Many Employers Are Maintaining Benefits for Dislocated Workers: Cigna

Turmoil from COVID-19 is hurting group health plan enrollment, but many employers are trying to keep health benefits in place for workers who have been furloughed or let go, Cigna Corp. executives said today, during a conference call with securities analysts.

Cigna held the call to go over earnings for the first quarter.

David Cordani, the company’s chief executive officer, acknowledged that the focus of attention is on the unique challenges posed by the COVID-19 pandemic.

“At Cigna, we have worked to ensure the health and safety of our customers, patients and colleagues and we will continue to partner across the system to lead through this crisis,” Cordani said.

Cordani said he expects the pandemic to lead to headwinds, such as further disenrollment from health plan plans and other benefit plans.

Resources

• Cigna earnings resources are available here.
• An article about Cigna’s fourth-quarter earnings is available here.

But Cordani said that Cigna is sticking with earlier earnings projections, of $18 to $18.60 per share, for 2020, and that employers’ concern about employees has helped moderate disenrollment effects.

“For those corporate employers who have had co-worker dislocation, fully half of those employers are maintaining continuity of benefits, either through the word furlough or by having layoffs, but with benefit continuity,” Cordani said.

One reason employers are maintaining benefits is that they’re hoping to bring business, and workers, back soon, Cordani said.

Earnings

Cigna is reporting $1.2 billion in net income for the first quarter on $38 billion in revenue, up from $1.4 billion in net income on $33 billion in revenue for the first quarter of 2019.

The Bloomfield, Connecticut-based company ended the quarter providing or administering health coverage for 17 million people, or 1% more than it was covering a year earlier.

The company recently acquired the Express Scripts Inc. pharmacy benefits manager (PBM) company.

Enrollment

Here’s what happened to two types of health plan enrollment:

• Commercial Insurance and Self-Funded Plan Administration: Held steady at 14 million.
• International Coverage: 1.7 million (up from 1.6 million)

Liquidity

Eric Palmer, Cigna’s chief financial officer, said the company has $1.6 billion in cash available to the parent company, access to the cash from $1.4 billion from a new term loan, and access to $4.25 billion in cash from revolving lines of credit.

“For 2020, we continue to expect greater than $7.5 billion of cash flow from operations, reflecting the strong capital efficiency of our well performing businesses,” Palmer said.

— Read Centene Braces for COVID-19 Impact, on ThinkAdvisor.

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