Cigna (CI)

Health insurance company Cigna (NYSE:CI) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 9.5% year on year to $69.75 billion. Its non-GAAP profit of $7.83 per share was 2.5% above analysts’ consensus estimates.

Company Overview

With roots dating back to 1792 and serving millions of customers across the globe, The Cigna Group (NYSE:CI) provides healthcare services through its Evernorth Health Services and Cigna Healthcare segments, offering pharmacy benefits, specialty care, and medical plans.

Upfront premiums collected by health insurers lead to reliable revenue, but profitability ultimately depends on accurate risk assessments and the ability to control medical costs. Health insurers are also highly sensitive to regulatory changes and economic conditions such as unemployment. Going forward, the industry faces tailwinds from an aging population, increasing demand for personalized healthcare services, and advancements in data analytics to improve cost management. However, continued regulatory scrutiny on pricing practices, the potential for government-led reforms such as expanded public healthcare options, and inflation in medical costs could add volatility to margins. One big debate among investors is the long-term impact of AI and whether it will help underwriting, fraud detection, and claims processing or whether it may wade into ethical grey areas like reinforcing biases and widening disparities in medical care.

The Cigna Group competes with other major health insurers and pharmacy benefit managers including UnitedHealth Group (NYSE:UNH), CVS Health/Aetna (NYSE:CVS), Humana (NYSE:HUM), Anthem/Elevance Health (NYSE:ELV), and Centene Corporation (NYSE:CNC). In the pharmacy benefits management space, specific competitors include CVS Caremark and OptumRx (part of UnitedHealth Group).

Larger companies benefit from economies of scale, where fixed costs like infrastructure, technology, and administration are spread over a higher volume of goods or services, reducing the cost per unit. Scale can also lead to bargaining power with suppliers, greater brand recognition, and more investment firepower. A virtuous cycle can ensue if a scaled company plays its cards right.

With $268 billion in revenue over the past 12 months, Cigna is one of the most scaled enterprises in healthcare. This is particularly important because health insurance providers companies are volume-driven businesses due to their low margins.

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Luckily, Cigna’s sales grew at a decent 11.6% compounded annual growth rate over the last five years. Its growth was slightly above the average healthcare company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Cigna’s annualized revenue growth of 18.8% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

Cigna also reports its number of customers, which reached 16.35 million in the latest quarter. Over the last two years, Cigna’s customer base averaged 2.3% year-on-year declines. Because this number is lower than its revenue growth, we can see the average customer spent more money each year on the company’s products and services.

This quarter, Cigna reported year-on-year revenue growth of 9.5%, and its $69.75 billion of revenue exceeded Wall Street’s estimates by 3.6%.

Looking ahead, sell-side analysts expect revenue to grow 3.2% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and suggests its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health.

Cigna was profitable over the last five years but held back by its large cost base. Its average operating margin of 4% was weak for a healthcare business.

Analyzing the trend in its profitability, Cigna’s operating margin decreased by 1.4 percentage points over the last five years. The company’s two-year trajectory also shows it failed to get its profitability back to the peak as its margin fell by 1.1 percentage points. We still like Cigna but would like to see some improvement in the future.

In Q3, Cigna generated an operating margin profit margin of 3%, down 1 percentage points year on year. This reduction is quite minuscule and indicates the company’s overall cost structure has been relatively stable.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Cigna’s EPS grew at a solid 8.1% compounded annual growth rate over the last five years. However, this performance was lower than its 11.6% annualized revenue growth, telling us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.

Diving into the nuances of Cigna’s earnings can give us a better understanding of its performance. As we mentioned earlier, Cigna’s operating margin declined by 1.4 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q3, Cigna reported adjusted EPS of $7.83, up from $7.51 in the same quarter last year. This print beat analysts’ estimates by 2.5%. Over the next 12 months, Wall Street expects Cigna’s full-year EPS of $28.41 to grow 14.5%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Cigna has shown mediocre cash profitability over the last five years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 3.7%, subpar for a healthcare business.

Taking a step back, we can see that Cigna’s margin dropped by 1.2 percentage points during that time. If the trend continues, it could signal it’s in the middle of an investment cycle.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Cigna’s management team makes decent investment decisions and generates value for shareholders. Its five-year average ROIC was 9.5%, slightly better than typical healthcare business.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Fortunately, Cigna’s ROIC averaged 2.4 percentage point increases over the last few years. This is a great sign when paired with its already strong returns. It could suggest its competitive advantage or profitable growth opportunities are expanding.

Cigna reported $6.03 billion of cash and $37.13 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $11.58 billion of EBITDA over the last 12 months, we view Cigna’s 2.7× net-debt-to-EBITDA ratio as safe. We also see its $1.38 billion of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We enjoyed seeing Cigna beat analysts’ revenue and EPS expectations this quarter. Overall, this print had some key positives. The stock remained flat at $301.10 immediately after reporting.

Updated: December 3, 2025 at 11:05 PM EST

When considering an investment in Cigna, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

Cigna possesses a number of positive attributes. To kick things off, its revenue growth was good over the last five years. And while its customer momentum declined, its scale gives it meaningful leverage when negotiating reimbursement rates. On top of that, its solid EPS growth over the last five years shows its profits are trickling down to shareholders.

Cigna’s P/E ratio based on the next 12 months is 8.9x. When scanning the healthcare space, Cigna trades at a fair valuation. If you believe in the company and its growth potential, now is an opportune time to buy shares.

Wall Street analysts have a consensus one-year price target of $328.35 on the company (compared to the current share price of $270.75), implying they see 21.3% upside in buying Cigna in the short term.