By Khushi Mandowara
(Reuters) - The Cigna Group raised its full-year profit forecast on Thursday, banking on strength in its pharmacy benefit unit and lower-than-expected insurance claims, sending the company's shares up 1.2%.
Health insurers had warned of a jump in medical costs earlier this year as older adults return to hospitals for elective surgeries that were delayed during the pandemic.
However, Cigna joined rival health insurers UnitedHealth and Elevance in allaying some of those concerns by lifting their annual adjusted profit forecasts.
Cigna also reported third-quarter adjusted earnings that beat Wall Street estimates.
Its benefit-expense ratio, or the percentage of payout on claims compared to its premiums was 80.5% in the quarter, lower than analysts' estimates of 81.67%, according to LSEG data.
Revenue from the company's health insurance unit rose 14% to $12.77 billion in the quarter as memberships in its commercial plans, which usually have a higher premium, rose.
The challenges that were forecast for U.S. commercial memberships due to economic weakness in late 2023 has not yet materialised, Cigna CFO Brian Evanko said.
Cigna's Evernorth Health, which includes the pharmacy benefits management unit, reported an 8% jump in quarterly revenue to $38.6 billion.
The company said in August it expects "accelerated income growth" in the second half for Evernorth, citing increased demand for biosimilars.
Biosimilar growth at the Evernoth unit even next year will largely be driven by close copies of AbbVie's arthritis treatment Humira, Evanko said.
Cigna forecast annual profit of at least $24.75 per share, compared with its previous outlook of at least $24.70 per share.
The company reported an adjusted profit of $6.77 per share in the third quarter, beating estimates of $6.67.
(Reporting by Khushi Mandowara in Bengaluru; Editing by Saumyadeb Chakrabarty and Shounak Dasgupta)