David M. Cordani, president and CEO of Bloomfield-based Cigna, downplayed concerns Thursday over the company’s proposed $54 billion merger with suitor Anthem Inc., which is still facing federal government opposition as it awaits a court decision.
In a conference call with investors, Cordani emphasized that the company could have up to $14 billion of capital available for the merger and other company needs, including share repurchasing.
“We await the court’s decision,” Cordani said in answer to an analyst’s question on the call, adding that it was most important “to make sure our investors understand the breadth of capital available” for that potential merger and other growth needs.
The proposed merger is expected to be blocked, according to a New York Post story in mid-January that cited multiple sources. Anthem extended the deadline for the deal through April 30, and Cigna said it would evaluate its options.
Cordani also said he expects Cigna to thrive as a standalone company if the deal with Anthem does not go through, despite the “disruptive overhang” from awaiting a decision and the “tension that builds over time.”
“While we have had some challenges our customers and clients have been buffered from that,” he said.
Cordani also said Cigna “owns” the sanctions against its Medicare Advantage prescription and health plans and expects to resolve them, though it anticipates a loss of 50,000 Medicare customers in 2017. Last year, the Centers for Medicare & Medicaid Services (CMS) suspended Cigna from marketing Medicare Advantage plans and enrolling new customers because of a long-standing history of noncompliance with federal requirements.
Meantime, Cigna expects to grow its national, middle market and international medical membership from 300,000 to 500,000 accounts, said CFO Tom McCarthy.
Cigna also expects to consider its participation in Affordable Care Act exchanges this spring.
4Q results
Cigna Thursday also revealed that its fourth quarter profits slipped 10.3 percent. Net income for the quarter ended Dec. 31 was $382 million, or $1.47 per share, compared with $426 million, or $1.64 per share, for the year-ago quarter.
Full-year net income for 2016 was $1.9 billion, or $7.19 per share, compared with $2.1 billion, or $8.04 per share in 2015.
McCarthy said he expects 2017 adjusted earnings to be between $9-$9.50 per share.
Despite profit declines, Cordani said Cigna experienced “solid momentum” for the fourth quarter of 2016 and the year as a whole, particularly in its global healthcare and supplemental benefits businesses.
