Cigna raises outlook, exits ACA exchanges
In its latest earnings report, Cigna disclosed third-quarter adjusted earnings of $7.98 per share while upgrading its 2026 profitability targets. That marks an increase from the $7.83 per share recorded in Q3 2025. Operating income remained virtually unchanged at $2.1 billion, slightly above the $2 billion logged in the same period last year. Additionally, the insurer confirmed it will withdraw from Affordable Care Act exchanges by year’s end.
Third-quarter results
Gains at Cigna Healthcare and Evernorth’s specialty and care services business offset a decline in pharmacy benefit earnings. During the same period, medical care expenses consumed 85% of revenue, a slight increase from 84.8% a year earlier. CFO Ann Dennison said the exchange business is expected to turn a profit in 2026, though margins will fall short of targets. Medical cost trends are higher than usual but in line with what was expected.
Revenue rose 6% year over year to $73.7 billion. This growth occurred compared with revenue of $69.7 billion in the prior year’s third quarter. Adjusted income from operations was essentially flat at $2.1 billion, compared with $2 billion from the same quarter last year. Cigna Healthcare’s adjusted revenue increased 9% to $11.7 billion, driven by higher premiums. Evernorth recorded a 6% increase in adjusted revenue, reaching $63.8 billion. Its pretax adjusted operating income fell 4% to $1.83 billion.
Patient care initiatives
Evernorth is expanding its capacity to prepare complex specialty drugs at Accredo and encouraging the use of lower-cost alternatives like lenalidomide. A HealthSense program brings together claims, pharmacy, and benefits information to help care teams intervene earlier, starting with cancer treatment.
Cigna plans to move its fully insured commercial clients to Evernorth’s rebate-free Signature model in 2027. The company is actively negotiating with the largest pharmaceutical manufacturers as it speaks, aiming to finalize these relationships ahead of the transition. Adoption among other clients is expected to pick up in 2028. This model replaces rebates with fees.
CEO Brian Evanko stated that smaller rebate pools and reduced employer coverage of GLP-1 drugs will weigh on pharmacy benefit earnings next year. Evanko highlighted that smaller industrywide rebate pools and a reduction in employer-sponsored coverage for GLP-1 weight loss medications will also impact future profitability.
The exit and future outlook
As the company steps back from the ACA market, individuals currently covered through these plans will need to secure new coverage before the year concludes. These plans were offered across 11 states in 2026, serving a specific demographic of consumers. The shift reduces options for low-to-middle-income consumers who previously relied on these structured marketplaces for essential health insurance.
Cigna expects adjusted earnings per share to grow at least 10% in 2027 from a 2026 baseline of about $30. This projection accounts for the exit from the ACA business. Cigna expects Evernorth’s earnings to growth to be in the low single digits next year. Cigna raised its 2026 adjusted earnings forecast to at least $30.60 per share, up from $30.45. Dennison estimated an all-in headwind of approximately $200 million from leaving the exchanges. It plans to issue full 2027 guidance on its fourth-quarter call.
Specialty and care services earnings rose 15% to $1.06 billion, while pharmacy benefit services earnings fell 22% to $765 million. The company is gaining members among small and midsize employers and working to improve margins on stop-loss coverage. Evanko described the current period as a “strong selling season” for both Cigna Healthcare and Evernorth.
