Cigna beats Q4 estimates, hikes dividend
Health insurer exceeds earnings expectations while 2026 guidance falls slightly short of analyst projections
Cigna Group delivered stronger-than-expected fourth-quarter results and rewarded shareholders with a dividend increase, though its 2026 guidance fell short of Wall Street expectations, sending the health insurer's shares lower in premarket trading.
The company reported adjusted earnings per share of $8.08 for the fourth quarter of 2025, beating the analyst consensus of $7.88 by 20 cents, according to earnings data released Thursday. Revenue reached $72.47 billion, exceeding the $70.31 billion estimate by more than $2 billion.
The strong quarterly performance was driven primarily by growth in the company's core health services business. Cigna Healthcare's adjusted income from operations increased 16% year-over-year in the fourth quarter, according to the company's regulatory filing. The segment has been a key profit driver as more employers and consumers seek comprehensive health coverage options.
Despite the solid fourth-quarter beat, Cigna's outlook for 2026 disappointed some investors. The company projected adjusted earnings per share of at least $30.25 for the full year 2026, slightly below the consensus estimate of $30.34. Revenue guidance of $280 billion also trailed analyst expectations of $282.4 billion.
Cigna's board demonstrated confidence in the company's financial strength by increasing the quarterly dividend to $1.56 per share, up from $1.51 previously. The company also returned substantial capital to shareholders through buybacks, repurchasing $3.6 billion of its own stock during 2025 and adding $6 billion to its share repurchase authorization.
The mixed results highlight the challenges facing health insurers as they navigate rising medical costs and competitive pressures in the pharmacy benefits management market. While Cigna's core insurance business remains robust, analysts have expressed concerns about headwinds in the pharmacy benefits segment heading into 2026.
Cantor Fitzgerald, which maintains an "Overweight" rating on the stock with a $325 price target, recently noted investor disappointment regarding preliminary 2026 projections for Pharmacy Benefit Services but expressed optimism for a potential recovery in 2027. Overall, analysts maintain a "Moderate Buy" consensus on Cigna, with average price targets ranging from $307 to $330.
Cigna shares closed at $271.71 on Wednesday and were trading lower in the premarket session following the announcement. The stock has gained approximately 14% over the past year, underperforming some competitors in the healthcare sector.
Looking ahead, investors will focus on Cigna's ability to execute on its 2026 guidance targets and manage challenges in the pharmacy benefits business. The company's strong balance sheet and consistent shareholder returns through dividends and buybacks provide support, but margin pressures in the PBM segment could weigh on growth prospects in the near term.