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ST. LOUIS - Express Scripts, part of Evernorth and a subsidiary of The Cigna Group (NYSE: NYSE:CI), has filed a lawsuit against the Federal Trade Commission (FTC), challenging the accuracy of a recent FTC report on the pharmacy benefit management (PBM) industry. The suit, lodged in a federal court in Missouri, seeks the retraction of the July 2024 report, which Express Scripts claims contains false and misleading information about the PBM industry and its role in drug pricing.
The FTC's report, according to the company, disregards substantial evidence provided by PBMs, including millions of documents and extensive data, which Express Scripts argues demonstrate the value PBMs bring in reducing drug costs. The company's legal action asserts that the report's inaccuracies and the Commission's alleged bias could potentially damage the health care system by leading to higher drug prices for American consumers.
Express Scripts contends that PBMs are instrumental in driving down net drug costs for plan sponsors and their members, citing approximately $38 billion in savings for their clients in the previous year. The company emphasizes that drug manufacturers are the ones setting drug prices, not PBMs. Express Scripts also highlights its efforts to negotiate lower net costs of drugs, promote the use of generics and biosimilars, and provide transparent cost information to customers.
The lawsuit also argues that the FTC report violates the U.S. Constitution and federal law. Express Scripts maintains that it passes through more than 95% of all rebates and fees it receives to its client plan sponsors, challenging the notion that PBMs contribute to high drug costs.
Evernorth Health Services, the umbrella under which Express Scripts operates, is dedicated to improving health and increasing vitality through its pharmacy, care, and benefits solutions. The company's services are designed to make the prediction, prevention, and treatment of illness more accessible.
This legal dispute highlights the ongoing debate about the role of PBMs in the American health care system and the complexities of drug pricing. The information for this article is based on a press release statement.
In other recent news, Cigna Group reported a substantial increase in its second-quarter earnings for 2024, with total revenue of $60.5 billion, marking a 25% growth year-over-year, and adjusted earnings per share of $6.72, a 10% increase. This robust growth was primarily driven by its Evernorth Health Services and Care Services segments, with Evernorth's adjusted income rising by 12%. Express Scripts, Cigna's foundational pharmacy benefit services business, also showcased strong client demand and innovation.
Financial services company Jefferies maintained a bullish stance on Cigna, raising its price target on the company's shares to $422 from $402. This revision follows discussions with Cigna's CFO Brian Evanko and Investor Relations lead Ralph Giacobbe, highlighting the company's potential benefits from specialty drugs expected to lose exclusivity by 2030.
Cigna Healthcare is planning to divest its Medicare Advantage business by the first quarter of 2025, demonstrating the company's strategic adaptability. The company's full-year guidance for adjusted EPS is at least $28.40 for 2024, with an anticipated average annual adjusted EPS growth of 10% to 14%. These recent developments reflect Cigna's commitment to delivering value-driven solutions and its confidence in achieving its growth targets.
InvestingPro Insights
As The Cigna Group (NYSE: CI) takes a stand against the Federal Trade Commission's report, investors may be interested in how the company's financial metrics stack up. According to InvestingPro data, Cigna currently holds a market capitalization of $102.55 billion, reflecting its substantial presence in the healthcare sector. The company also exhibits a Price/Earnings (P/E) ratio of 28.44, which adjusts to a more favorable 19.2 when looking at the last twelve months as of Q2 2024. This suggests that the company is potentially undervalued based on its earnings power.
Moreover, Cigna's commitment to returning value to shareholders is evident in its aggressive share buyback strategy and high shareholder yield, which are key InvestingPro Tips. This is further supported by the fact that the company has increased its dividend for three consecutive years and has consistently paid dividends for 43 years, showcasing a strong track record of financial stability and reliability for investors.
For those looking to delve deeper into Cigna's financial health and investment potential, InvestingPro offers additional tips. These tips provide insights into aspects such as the company's low price volatility, its status as a prominent player in the Healthcare Providers & Services industry, and its valuation multiples. In total, there are 13 additional InvestingPro Tips available for Cigna, which can be found at https://www.investing.com/pro/CI.
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