UPDATE 2-Cigna beats profit estimates on pharmacy benefits strength, raises FY sales view

(Adds earnings details, updates shares)

Nov 5 (Reuters) - Cigna Corp beat estimates for quarterly profit on Thursday and raised its full-year sales forecast, driven by higher sales in its newly revamped health services unit that mainly houses its pharmacy benefits management business.

The health insurer also backed its adjusted profit forecast of $20 to $21 per share for 2021 based on the expectations of steady growth in its pharmacy benefits management business.

The company, however, said it was expecting higher medical costs related to COVID-19 and a recovery in demand for healthcare services to more typical levels for the rest of the year, echoing warnings of its rivals UnitedHealth, Anthem Inc and Humana Inc.

Cigna is banking on growth in the unit that offers government-backed health plans as well as Medicare Advantage plans for people over 65 or those with disabilities, to bolster its profit. It expects the Medicare Advantage business to record a 10% to 15% membership growth in 2021.

For the latest quarter, adjusted revenue from Evernorth unit, which includes the Express Scripts pharmacy benefit management business it purchased in 2018, rose about 20% to $29.83 billion, driven by a 22% jump in adjusted pharmacy prescription volumes.

“It is ironic to consider that a main concern for investors around buying Express Scripts is that it would slow Cigna’s growth profile when Evernorth grew revenues by 20% in the third-quarter,” Stephens analyst Scott Fidel said in a note.

Cigna raised its 2020 revenue forecast to about $158 billion from $154 billion to $156 billion estimated previously.

It also tightened its adjusted profit expectations, forecasting full-year earnings of $18.30 to $18.60 per share, compared with its previous expectations of $18 to $18.60.

Excluding items, Cigna earned $4.41 per share, beating estimates of $4.24, according to IBES data from Refinitiv.

Cigna shares rose 1.8% to $214.45 in midday trading. (Reporting by Manojna Maddipatla in Bengaluru; Editing by Saumyadeb Chakrabarty and Anil D’Silva)