The Cigna Group reported a $739 million third quarter profit despite a $1 billion loss on its investment in clinic operator VillageMD.
On Thursday, Cigna reported a “non-cash investment loss” of $1 billion, or $3.69 per share, “related to VillageMD.” That negatively impacted an otherwise solid quarter of growth from its health benefits and medical care provider businesses that resulted in Cigna’s net income falling to $739 million, or $2.63 in the third quarter, compared to $1.4 billion, or $4.74 a share, in the third quarter of 2023.
Cigna’s Evernorth health services business holds a minority stake in VillageMD, a Chicago-based startup that has scaled back dramatically on the expansion of doctor practices and Village Medical clinics the company opened attached to Walgreens. Cigna’s Evernorth invested more than $2.5 billion in VillageMD two years ago and Walgreens invested more than $6 billion in the doctor-staffed clinic operator over several years under former chief executive Roz Brewer to take a controlling stake.
But the VillageMD investment hasn’t gone well in part because the clinics weren’t attracting enough patients.
Earlier this month, Walgreens reported billions of dollars in losses in the value of its controlling stake in VillageMD and Cigna, too, reported an earlier loss this year on its smaller investment. Tim Wentworth, who took over as Walgreens chief executive last October from Brewer, has said the drugstore chain would remain an investor and partner, but is working with VillageMD’s management “toward an endpoint.”
Aside from the loss on its clinic investment, Cigna’s underlying businesses performed well at a time rivals are struggling. Cigna’s total third quarter revenue jumped 30% to $63.7 billion.
Cigna reported adjusted income from operations of $2.1 billion, or $7.51 per share, compared with $2 billion, or $6.77 per share, in the third quarter of last year, “reflecting strong contributions from Evernorth health services, particularly within specialty and care services.”
In addition, the health and pharmacy benefits businesses are growing with total customer relationships up 12% to 183.5 million.
“Our strong performance this quarter is a testament to the leadership, stability and expertise of our team,” said David M. Cordani, chairman and CEO of The Cigna Group. “Our disciplined execution of our strategic plan and our comprehensive health services ensure we remain well-positioned in a highly dynamic environment, while sustaining business growth in both the near- and long-term.”
Total pharmacy customers increased 22% to 120 million as of Sept. 30 of this year compared to the end of last year “due to new sales and the continued expansion of relationships,” Cigna said. Meanwhile, total medical customers were flat at 19 million compared to the end of last year and the year ago quarter, “primarily reflecting a year-to-date decrease in individual and family plans customers, driven by targeted pricing actions in certain geographies,” Cigna said.
