the Affordable Care Act marketplace at year-end after serving under 400,000 customers, representing a small fraction of its 18 million medical members. The move aims to refocus resources on core health plan and services operations with stronger long-term economics.
2. Q1 Financial Performance
In Q1, adjusted earnings reached $7.79 per share, topping analyst forecasts, while revenue rose 5% to approximately $68.5 billion. Healthcare expenses trended below expectations, driving margin expansion in the health plan segment and prompting an increase in the 2026 EPS outlook to at least $30.35.
3. Pharmacy Benefits Challenges
Pharmacy benefits pretax income plummeted 28% year-over-year as Cigna implements a transparency-driven model and absorbs concessions to major clients. Membership in the PBM business declined, offset partially by a 20% jump in specialty and care services profit.
4. eviCore Strategic Review and Leadership Change
The company has launched a strategic review of eviCore, its prior authorization and clinical services unit, to explore potential alternatives. COO Brian Evanko is set to replace CEO David Cordani in July, marking a leadership transition that coincides with portfolio shifts and operational resets.