Cigna Layoffs 2024 – Cigna reports a $277 million Q1 loss

The Cigna Group is an American global healthcare and insurance firm. It is headquartered in Bloomfield, Connecticut. The company’s insurance subsidiaries are important suppliers of medical, dental, and related products and services. They are mostly provided through employers and other groups.

In the coming months, Cigna’s Evernorth Care Group plans to reduce specialty services and combine select Arizona care facilities. On May 31, an Arizona WARN notice was submitted. It indicated that 261 employees would be laid off due to downsizing.

Previously, Cigna had layoffs in 2023 as well.

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Cigna laid off employees in 2023

The former Cigna Group and its subsidiary employees took to social media in October 2023. They discussed layoffs that they claim have taken place across the business.

Cigna did not reply to queries about the decline in the workforce or if more layoffs were planned. It has not confirmed the exact number of workers who may have been impacted or the date on which layoffs would take place. In addition, Cigna did not file WARN papers with state authorities. According to the company’s website, it employs over 74,000 individuals worldwide.

On LinkedIn in October 2023, former Cigna employees pointed out a decrease in workforce that they believe occurred across the company. According to various sources:

1. A former operational risk senior adviser revealed her departure from Cigna after an “enterprise reduction in force initiative.”

2. A former senior director of individual and family plan affordability stated that she “was affected by a job layoff at Cigna Healthcare.”

3. After more than 20 years with Cigna, the former head of integration solutions for U.S. medical technology was looking for new opportunities.

4. A former mainframe technical services analyst at Express Scripts stated that he was laid off “due to a staff reduction.”

5. A former analyst revealed that he was laid off after three years at the organization.

Cigna’s cuts come as other prominent healthcare businesses with insurance units have laid off employees in 2023.

Cigna expects growth 2024

Cigna and the Health Care Service Corporation (HCSC) reached an agreement in January 2024. This was to sell Cigna Group’s Medicare Advantage, Cigna Supplemental Benefits, Medicare Part D, and CareAllies operations. The acquisition has a total value of around $3.7 billion. 

The transaction also included a four-year service agreement. Evernorth Health Services, a Cigna Group company, will continue to supply Medicare medicinal products. The transaction will be completed in the first quarter of 2025 if all relevant permits are granted.

On February 2, 2024, Cigna stated that it expected the following, which would boost growth:

  • higher prices for some commercial health insurance plans, 
  • strength in its pharmacy benefit management (PBM) business from biosimilars,
  • weight loss medications.

Shares of the company climbed 6.3% after Cigna raised its profit prediction for 2024. It happened just two days after it agreed to sell its Medicare operation, which served adults aged 65 and up, to Health Care Service.

In January, Humana, a major player in the Medicare Advantage (M.A.) market, warned. It said that growing care costs for older people might affect its earnings in 2024 and 2025.

However, Cigna is safe from such a blow. It’s because it has a much smaller presence in the M.A. market. Also, it will completely leave the industry when the deal is completed early next year.

“We decided that our Medicare businesses would need sustained investments, focus, and capital. Also, we need specific resources that are excessive in size within the Cigna Group’s portfolio,” stated David Cordani, CEO.

Cigna reports a $277 million Q1 loss

The Cigna Group recorded a net loss of $277 million in the first quarter of 2024. The firm reported its first-quarter earnings on May 2, 2024. The loss was blamed on declines in the value of VillageMD, of which Cigna owns a minority stake.

Cigna increased its earnings forecast for the year. It is estimating adjusted earnings of at least $28.40 per share. It is up 15 cents from its prior earnings release. As reported by The Wall Street Journal, the company outperformed forecasts in its first-quarter earnings.

The Cigna Group’s first-quarter revenues reached $57.2 billion. It is a 23% increase over the previous year. Evernorth, Cigna’s health services sector, saw revenues rise 28% year on year to $46.2 billion.

Cigna Healthcare, its health insurance segment, saw a 4% year-over-year increase in revenues to $13.3 billion. The segment’s medical loss ratio was 79.9% in the first quarter, as opposed to 81.3% in the previous year.

Cigna had 19.2 million medical members as of March 31. It is a decline from the previous year. Based on the earnings report, the decline was due to a loss of individual plan customers.

The business raised its estimated $235 billion in year-end revenues. The total adjusted operating income for the year is expected to be at least $8.1 billion.

Cigna plans to lay off 261 employees

Cigna’s Evernorth Care Group planned to reduce particular specialty services. Also, it is going to combine certain Arizona care locations in the coming months. On May 31, an Arizona WARN notice was submitted. It indicated that 261 employees would be laid off due to downsizing.

The choice was made as Evernorth Care Group tried to modify its strategy. It’s because of its changing market conditions and patient and community demands.

Employees affected by the layoffs will receive a severance package that includes transitional help. The news of the service and workforce layoffs came after Evernorth sold seven outpatient imaging locations in Phoenix to RadNet, a diagnostic imaging provider. The deal happened for an unknown amount in late January.

Evernorth Care Group operates over 20 healthcare center locations and four urgent care centers. It offers a one-stop-shop service approach. It also boasts over 150 main and specialized care providers, according to its website.

A representative for Evernorth Care Group released a statement that stated, 

“We will continue to offer high-quality, affordable care and exceptional service. The company is still very committed to servicing its patients in Arizona.”

Cigna’s medical use patterns across its portfolio were consistent with its forecasts for 2023 and 2024, said CFO Brian Evanko. He noted the company’s lack of Medicaid management.

At the Goldman Sachs Global Healthcare Conference, Evanko also stated the company’s adjusted annual profit estimation, which was issued in May. Cigna’s primary source of revenue is the management of employer-sponsored health programs.

Conclusion

During the COVID-19 outbreak, Medicaid plans had to keep people enrolled. Redeterminations for Medicaid eligibility have been extended since the policy’s conclusion in 2023. Following the epidemic, insurers saw an unexpected increase in patient use of healthcare coverage.

Cigna’s “outpatient dynamic” was also influenced by the Change Healthcare hack. It impacted claims during the first quarter of 2024, stated CFO Brian Evanko. 

The ransomware attack on UnitedHealth in February took a “major portion” of personal data from American consumers. It also disrupted provider payments. CEO Andrew Witty of UnitedHealth stated in a May hearing that the hack created “incredible disruption” throughout the healthcare sector.

Evanko stated that Cigna had been affected by the attack but was back to normal. “But for the rest of the year, we’re anticipating that kind of normalized level to persist,” he stated.

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