Health insurer Cigna Corp said it would not expand its individual Obamacare plans into more states next year, joining an industry pullback from the struggling business.
Cigna, which manages insurance plans for big companies and sells health plans on the government exchanges created under Obamacare, had planned to expand into 10 states from seven.
Insurers including Aetna Inc, United Health Group Inc and Anthem Inc which has agreed to buy Cigna say they are losing money on the exchanges because of lower than anticipated enrollments. Enrollees are also sicker and older than expected, the companies say.
United Health and Aetna will leave the exchanges in 2017.
The U.S. government has moved to block the Cigna-Anthem deal, saying it would stifle competition.
Shares of Cigna, which reported a better-than-expected third-quarter profit, were up 0.4 percent at $118.32.
Anthem on Wednesday raised the prospect of smaller participation in the exchanges in 2018, saying it would have a market-by-market strategy that hinges on 2017 profitability.
President Barack Obama’s Affordable Care Act, popularly known as Obamacare, created online exchanges where consumers can shop for individual health insurance and get subsidies.
“We’re continuing to plan for a loss in the (individual Obamacare) business,” Cigna Chief Executive David Cordani said in a call with analysts, adding that there would still be “some revenue growth.”
Cigna’s commercial medical loss ratio – the amount it spends on medical claims compared to income from premiums rose slightly to 79.4 percent in the quarter ended Sept. 30.
However, its government medical loss ratio rose to 85.3 percent from 83.6 percent a year earlier.
Investors would likely be relieved by Cigna’s report as there were no major signs of additional weakness, Barclays analysts wrote in a client note.
Cigna said its net income fell 16.6 percent to $456 million, or $1.76 per share, in the quarter.
Excluding items, the company earned $1.94 per share, topping analysts’ average estimate of $1.91, according to Thomson Reuters I/B/E/S.
Operating revenue rose 4.5 percent to $9.81 billion, just shy of the $9.83 billion analysts had expected.
Up to Wednesday’s close, Cigna’s stock had fallen 19.5 percent this year, compared with a 7.5 percent slide in the S&P 500 Managed Healthcare index.