Cigna flags margin pressure in pharmacy benefit unit over next two years; shares fall

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By Sneha S K and Sriparna Roy

(Reuters) -Cigna Group warned of margin pressure over the next two years as its pharmacy benefit management business switches some customers to a new model that does not include the after-market discounts known as rebates, sending the insurer’s shares more than 14% lower in early trading on Thursday.

Earlier this week, the company said it will end prescription drug rebates in some types of health plans in 2027 and offer up-front discounts at its pharmacies, a shift it said would lower costs for patients.

“Given the significant financial and affordability pressures for partners operating heavily in government programs, we have proactively improved the economic terms of the contracts for the benefit of these long term strategic clients,” said CEO David Cordani.

“As a result of these factors, we expect margin pressure within our pharmacy benefit service segment over the next two years.”

The clients include Prime Therapeutics, the U.S. Department of Defense and Centene.

Cigna also expects operating income in its Evernorth unit, which houses its pharmacy benefit manager, to be down in 2026.

The comments clouded the company’s third-quarter profit beat, which was driven by Evernorth strength.

It earned a quarterly adjusted profit per share of $7.83, beating estimates of $7.65 per share, according to LSEG data.

(Reporting by Sriparna Roy and Sneha S K in Bengaluru, Amina Niasse in New York; Editing by Devika Syamnaath)